Don’t let the label get in the way: how to avoid product recalls and react fast to regulatory changes

The year 2022 was record year for product recalls in regulated industries with US recalls reaching an all-time high of 1.5 billion impacted units and, 10,545 product recall events across Europe, according to analysis by brand protection and recall risk experts, Sedgwick. When drilling down to the detail many recalls were due to errors on labels and packaging.

These recalls were exacerbated by certain external pressures – such as short notice ingredients changes due to supply chain shortages. The list of FDA recalls for 2023 so far shows that this results in a large proportion of recalls from “undeclared ingredients”, as some ingredients are substituted into batch recipes but not reflected in product labelling.

Other challenging factors include the spawning of more governance agencies, who are responsible for regulating everything from pharmaceuticals and consumer-packaged goods to food – with over 5 in the UK and over 50 in Europe. In the US alone there are 47 parts of code related to labelling and packaging of manufactured products, with 7,500 operational restrictions for manufacturers to comply with. As a result, a manufacturer selling internationally – even if they only produce a small range of products– must ensure that every package sold meets regulatory guidelines for display of ingredients and additional product marking in every country. 

From a consumer perspective there is also the requirement to show other information on packaging, to support the ESG agenda where nutritional values, air miles, and information on de-forestation are needed for consumers to make healthier and more sustainable choices.

A single source of labelling truth

In our opinion, a key way to limit recalls is to introduce a single source of truth at the labelling and artwork stage of product manufacturing. As stated by Gartner®, "Organisations often struggle with poorly managed artwork and labelling practices, which lead to costly mistakes, delays and poor customer experiences. Labelling and Artwork Management (LAM) best practices involve utilising the advanced tools from the initial project brief throughout all development stages and during the final package/labelling conversion and fulfilment.”*

“Supply chain technology leaders seeking to accelerate LAM digitalisation should partner with IT and software providers to invest in enterprise labelling to increase capabilities that elevate traceability, manage costs, harmonise processes, ensure compliance and generate audit logs. Use enterprise labelling to trace all products from the plant to final use."*

Put simply, LAM Systems are vital for businesses to scale up labelling quickly, while maintaining correct governance, traceability, and accuracy. This minimises the chance of recalls due to labelling error, but also aids auditing and course correction if a recall is required.

There are four specific areas where labelling and artwork processes contribute to product recalls, but they can be managed more effectively with a Label and Artwork Management (LAM) solution.

First: Direct links to ingredient databases for greater product traceability

Errors such as unclear ingredients, out of date databases and manual adjustments can all lead to significant disruption on the manufacturing line. This can be a critical issue in highly-regulated industries involving perishable goods – any delay in pharmaceutical or food & beverage manufacturing can have an immense impact on throughput, cause unnecessary costs or worse, trigger a recall.

A LAM solution provides a single source of truth linking to a master ingredient database. When the database or recipes are updated, the system should automatically check for mistakes upstream and early in the manufacturing process, allowing manufacturers to mitigate their impact as early as possible.

Manufacturers can also control who views important ingredients lists – less eyes means less potential for compromising recipe leaks. LAM Vision Controls can allow manufacturers to maintain a level of secrecy around product ingredients and reduce the potential for sensitive data to be leaked. These tools also supplement action tracking by giving different stakeholders power to sign off different briefs, templates, information, and final labels. This allows each component of a singular final artwork to be completed in the most timely, traceable, and secure way possible.

Second: Localisation and product rules built in for regional compliance and security

Mergers and acquisitions, or expansion of selling product lines into new geographies, are all business scenarios where manufacturers must rapidly apply new labelling standards across thousands of product lines. But this increases the chance of labelling error and subsequent recall risk.

This is where an LAM rules engine adds an extra layer of error safeguard. The system hosts real-time information about local regulations plus a reconfigurable label design interface to match regional differences. These can include different date configurations from UK to US labels, or local regulatory changes in the display of certain information – such as the requirement for Northern Irish imports to adhere to EU regulations while Great Britain works on its own system. The rules engine is educated on these changes and supports the manufacturer to implement them across impacted product lines.

LAM in action

Highly-successful medical device company Teleflex has been using the Kallik LAM solution to seamlessly expand its significant global footprint – both in terms of physical locations and targeted sales markets, since 2015. Its design and manufacturing facilities spread from South America to Asia, having grown into the business via a series of mergers and acquisitions. Teleflex have implemented a project to establish a Global Labelling System, which has streamlined operations and centralised asset management to try and completely eliminate product recalls – despite the operational complexity of certain business acquisitions. This has been achieved, recalls have not occurred since the LAM system went live. A tremendous achievement for any company manufacturing complex products on a global basis.

Third: Scalability to deal with regulatory changes

When new regulations come into play, businesses need to be confident in their ability to ramp-up label production and comply accordingly. It could take 10 humans weeks to change 1000 labels, but a comprehensive LAM system allows the printing of thousands of labels from just one editable template and an automated process to update all the impacted labels.

For one Kallik customer that operates in the cardiovascular and endovascular medical device sectors across 168 countries, this is a reality. The company has transformed its labelling practice by introducing standardised, readily changeable formats to alter templates – printing approximately 700,000 labels from one template. Operational agility and the ability to rapidly adapt to new regulations has been critical to maintaining their position in the MedTech market, generating $750 million of revenue per annum despite the ongoing tough economic conditions.

Fourth and final: Mitigating the impact of a recall

Recalls are costly when they occur, losing manufacturers precious time and money. With the global economy and supply chain shortages exacerbating the impact of recalls, manufacturers need access to a digital repository to quickly zero in and audit impacted products and labels.

An LAM solution should hold an electronic record of every action in a global reporting log, to isolate individual batch numbers when recalls occur. No matter how or why the recall has been caused, manufacturers can track and trace the issue back to its source and isolate the batch to issue a more targeted recall – reducing the amount of product lines that need to be recalled.

When integrated with an ERP System, further traceability can be found through digital signatures against FDA guidelines, which audit lock manufactured products to capture the final sign-off of batches. With 80% of labelling software operating on premise, disparate systems can complicate the identification of who, what and where has caused the recall – but a single LAM system bypasses this siloed software to offer all labelling data in one easily accessible place.

LAM holds the key to managing recall risk

Whether manufacturers are looking to explore new geographies or expand product lines, there will always be a growing list of regulations to adhere to and so an increased threat of non-compliance and recalls.

But they are doing this at a time where there is an increased need to swap ingredients due to short-notice supply chain issues, and a strengthening customer ESG agenda for packaging. It has never been more important for manufacturers to deploy a comprehensive LAM system. In order to maintain accuracy at scale, save time implementing required changes, and mitigate the impact of recalls that occur.

*Gartner, ‘Market Guide for Label and Artwork Management Software Applications” February 15, 2023.

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