How to Manage a Recall

As Blasgen explains, the central goal in a recall is to figure out how much of the bad product was manufactured and where it went.

To do that, he recommends starting by querying your manufacturing execution system, which keeps data on production lines, product batches, ingredients and conditions inside the factory when products were made. ConAgra, according to its Web site and other corporate communications, uses a mix of Manugistics and SAP software in its factories to schedule and monitor manufacturing runs.

Next, Blasgen says, IT managers should pull shipping records from their transportation management systems. (Kewill Ship and HighJump Software are typical systems.) Search for date, lot or batch codes to figure out which distribution centres or customers were sent the suspected bad product, Blasgen says. Then match that information against data in the distribution centres' and customers' receiving systems.

Those are the steps Blasgen recommends. But most supply chains are not configured to allow a CIO to follow them. "Do you see what's happening?" Blasgen asks. "Multiple systems with their own ways of querying and no magic 'recall button' to press for any of this."

Fixing a Hole Where the Rain Leaked In

ConAgra had streamlined its supply chain with its $US300 million "Project Nucleus" started in 2003 and mostly led by Blasgen. The company closed factories, consolidated distribution centres and standardized on SAP enterprise resource planning software. Blasgen says that any company that reworks its supply chain to be more efficient will make and move products faster. That's good when the products are good and bad when they're not.

Steve David, the former Procter & Gamble CIO, notes the irony. "You take the bad with the good," he says.

In financial statements filed late last year with the Securities and Exchange Commission, ConAgra claims savings of $US275 million so far from its supply chain revamp. That pot has helped offset the $US78 million ConAgra reportedly has spent to date on the recall - costs that include customer notifications, installing and staffing a toll-free hotline, consumer refunds, and collecting and disposing of bad peanut butter.

Another $US15 million to $US20 million went to overhauling the Sylvester factory. ConAgra bought a new peanut roaster, upgraded finished-product testing procedures, built new factory walls and designed other ways to keep peanut dust and raw peanuts away from already roasted peanuts (heating to 74 degrees kills salmonella). It also put up a new roof and installed a new sprinkler system. Why?