The Costs of Failing to Meet FSMA Requirements

Consider this hypothetical food safety situation: A manufacturing facility tests positive for bacteria. In response to the finding, they issue a voluntary recall. The decision-makers in the C-suite desire to limit the damage as much as possible in order to protect the brand and the bottom line, perhaps without fully understanding the direct impact doing so can have on the company’s compliance with FSMA requirements and overall brand success. Here’s how the situation unfolds.

The Recall is Initiated

The organization incurs millions of dollars in expenses to pause production and carry out recall response initiatives, alerting the necessary parties within and outside the organization (including regulatory agencies, distributors, suppliers, customers, and retailers), and manage the logistics of removing affected or mislabeled products. They are also tied up with the responsibilities of examining the root cause of the recall and remediating the identified problems to prevent future occurrences.

The Media Gets Wind

The news of the company’s food recall gets immediate and aggressive media coverage from both traditional and social media platforms. As the news media picks up on the story, the blame game ensues, echoing throughout social avenues. Customers are left wondering whether the food they’re buying is safe, and some of them avoid the product, or the retailer, or the brand altogether for months or years afterward. 

Inventory Impacts Unravel

The recall begins to impact large-scale supply and inventory patterns. This single food safety failure affects a long list of distribution channels, including wholesalers/distributors, repackers, manufacturers, retail outlets, consumers, federal government consignees, and foreign consignees.

The grocery stores expend time and resources to gather recall-related details, issue internal recall notices, pull products from shelves, make arrangements for food disposal and reimbursement, notify consumers appropriately and file any necessary compliance paperwork. 

Because of the chaos and disruption, some clients choose to move their business elsewhere, leaving a significant gap in sales potential. This demands a new (and expensive) sales effort to bring on new clients. 

Litigation Arises

Enough consumers are sickened or affected by the recalled product that the company faces the possibility of a class-action lawsuit. As litigation unfolds in the media, even deeper brand damage occurs.

The organization is highly susceptible to regulatory scrutiny. If found to be in violation of any relevant FSMA mandates or other compliance obligations, the governing bodies may consider legal actions like a forced shut-down, initiating a seizure or injunction, implementing administrative detention, suspending the facility’s food registration or even issuing criminal fines and in some extreme cases, jail time.

The Recall Expands

Imagine that after all of this backlash, the company must announce an expansion of the recall. Because comprehensive data and historical trending were not leveraged to set the recall limits properly, the recall hits the news cycle again and spurs another chain of damaging repercussions. 

Long-Term Damages Loom

Governing regulatory agencies are now much more keenly aware of how well the company is mitigating food safety risks within its facility. They implement new audit requirements that involve greater frequency and granularity going forward. 

Extra effort and resources are needed to re-establish public and customer trust. Even after years of redoubling efforts to improve and verify new safety standards, the brand still experiences lower brand trust among customers earned prior to the recall incidents.

This hypothetical scenario highlights a major disconnect between executive decision making and valuable food safety information or expertise. This disconnect – or ANY failure to ensure a dynamic approach to FSMA compliance and public safety – can result in crippling damages to the brand. It’s not just about regulatory fines or wasted product. The deterioration of consumer trust can be the downfall of any food brand. 

The Inconvenient Truth

In actuality, the above scenario is no more hypothetical than the many news stories we see today. You may remember the General Mills flour recall just a few years ago. A couple months after the brand first recalled flour products linked to an E. coli outbreak, they had to expand the recall not once, but twice. To make matters worse, the company found itself recalling 250 tons of Gold Medal flour earlier this year in response to Salmonella fears.

As a corporate leader, you need to recognize your food safety program’s importance to the company’s overall profitability and long-term success. If you’re not closely following this critical area and implementing the proper data management solutions to monitor it effectively, this not-so-hypothetical situation could be the one you’re facing down tomorrow, or next month or next year.

When it comes to maintaining the livelihood of your brand, there’s simply no substitute for a proactive approach. For more information about mitigating recalls, access your free, comprehensive Food Recall Prevention Kit.

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