Consider the lowly Class III recall. While overshadowed by the headline-grabbing, health-threatening Class I variety, the economic damage to your operations is anything but lowly.
On May 8, 2012 the State of Wisconsin announced that a large, big-brand processor paid the state $36,908.50 for 24 short-weight packages of franks and lunch meat – that’s $3075.71 per package!
While surely an anomaly for this producer, this is also a prime example of what companies should consider as they look at project budget allocations. In this case, the underweight dogs not only cost the processor the +$36K fine, but also put a ding in their reputation and brand. How much do you think that will cost them in terms of trust, growth and future sales?
Over the years we have seen short fill in school lunch milk cartons kick off an industry wide retraining program, and short weight lunch meat trigger a statewide recall. Although the fines themselves are substantial, the associated costs can easily surpass those considering a company might have to put out the cash to:
- Hire a recall management firm;
- Transport the product;
- Rework or dispose of the offending product;
- Pay additional slotting fees to get back on the shelf;
- And pay overall project management costs related to all the additional work.
When coupled with business disruption, the final tab can easily be pushed into the millions – far in excess of what a typical SPC install runs.
Not only do MAV violations cost serious recall money, but you are giving away product, getting less yield per batch and running with lower overall line efficiency. A proven SPC-based solution is one way to solve the problem as detailed in The Cost Implications of Improving Fill Weight Control.