A food recall is when a product is removed from the market or; a correction is made to the product because it is either defective or potentially harmful The mere word “recall” can send a shudder all the way through a company, from receptionist to the executive team, to the boardroom and shareholders. Recalls are costly and risky and can threaten the existence of a company.

1. “A food recall is when a product is
removed from the market or; a correction
is made to the product because it is either
defective or potentially harmful”
Understanding Recalls in the Food
and Drug Industry

2. Recalls in the Food and Drug Industry
What is a Recall?
A food recall includes any corrective action by a company needed to protect
consumers from potentially adverse
effects of a contaminated, adulterated,
or misbranded product. A recall is a
voluntary action, and the recall decision
is made by the company management.
If the company does not initiate a recall,
the government agency responsible for
the particular product category may
request that the company do so. Recalls
are conducted by industry in cooperation with federal and state agencies.
Purpose of Recall
The basis of the recall concept depends on a company’s food safety policies,
ethical understanding, regulatory requirements, and financial constraints. A
recall protects not only the consumer, but also the company. A smooth recall
process can save a company’s name and prevent further damage due to
negative publicity. Destroying, replacing, or altering the product are the three
main corrective actions. A recall plan should strive to achieve the following
goals:
Protect consumer health
Comply with existing rules and regulations
Minimize the cost of the recall
Regain and improve the company’s reputation
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 2 of 8

3. Recalls in the Food and Drug Industry
Recalls Classification
Class I - There is reasonable probability that eating the food would cause
serious, adverse health consequences or death.
Example: Meat contaminated with L. monocytogenes; E. coliO157:H7 in raw
beef; allergens such as peanuts or eggs (not listed on the label).
Class II - There is a remote probability of adverse health consequences from
eating the food, or if the resulting condition is temporary or medically
reversible.
Example: Presence of FD&C Yellow #5 dye in candy; presence of dry milk, a
Class II allergen, as an ingredient in sausage without mention of the dry milk
on the label.
Class III - There is no probability that eating the food will cause adverse
health consequences.
Example: Mislabeling the product. Lower weight products than shown on
the package label or improperly labeled processed meat in which added
water is not listed on the label as required by federal regulations.
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 3 of 8

4. Recalls in the Food and Drug Industry
Role of Government Agencies
Even though a recall is a company management decision, a government agency
can force the company to recall potentially misleading and/or hazardous
product.
Two government agencies, the Food
and Drug Administration (FDA) and
the U.S. Department of Agriculture
Food Safety and Inspection Service
(USDA FSIS) share regulatory
responsibility for food product
recalls. Although all recalls are
voluntary, these agencies may ask
the company to initiate a recall.
To date, no company has ever
refused a request from these
agencies to recall a potentially
unsafe or hazardous product.
However, if a company refuses to recall a product, the FDA and the USDA FSIS
have legal authority to detain the product and to stop operations for good
reason if the product constitutes a danger to public health.
The products under the jurisdiction of these two agencies differ. The FDA is
responsible for domestic and imported foods. The USDA FSIS is responsible for
meat and poultry. As an exception, responsibility for eggs is shared by the FDA
and the USDA
On February 24, 2010, FDA launched its Advancing
Regulatory Science Initiative (ARS) building on the
achievements of existingAgency programs, groundbreaking
efforts to transform the way medical products are developed,
evaluated, and manufactured.
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 4 of 8

5. Recalls in the Food and Drug Industry
Recalls - When the Worst Happens
According the Centers for Disease Control (CDC), food-borne illnesses cause
about 300,000 hospitalizations and 5,000 deaths every year in the United
States [source: CDC]. Common causes are outbreaks of bacteria such as
salmonella and E. coli. It seems every time the public starts to regain trust in
food handling safety, a new story breaks about another massive food recall.
These outbreaks are not only blows to victims' health, but also the economy. In
the United States, the economy losses about $7 billion every year due to these
outbreaks [source: Washington Times]. The recall costs, which include getting
food off shelves, handling lawsuits, revamping plants and repairing public
relations, can be gargantuan for companies. And that's not counting the
tainted reputation and loss of sales that can be difficult to monetize.
A salmonella outbreak in 2007 resulted in a 100% recall of Peter Pan peanut butter
In early 2007, consumers heard that they should stop buying and eating the popular Peter Pan brand
ofpeanut butter. Apparently, an outbreak of salmonella had
been linked to the product. When they discovered it, the
company that made this peanut butter, ConAgra, engaged
in a rare and massive 100% recall of the product.
The outbreak caused more than 600 cases of salmonella but
luckily, no deaths. ConAgra spent around $78 million on the
recalls [source:Nash]. These funds went into not only finding
and getting rid of the products, but also notifying customers
and implementing a toll-free hotline for consumers to contact
the company. On top of shelling out this money, the company
missed out on approximately $55 million worth of lost
sales(Source:Hughlett). ConAgra then poured another $15 to
$20 million into renovating the responsible plant.
The mere word “recall” can send a shudder all the way through a
company, from receptionist to the executive team, to the boardroom
and shareholders. Recalls are costly and risky and can threaten the
existence of a company.
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 5 of 8

6. Recalls in the Food and Drug Industry
The Tragedy of Foodborne Illness: Much Is Preventable
Food safety recalls are not predictable, they can happen at the best of times,
or the worst of times. At any given moment, food companies must be able to
quickly and effectively recall products that have been deemed unsafe for the
market. How a company responds to these situations is critical; failure to
handle a recall successfully (either voluntary or mandatory) can have serious
economic and legal consequences.
It is becoming critical for food companies to have the proper
Recall Management processes in place.
Unfortunately, few food
companies today are ready
to handle a recall, and are
putting their company at
risk.
This is not to say that all food
companies must have end-toend food safety ERP or recall
management systems. In fact,
there are more food companies running on spreadsheets and manual paper
processes than on industry-specific ERP systems. However, as these companies
grow, as their business processes become more complex, as top retailers
become more demanding, and as food safety protocols like GFSI and SQF keep
increasing process standards the need for automation and ERP systems grows.
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 6 of 8

7. Recalls in the Food and Drug Industry
The 4Variables of the Food Industry and ERP Functionality
Quality Control
Tracking the quality of your products from your growers and suppliers tothe
receiving dock, through the production process and to shipment is critical to
your business. SAP Business One (Food-ERP) lets you easily manage your
quality control system with built-in features to help you assign grades,
manage testing procedures, set-up auto-hold procedures, block failed lots
from shipment, and increase inventory visibility, all vital to optimizing your
operations.
Quantity
Any given day, food processors receive directly from farms or commodity
processors and are required to adjust production to what is actually received
each day, including the quality factors mentioned above. Having a
forecasted demand for the week for example.
Expiration
Having inventory tracked not only by LIFO or FIFO, but also by FEFO (First
Expired First Out) is critical. This, along with an allocation system as part of
order management, is critical to ensure the right product and code dates are
going to the right customers. This saves the processor not only in returns,
but also reduces the need for selling product below market due to expiration
dates.
Cost
Can vary monthly, daily or weekly depending on the ingredient. Commodity
costs change daily and having an ERP solution that can manage various
costing scenarios, production planning simulation based on cost and variable
recipes that allow for substitutions, allow food and beverage manufactures
to be nimble and make day to day changes to minimize cost and maintain
margins and prices change.
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 7 of 8

8. Recalls in the Food and Drug Industry
About CeleriTech
CeleriTech is a certified SAP Partner. SAP Business One is the world leading
business management software for small and medium-sized companies.
CeleriTech is focused on delivering integrated business technology solutions
tailored to your needs.
Our solutions fit any industry sector and are based on leading edge
technology using the best business practices. We have offices in Miami,
Venezuela, Colombia and Peru, with local resources able to service and
support at a local level in these countries.
We can help you:
Minimize risk of losing customers’ trust by professionally managing a
possible recall of a defective batch
Minimize risk of non-compliance with food regulations
Enable effective batch-specific returns processing
Monitor materials planning, sales and distribution, procurement and
production
nd
3785 NW 82 Ave, Suite 110, Doral, FL33166
786-331-1281
www.celeritech.biz
Page 8 of 8