No company intends to need to pull its products off the shelf or warn customers that they might not have gotten what they intended. Unfortunately, it happens to even the best companies. Having the right systems and processes in place to mitigate these unfortunate moments can make the difference between a blip on the radar screen and a full-scale supply chain, business, and branding catastrophe.
“We often say there are three things that are certain: death, taxes, and recalls. It’s not so much a matter of if but when,” said Mike Good, vice president of marketing and sales operations for product recall specialist at Stericycle ExpertSolutions, a reverse logistics service provider. “A poorly handled product recall can devastate a company’s market share, brand, and bottom line.”
In fact, product recalls are quite common. In 2016, there were more than 3,400 recalls across industries (including food and beverage, pharmaceuticals, medical devices, consumer products and automotive), according to Stericycle, which tracks such statistics in its Recall Index. “That’s an average of 9.4 recalls per day, making 2016 a record breaking year,” Good added.
In the electronics industry, batteries and power sources such as power cords, are the biggest culprit, accounting for 63.6% of recalls in the first quarter of 2017 and 79% of all recalls last year. “Lithium ion batteries add a layer of complexity especially with transportation,” Good said. “Shipping them requires highly specialized boxes, packing tape and labels and all of that requires a whole other level of effort.” However, some recalls pose less hazards but are mandated by regulations (such as a product that isn’t labelled according to the standard).
“With the right planning and procedures in place, a recall can be up and running within 24 hours,” Good said. Good outlines five elements of a comprehensive and effective recall process:
- Preparation: Every organization should create an individual recall plan based on a variety of factors including proven best practices, the regulatory environment of the particular market, company size, and geographic location. “This step forces the company to do a walkthrough of every step in the process,” Good said. “We would recommend someone be brought in as product lead and steering committee and be nimble in their approach.” The planning team should include representation from functions throughout the organization including supply chain, logistics, shipping and receiving, inventory control, data analytics regulatory affairs, and public relations. Further, the company should run a mock recall to figure out any potential glitches.
- Notification and response: Organizations need to understand how to ramp up staffing in a call center in the wake of a recall. One option is to have a third party manage calls. In addition, the organization needs to make sure that it has access to web based tools to help get the word out to customers and give them access to needed information. “Mismanaging this step can truly jeopardize health and safety, ratchet up consumer anxiety, and erode brands,” said Good.
- Recall retrieval: In this third step, the organization removes affected products from store shelves, the supply chain, and consumer homes. To succeed in this step, organizations need solid systems in place to track both where products have been shipped and where they reside along the supply chain. “Most companies lack an effective way of doing this,” said Good.
- Processing, remedy & disposal. “Removing, processing, destroying products is very complex and governed by strict regulatory statutes,” said Good. During a recall, organizations need to create top-not security and return integrity protocols. They must also be prepared to handle a surge of products coming back. “You might have two million units come back today and next week 10,000,” explained Good. “You need to manage that throttle control through the recall lifecycle and get visibility through labelling and tracking mechanism.”
- Sustainability: Organizations should also look at creating systems to recycle and reuse elements of the product after recall. “In this fifth stage, we drive for minimal impact on the environment,” Good said.
Has your company faced a product recall? Let us know how it went in the comments section below.