Recalls that Shocked the Pet World

Pet World

Abstract

Product recalls happening when a product is perceived to have a harmful effect on the consumers. Therefore, the product has to be withdrawn from the market as soon as the complaints surface. These recalls are necessitated by the lack of conformity to safety standards measures. There are dire consequences that come with product recalls. These adverse effects include but not limited to loss of employment to individuals, financial losses for the companies, breakdown of supply chains and business-to-business relations, and the loss of consumer confidence in the products of the affected companies as well as regions. To address the problems of recalls, there are due processes that firms are supposed to follow in communication and investigations. This project will consider and evaluate the problem, process, and outcome of recall of pet feed supplied through Menu Foods Company.

Introduction

Product recalls have been a factor that has engulfed most global supply chains. The complexity of the supply chains and market dynamics affect the operations of businesses, hence, the risk of increased cases of defective products. These recalls typically happen when a product is perceived to have a harmful effect on the consumers, therefore, the product to be withdrawn from the market as soon as the complaints surface (Kumar & Schmitz, 2011). As such, the recalled products have to be confirmed to have fallen short of agreed safety standards, thereby containing contaminants that risk the health of the consumers. When verified, the company that was involved in the supply of the product has to ensure that the consumers are adequately compensated, and in some case, get a replacement without incurring extra cost. Consequently, the companies involved in the supply chain for the recalled products suffers financial losses and may be forced to close down in some circumstances.

Problem Evaluation

In the case study presented by Bapuji (2011), consumers had bought feed for their pets from Menu Foods Company in Canada. After using the products, the company started getting complaints from customers that their pets were suffering and even dying of kidney failure. An investigation by experts showed that there was a component, melamine, in the feed that compromised quality. Further assessment of the origin of the product showed that a Chinese company, Xouzhou Anying, was intentionally contaminating the feed for increased profits. Additionally, the supply chain had an unauthorized supplier, Binzhou Futian, who actually added melamine to the feeds.

The main issue was that consumers were unhappy that Menu Foods was selling harmful feed for their pets. Nevertheless, the company never accepted responsibility for the defects and called for a trace of the original company involved. This action had already tarnished the brand names of the retailers involved in the supply of the feed. Some of the brands involved had a global reputation, such as Colgate, Procter & Gamble, Nestle, and Del Monte. Despite the fact that the retailers were not directly involved, they were affected by being involved in complex supply chains that lacked a clear system for checks. Every product should have clear labels of the ingredients, which forms the basis for consumer choices. It was the responsibility of both ChemNutra and Menu Foods to test the feed for the prescribed components prior to releasing the product to the market. More so, the retailers were not concerned about the authenticity of the product they sold. They failed to trace the logistics of the product to Menu Foods and did not compel the company to offer detailed information about the ingredients of the products. In fact, the retailers ought to have been offered sufficient information to enable them to handle potential concerns from consumers. Besides retailers’ failure, Xouzhou Anying did not adhere to the terms of contract with Menu Foods. This was evident when the unauthorized company, Binzhou Futian, was implicated for the supply of melamine to Xouzhou Anying without prior knowledge of Menu Foods.

Another major problem was that Menu Foods failed to inform the tax authorities of the kind of products they were outsourcing from ChemNutra. Although it was generally known that Menu Foods supplies pet feed, the company evaded inspection of the product, thereby creating the crisis. Additionally, the Foods and Drugs Authority (FDA) involved ChemNutra in Las Vegas in import irregularities so that they could evade taxation as well as inspection. This was evidenced by the fact that all the imports for the wheat gluten were made through a textiles company called Suzhou Textiles in collusion with Xuzhou Anying. These irregularities would have been avoided if the import inspection authorities were keen to verify that all the products described in the shipment documents are the same products inside the transit containers. Therefore, though it would be plausible to believe that the Chinese companies were guilty of the poisoned pet feed, the blame also partly lay with the government authorities, ChemNutra, Menu Foods, and the retailers. The responsibility for recalls should be borne by every company involved in the distribution of the compromised product (Magno, 2012).

Process Evaluation

Either the final supplier of the product to consumers can implement the recall process or the government authorities mandated to ensure that the consumers are protected from defective and harmful products. In the case of Menu Foods recall, the company began by informing the Foods and Drugs Authority that the consumers were raising concerns about the increasing death toll and illness of cats and dogs. Then public announcements were made requiring all those who had bought the pet feed to return it to the respective retail stores or directly to the Menu Foods. Ideally, this is the first step, and the recall efforts can be made by noting the batch and serial numbers of the products. This step is essential in doing experiments and ascertaining whether the whole supply batch or just a proportion of the recalled products were unfit for use. Once the consumers submit the recalled products, they are either reimbursed or offered replacements.

Menu Foods contacted the FDA and research laboratories to investigate to test for the cause of the complaints as well as trace the origin of the melamine found. The investigations were successfully conducted revealing that the wheat gluten contained the poisonous component, which was five times cheaper than other safe and acceptable protein supplements. Further probe indicated unearthed the importing irregularities and involvement of an unauthorized supplier in the supply chain.

However, the recall was not as timely as was supposed since the death toll rose with time before the recall was done. The process was slowed down by the lack of automation that is essential for tracking inventory order history, and a detailed trace of the complex supply chains. Nevertheless, Menu Foods was right to seek collaboration with researchers, FDA, and other companies in arresting the situation before more damage was done to the consumers.

Outcome Evaluation

There are dire consequences that come with product recalls. These adverse effects include but not limited to loss of employment to individuals, financial losses for the companies, breakdown of supply chains and business-to-business relations, and the loss of consumer confidence in the products of the affected companies as well as regions. According to Chen, Ganesan, and Liu (2009), investors may also stop funding some of the private companies implicated in cases of product recalls.

In the case of Menu Foods, Canadian consumers and in the USA were made to believe that the fault solely lay on the Chinese firm contracted for the supplies. Consequently, the Chinese government initially did not accept the blame, but mounting pressure forced it to react. There was a crackdown on the Chinese firms and officials who were involved in the malpractice through compelled employee lay-off, closure of some of the factories, and the execution of the chief of drug and food regulator. Although it was not clear whether the government had instituted strong policies to curb manufacturing malpractices, investigations revealed that it was common practice in the country for manufacturers to use substandard, cheap, and unsafe components.

The relationship between China and the North America trade partners soured. The global outcry was inadequately addressed, leading to losing of consumer confidence in Chinese brands. Most of the companies involved in the complex supply chain in the US and Canada suffered tainted brand images, thereby leave them no option but to improve their product checks to ensure quality for their customers.

 

 

References

Bapuji, H. (2011). Not Just China: The Rise of Recalls in the Age of Global Business. Basingstoke: Palgrave Macmillan.

Chen, Y., Ganesan, S., & Liu, Y. (2009). Does a Firm’s Product-Recall Strategy Affect Its Financial Value? An Examination of Strategic Alternatives during Product-Harm Crises. Journal of Marketing. 73(6): 214-226

Kumar, S. & Schmitz, S. (2011). Managing Recalls in a Consumer Product Supply Chain – Root Cause Analysis and Measures to Mitigate Risks. International Journal of Production Research. 49(1): 235–253

Magno, F. (2012). Managing Product Recalls: The Effects of Time, Responsible Vs. Opportunistic Recall Management and Blame on Consumers’ Attitude. Procedia – Social and Behavioral Sciences. 58: 1309 – 1315

 

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