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From: Food Quality & Safety magazine, June/July 2007

How to Avoid a… Total Recall

Lot Traceability Is the Linchpin of Responsible Batch Management

by Melanie Neumann Gilbert, Esq.

Recent major national and international recalls, coupled with post-9/11 regulatory initiatives, have placed the spotlight on an issue providing all the intensity of a Hollywood drama. The importance of accurate and efficient traceability of our food supply from farm to table has never been more apparent. There has been a surge in the development of systems that seem capable of working magic by generating an incredible amount of product and distribution information by inputting a small amount of data, like a lot code.

Lot-code tracking can help food industry participants meet the many responsibilities they are charged with upholding in return for the privilege of producing and supplying food.

Under the U.S. Bioterrorism Act and a 2005 European Union directive, traceability is required by law. Moreover, companies can protect their brands and reputations and reduce costs and liability by precisely tracking finished goods from their component parts all the way to the kitchen table.

Ultimately, the primary reason for lot traceability is to protect consumer health and safety. By accurately and quickly identifying potentially suspect product and all customers to whom it was shipped, manufacturers, suppliers and distributors are better equipped to warn consumers and retrieve affected product as expeditiously as possible.

The Fundamentals

In its basic form, the lot code is an identifying combination of alpha-numeric characters printed on a product container and case of finished products. Lot or batch codes are also required for all incoming raw materials from suppliers. That way, producers can track each raw material at the door and attach it to subsequent production information in which such materials are used.

The lot code can take different forms, but ultimately must somehow indicate the date – and sometimes even the time – the product was packaged.

The objective of lot-code traceability is to arrive at a total reconciliation of the number of cases of a given product made, all raw materials that went into the product and every location to which that product was shipped.

This goal can be met by using one of many traceability systems. Such systems range from manual processes where personnel must hand-write and catalog every detail to the latest software systems that can spit out any combination of details in a few keystrokes.

The number of products produced in a given facility, as well as the quantity and complexity of ingredients and the sourcing practices for raw materials, are key in determining whether manual or electronic systems will sufficiently meet traceability objectives.

Manual systems may be perfectly adequate to meet traceability requirements for companies that make few products with relatively simple formulas and short shelf life, few customers, and smaller distribution channels. However, for a business that produces 27 varieties of shelf-stable packaged pasta with a one-year shelf life and that is available in thousands of retail locations nationwide, an electronic system is necessary to perform the required backward and forward tracing required by regulation and industry-standard time frames.

Technologies vary greatly in functionality, depth of detail and, of course, in cost. Systems range from integrated warehouse management systems (WMS) to SAP traceability modules. Functionality ranges from tracing the minimum required by law to tracing much greater detail for proactive business purposes and customer specifications.

No matter what the system you must be confident that it will satisfy the numerous drivers that are demanding new traceability responsibilities at each step of the food chain. Test these systems through multiple traceability exercises to confirm that your system can produce the information you need quickly and accurately.

What’s Driving the Need

Pursuant to Section 306 of the Bioterrorism Act, effective for large companies as of December 2005 to the smallest of companies as of December 2006, companies that manufacture, process, pack, distribute, receive, hold or import food must maintain records that identify the immediate previous sources and the immediate subsequent recipients of the subject food.

This legislation was enacted in response to the events of 9/11 to help protect the nation’s human food and animal feed supply in the event of credible threats to humans or animals. To accomplish this, companies must record a lot number, code number or other identifier with respect to each unit or case of finished goods. Similar requirements have been in place in the EU even earlier, since January 2005.

Although not required by law until recently, several companies implemented effective lot-trace processes within their organizations well before legally required in order to address many other business responsibilities. The most significant are:

  • Consumer Protection: Consumer health and safety is the penultimate goal of any food safety/quality program. The Bioterrorism Act was implemented for this primary purpose. By using lot-trace systems, companies can identify potentially adulterated or misbranded product with speed and accuracy and, when necessary, recall suspect product from consumers.
  • Company Reputation and Brand Protection: Lot traceability aids in mitigating company and brand reputation damage in the event of a recall. By tracing lot codes, companies can confidently identify and recall only the affected product, often reducing the scope of a recall or withdrawal to a subset of total production. The ability to limit the quantity recalled in turn often limits media exposure. Without lot codes or other production identification, a manufacturer would have no way of telling “good” product from “bad.” Hence, the company may be forced to recall all product in the market. The amount and value of products recalled could ruin the company’s reputation and the brand. The greater the attention, the greater chance the damage could extend beyond the affected product. Lot codes can help reduce your volume, hence your potential exposure.
  • Minimize Costs: Robust lot traceability processes also help reduce costs associated with a recall. To illustrate, imagine a bread manufacturer who produced 5,000 cases of bread but cannot identify with confidence every product that one contaminated bag of flour went into because it does not use or track lot codes. That one bag of flour may have only truly made its way into 500 cases of bread. But because the company cannot trace that specifically, it will have to recall all products that the flour could have potentially entered since the last clean up or since the earliest that bag of flour could have been introduced into production. Recall costs immediately increase nine-fold in this scenario by having to recall 90% more product than is affected.
  • Minimize Potential Liability: Lot code traceability can help establish third-party responsibility, if the lot trace information reveals that a raw material supplier or co-packer was the source of the recall. Although the manufacturer is still responsible for the recall, at least indemnification from the responsible party may be sought. Your tracking system serves as evidence – a type of “expert witness” – in establishing such nexus to the supplier and ultimate liability.

Traceability Tips

Suggestions for effective lot tracing and thoughts on how they affect recall management:

  • Test your Traceability Limits: It’s easy to develop a comfort zone and a bit of a false sense of security when performing in-house trace exercises. Meeting regulatory and customer timing expectations for trace information is pretty easy for most companies that test one lot code of finished product one step backward to its raw material components and one step forward to the first point of distribution. This is a typical “mock trace” or “mock recall” exercise for most. However, companies are best served if they truly test the limits of their traceability capabilities by using many different complex scenarios in trace exercises. Myriad scenarios should be created where large quantities of raw materials are traced forward into all finished goods, where a finished good is traced backward to all raw ingredients and even to the farm or field and where foreign objects or unapproved substances are found in products prompting need to identify all potentially affected product. And don’t just test your own internal capabilities—test those of your contract manufacturers and suppliers as well. Trace systems must be able to withstand the rigors of complextrace exercises before companies should feel confident their systems can answer when called upon.
  • Use Legible Code Imprinting Methods: Another important decision is how and where the lot code is imprinted on your product. Embossed codes are pressed into the paperboard or carton packaging. Historically, this process brings a higher risk of illegible or partial codes that may expand the scope of your recall by requiring you to recall more products than are affected. From a regulatory agency perspective, a partial code or illegible code means no code so, out of precaution, it must be included in the scope of your recall. The location of the lot on the package is also critical. Lot codes randomly printed on a single package panel within the package graphics are often problematic. Companies should consider using inkjet or laser coding methods. This method in essence “burns” the lot code onto the product packaging, thereby making it more clear and legible to read. Further, many companies use a white “target box” for the lot code or at least an unprinted section of the package, which allows for better visibility. This reduces the likelihood or partial or illegible codes that could increase the scope of a recall.
  • Tracing Variety Packs: More and more, companies are creating variety packs, containing for example, four different flavors of the same product. Variety packs present unique challenges to traceability. Typically, an individual case of each product is opened and commingled into one case of the multiple pack combination. The new multipack is then repalletized under a new code. It’s easy to lose traceability in this process. The tracking of individual products into the variety pack is often a manual process and wrought with likelihood for human error. Companies should assess their current variety pack trace process and periodically audit it thereafter to ensure individual codes are being recorded consistently, correctly, and legibly, and that those records are stored in a secure location and easily accessible when needed.
  • Trace Rework: Use of carryover product, or rework, from the previous day’s production also poses unique risks. Companies must be able to trace the use of rework to perform a complete trace to ultimately determine the scope of affected product. Companies should also ensure that it breaks the rework cycle periodically commensurate with the food safety risk involved in the product (e.g., fresh meats and dairy may break daily due to high risk of microbial contamination; shelf stable processed food may go longer due to lower food safety risks). Hudson Foods is an example of a company that did not break the rework chain. Rather, it continued to carry over product from one day to the next for so long it had to recall all products produced in its Columbus, Neb., facility. That 1997 recall of 25 million pounds of beef was not only one of the largest in history, it also doomed the Rogers, Ark.-based company, which was purchased by Tyson Foods in 1998.
  • Consider Recall Insurance: If your company carries Recall Insurance in the form of Malicious or Accidental Contaminated Product Insurance, effective lot code traceability may also reduce your premiums or in the event of a recall reduce the claim.

Melanie Neumann Gilbert is RQA, Inc.’s vice president of crisis management and general counsel. She can be reached at 630-512-0011 or



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