Haslam College of Business - THOUGHT LEADERSHIP: Why are Some Product Recalls So Challenging?

by Chris Craighead, Dove Professor of Supply Chain Management

In 2008, there was a salmonella outbreak across 43 states associated with salsa. Tomatoes were recalled from grocery stores across the country, but as the outbreak continued to grow, health officials discovered that jalapeno peppers were the true source of contamination.

Lawmakers echoed public outrage over the mistake, declaring, “The fact that it has taken 14 weeks to identify the source of contamination is simply unacceptable.” Yet multiple recalls since that time have suffered similar challenges. Given that many industries mandate traceability in their supply chains, why do so many companies struggle with recalls?

A starting point for shedding light on the matter is scale. Modern day supply chains often span the globe, involve thousands of entities (e.g., suppliers, transportation providers and distribution points) and can, in any given day, encompass millions of discrete activities to create and maintain product flow. The scale of the supply chain is problematic, but can be made worse by variations in technological capabilities between plant/company, region and country.

Companies design their supply chains around these issues to get the products to consumers as quickly as possible, but supply chains are meant to move products forward, not in reverse. Think of a typical car — ever try to reverse down a narrow, winding road at the same speed you’d drive down it forward? It likely will not end well!

Tracing bad products and reversing the flow of supply chains often gives rise to recall pressure points. In the martial arts, a pressure point is a place on the human body that inflicts pain, but only when pushed. Pressure points in supply chains similarly trigger issues when the system is strained, such as when trying to reverse the flow for a recall.

For example, source ingredients like tomatoes, jalapeno peppers and onions are uniquely identified up until they are combined to make salsa. As salsa they are issued a new product identification in most systems, and it becomes difficult to pinpoint the specific source ingredients, where the problem occurred, or even which ingredient was the problem. This recall pressure point caused pain for the tomato industry in the 2008 salmonella outbreak in the form of approximately $250 million dollars in losses.

The urgency often associated with recalls exacerbates these issues, and creates uncertainty for company decision making. Managers could face a costly situation armed with information that may — or may not — be accurate. The information actually needed also may not be timely, further complicating the situation and decision to recall (or not).

While this may be enlightening, it may also be troubling to consumers. At least in the food industry, managers usually recognize the uncertainty surrounding the recall decisions and adhere to a very deliberate strategy when facing a potentially harmful product: “When in doubt, get it out.” In other words, the food companies would rather eat the cost (pardon the pun) of the recall by potentially removing untainted products from store shelves than have their products cause harm to consumers.

Based on research with: Kaitlin Wowak, University of Notre Dame; Dave Ketchen, Auburn University.