Food recall response time is lengthened by distance between the supplier and manufacturer but reduced when supplier and affected firms operate in related sectors, according to a study.
Researchers found that response time gets worse as more firms are affected by the same recall, potentially due to competitive pressures. It also identified that prior experience improves recall reaction time.
The study investigated the effects of geographic distance, industry relatedness and clustering on firms’ response times to a supplier-initiated product recall. The report recommends supply chain resilience be strengthened through better tracking and traceability systems, and more extensive quality audits.
Findings highlight how geographic and industry-related factors determine the speed of a company’s response to product recalls.
Analysis of FDA recalls
The study, published in the International Journal of Operations and Production Management, is co-authored by Benn Lawson of Cambridge Judge Business School, Antony Potter of the University of Manchester, Frits Pil of the University of Pittsburgh, and Matthias Holweg of the University of Oxford.
Based on U.S. Food and Drug Administration (FDA) data from 2004 to 2013, the team looked at agri-food recalls involving 407 pairs of suppliers and affected downstream manufacturing firms.
Product recalls in the agri-food industry are done to protect consumer health and ensure safety of the food chain. They often involve a tainted ingredient which can spread quickly through complex supply chains, affecting many other fresh, frozen or prepared food products.
Timely responses to product recalls present challenges for most firms. The source might be a supplier from the same industry located next door, or one from a different sector thousands of miles away.
Speed in spreading the word and getting contaminated products out of distribution and off supermarket shelves is critical. The speed of a firm’s response to a recall is crucial to mitigate consequences for consumer health and avoid financial and reputation cost for the business, the researchers observed.
Co-author Benn Lawson said the study is based on “time to recall,” the downstream supplier’s public reaction time, measured in the number of days it takes a food manufacturer to issue its own recall following the first opportunity it could learn about the problem, which is the supplier’s announcement.
One of the highest profile cases involved Georgia-based peanut processor Peanut Corporation of America (PCA) and Salmonella contamination in 2009.
Geography played a role in the slowness of affected downstream firms to act. A business in Washington State more than 2,000 miles away was a customer of PCA, but took more than a month to clear all affected peanuts from its processing lines and issue a recall. That company then moved to a local supplier in Washington State.
When suppliers and manufacturers are far apart, firms tend to hold larger stores of inventory as insurance against transport delays, according to Lawson. This makes it harder to identify tainted goods because there are more product to inspect, and affected goods are more widely dispersed among transport networks and storage points.
Lawson said the team expected that a number of affected firms from the same area would increase information flow and reduce recall times but there was no effect.
“That might be due to competition among the affected firms for limited local resources to enable the recall, such as storage and transport capacity, or a reluctance to disclose firm-specific information to investors due to concern about the share price. We conclude that government penalties and inducement to share information may be required,” he said.
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