Focusing on risk reduction
Building a business case for automated COA validation. Calculate Your RiskPicture this: A Friday delivery rolls in late. The team skims the certificate of analysis (COA), assuming it’s good to go. But that out-of-spec (OOS) lot? It slips through, and by Monday, food and beverage manufacturers are facing the fallout: wasted product, costly rework, and a blow to brand trust. All from one bad lot that should’ve been caught.
It’s an all-too-familiar scenario in F&B. And a strong reminder of the value of risk reduction.
CHALLENGE
The million-dollar miss
The fallout from OOS materials isn’t just inconvenient, it’s expensive. Recalls alone are estimated to cost brands $10 million on average, not counting wasted product, regulatory fines, customer complaints, and the all-hands fire drill that follows. And the worst part? It’s all preventable.
Automation = risk off button
By digitizing COA-to-spec compliance, you can reject bad lots before they reach the dock. Automation cuts incoming OOS materials by 75% or more—saving time, money, and your team’s sanity.
Don’t just count minutes, count risks
Time savings matter, but the real ROI of automation lies in risk reduction and cost avoidance. These are harder to model but far more valuable long-term.
Recalls can cost millions, even before the reputation damage
From freight and disposal to missed orders and operational chaos, the total impact adds up fast, often far beyond the initial trigger.
The true costs of undetected OOS materials: direct vs. indirect impacts
When an out-of-spec (OOS) ingredient enters production undetected, the financial fallout can be categorized into direct costs (immediate, measurable expenses) and indirect costs (longer-term, often hidden impacts). Understanding both is critical for building a complete business case for COA automation.
Direct costs: Immediate financial hits
- Material & production losses
- Scrapped product
- Rework labor
- Recall execution
- Logistics and disposal
- Labor and coordination
- Facility & equipment costs
- Emergency cleaning
- Equipment damage
- Regulatory & retailer penalties
- Regulatory fines
- Retailer chargebacks
Indirect costs: The hidden ripple effects
- Lost revenue opportunities
- Delayed shipments
- Retailer de-listing
- Customer & brand damage
- Eroded trust
- Social media backlash
- Operational inefficiencies
- Increased QC burdens
- Supplier disruptions
- Stock price & investor confidence
- Market reactions
- Investor perspective
- Insurance and vendor costs
- Insurance rates
- Service fees and rates
SOLUTION
Risk reduction pays for itself
It’s impossible to predict every issue. But AI-driven Intelligent Document Processing (IDP) from TraceGains is the risk management solution you need to help keep bad shipments off your loading dock and away from your production line. With the ability to accurately read and analyze COAs and compare them to digital specs, team members can focus on the issues that need expert human attention.
As part of TraceGains powerful Supplier Compliance solution set, non-conformances and corrective actions are seamlessly tracked and organized, with automated Corrective and Preventative Action tools ensuring smooth resolution and effective cost recovery.
TraceGains Supplier Compliance with IDP lets you break free of cumbersome manual processes and realize real-world benefits:
- Prevent immediate losses from recalls and waste.
- Avoid long-term costs and revenue loss.
- Strengthen compliance with detailed reporting and trend analysis.
- Boost efficiency by freeing teams for higher-value work
CALCULATOR
Quantifying your risk exposure
Total Cost of Failure (TCF) = (Probability of OOS Event) × (Direct + Indirect Costs)
Example for a snack manufacturer:
- 5% annual chance of a major OOS event
- $500K estimated cost per incident (if caught mid-production)
- $1.5M estimated cost if a recall occurs
- Annual Risk Exposure: $25K to $75K per year
Key Insight: Even events with a very low likelihood can justify investment when the potential losses are high.
Interactive Risk Reduction Calculator
How to build your business case
Gather Historical Data
How often do OOS incidents occur? What did they cost?
Map Worst-Case Scenarios
Model recall, scrap, and reputation risks.
Model Risk Reduction Impact
Evaluate and quantify potential risk reduction.
The ROI of intelligent COA automation
Automating the comparison of COAs with specs and the management of resulting non-conformances can have major positive impacts on the business.
Reduce OOS incidents by 75%+ (via real-time spec checks).
Eliminate costly manual comparison (teams can focus on issues and exceptions).
Improve supplier accountability (score carding and performance measurement).