Global Logistics and Supply Chain Strategies - May 2008 - (Page 36)

bers and expiration dates. It also will be useable on hard-to-mark products like fresh foods, jewelry and do-it-yourself hardware products, according to GS1. “Basically, DataBar is a way to stack multiple linear barcodes together into one symbol that holds more information in a smaller area,” says Rasmussen. “It has characteristics of both 1D and 2D barcodes.” Jan. 1, 2010, has been set as the date for all trade item barcode scanning systems to achieve compatibility with GS1 DataBar barcodes and the GS1 Application Identifier System. By setting a 2010 compliance date to support the new symbology, GS1 “is trying to migrate everyone over to DataBar,” Rasmussen says. “Then, manufacturers can put information out there that can be collected in a natural fashion without really adding costs for retailers and others who handle the product.” Getting It Back Once product is located, it’s time for notification and logistics to come into play. Customers and consumers have to be notified about the recall and given options for returning the product for validation, credit and disposition. This is another area where event management capabilities are helpful, says Kozenski. “Using event management, you can send email or page trading partners to relay pertinent recall information.” For its retail customers, RedPrairie also can deactivate the product’s barcode in the point-ofsale device. “We can actually turn off an item at the cash register within minutes of getting a recall notification so that it can no longer be purchased,” he says. When an event happens, product typically has to be pulled immediately, says Larry Hruska, president of pharmaceutical services at GENCO Supply Chain Solutions, Pittsburgh. “We have processes in place where we can get a mailing out in a very short period of time.” In the case of pharmaceutical customers, GENCO may notify as many as 65,000 pharmacies and physicians or go all the way down to individual consumers, he says. “All the manufacturer has to do is plug in the name of the drug and lot numbers that are affected and any other specific information on the recall. Everything else is set up ahead of time and is ready to go.” Typically these notifications include a business reply card that pharmacies or other recipients can use to notify GENCO of the quantities that will be returned. “We compare what the pharmacy says it is returning with what actually gets returned and put all of that in our reporting to the manufacturer,” Hruska says. These reports make it much easier for the manufacturer to complete its required reports to the Food and Drug Administration. Highly controlled substances receive an extra layer of security. “A pharmacy has to notify us of exactly what it is sending back because we have to complete a DEA [Drug Enforcement Agency] form,” Hruska says. “This is then sent to the pharmacy with a tamper-resistant bag that it uses to send the product back. The bag has an RFID tag, so when it comes back through a receiving line, we read it and can segregate that product immediately.” Leading companies typically are prepared to handle recalls as part of their existing reverse logistics program, says Tim Konrad, president of reverse logistics at GENCO. “Most of the larger companies that we deal with understand that recalls are not an anomaly anymore but need to be thought of as a regular part of the business that has to be engineered and planned for in the same way that they plan for other risks,” he says. “If they are able to demonstrate a successful and efficient reverse logistics process, they will be a lot better off when they need to demonstrate compliance, whether to customers or regulators.” For these companies, “product flows back pretty much as a normal course of business, except that the affected SKUs have a new disposition, which usually is destruction,” he says. Companies that lack a formal reverse logistics program are at a disadvantage and face the biggest challenge in the event of a recall, because “then it becomes pretty much a large fire drill,” Konrad says. Konrad describes a recent recall for a food manufacturer in which GENCO was involved. “Product flowed back into the retailer’s reverse program that we manage and we physically showed proof of destruction, which is what the manufacturer was looking for. So in this case a manufacturer and retailer jointly worked together to make the recall as painless as possible.” Record-keeping also is important in verifying that all recalled product has been returned or accounted for, says Kozenski. “It’s not all track and trace, but also confirmation and verification that product is returned and disposed of.” Moreover, those returning products typically have to be given credit or a replacement issued, which adds another level of accounting and record-keeping. Sometimes the logistics process can be improved by consolidating both the outbound delivery of a new or replacement item with the inbound pickup of the old item, says SEKO’s Reimer. “This essentially cuts transportation costs in half because otherwise there would be two trips involved. We work to consolidate that process,” he says. Savings can also be achieved in many situations by recovering pieces and parts that might not be part of the recall and that can be reused, Reimer says. Testing might be required to see exactly what kind of condition the product is in, he says. If disposal is indicated, that typically is done through a certified scrapping process where the manufacturer gets a certificate of destruction. “Other times we can recover some parts so the manufacturer doesn’t lose the full value,” says Reimer. Recall Avoidance “The best recall is NO recall,” says Counihan, and the best strategy to achieve this goal is to have rigorous quality assurance programs that prevent faulty products from reaching the market. “Quality inspections need to be enhanced and risks reevaluated continuously,” he says. “Every time a company makes changes to a product line or to a source of supply, it needs to identify where the risks of a recall might be and take appropriate preventive action.” “We really need to think back to the TQM philosophy of the ‘60s and ‘70s,” says Iyer. “The mantra then was that you can’t inspect quality in, you have to build it in. That’s still true.” Avoiding recalls needs to start at the R&D and design phase, says Sven Denecken, vice president of ERP market strategy at SAP. “Today, when you design something you had better look not only at the costs but also at a supplier’s ability to meet all compliance requirements. It requires a very collaborative approach.” SAP’s best-practice templates for different industries help companies establish manufacturing practices that ensure that quality and compliance requirements are embedded into the process, as well as enabling visibility and collaboration, he says. “At SAP, our primary focus is to enable companies to avoid recalls to begin with.” TradeStone, Gloucester, Mass., also 36 MAY 2008

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Global Logistics and Supply Chain Strategies - May 2008 Contents Editorial GL and SCS Exclusive Fast Forward Up Front Cover Story: 'Be Prepared Is Motto that All Companies Should Follow When It Comes to Recalls Here and There 1+1=One Opinion Can't Happen Here Industry Voices

Global Logistics and Supply Chain Strategies - May 2008

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