Total Recall

In February, food manufacturing giant Mars was forced to issue a recall of its products in 55 countries after plastic was found in a Snickers bar purchased in Germany. Following this unpleasant discovery, the company traced the piece of plastic back to a factory in the small town of Veghel in the Netherlands; the plastic came from a protective cover used in the manufacturing process there. Mars could not guarantee that other products were not affected by the contamination, and the company voluntarily recalled all the goods manufactured in that particular plant. The incident serves as an important (and expensive) reminder of the crucial role transparency plays in the supply chain.

A Chocolatey, Costly Mistake

The recall was the first of its kind from the Veghel factory, which has been in operation for over 50 years. Experts expect consumers to be more reluctant to buy Mars brand chocolates while the recall remains fresh in their minds, and the company will endure additional losses because of repetitional damage. As a result, Mars could lose tens of millions dollars, with a projected $2.5 million loss in sales alone.

Nonetheless, the cost could have been significantly greater were it not for Mars’ impressive control of their supply chain; this allowed them to swiftly zero in on the exact factory in which the contamination occurred, “meaning the recall only affected the products manufactured there over a small time period.” This precision is all the more impressive in light of the company’s incredible size (with 29 brands of chocolate and $33 billion worth of sales last year, Mars is one of the world’s biggest food companies).

Lessons Learned

Mars’ supply chain management systems allowed the manufacturer to quickly trace the origin of the offending candy bar, which in turn meant the recall could be narrowed down to only those products produced at the Dutch facility. Had Mars not had such robust traceability, the recall likely would have affected a much wider range of products, manufacturing dates, and areas of distribution — beyond the financial loss, the damage to the brand’s image and credibility would have been immeasurably greater (remember the Tesco horsemeat scandal of 2013?).

While Mars’ response demonstrated how maintaining a transparent supply chain can help identify issues during the production process, it also brought to light the company’s inability to accurately trace the chocolate after it left the plant. It was because Mars could not determine if the incident was limited to only one bar that the recall affected 55 countries.