Monday, June 18, 2012
More Than Cars Get Recalled
RedPrairie and Gateway Research surveyed 130 consumer product, life sciences and food and beverage companies to see how well prepared they are to track, trace and recall products and report 72-percent were not confident in their companies’ recall and tracing abilities.
Only 51-percent of the companies surveyed believed they could initiate a recall within hours while almost 70-percent were very concerned about coordinating recalls with suppliers and distributors and more than half worry about their ability to find and isolate items within their own supply chain.
IDC Manufacturing Insights practice director Simon Ellis says a recall costs an average of $10-million.
86-percent of the executives surveyed recognized the seriousness of their financial liability if a product recall is initiated and even more if something goes wrong with the recall itself. Another 25-percent recognized potential brand reputation damage if they have a recall and it doesn’t go well.
We’ve assisted with major product recalls, and when the companies involved are committed to doing the right thing, taking responsibility quickly, and reacting fast, the long-term damage is minimal, or almost non-existent.
We assisted with a recall a few years ago and the only publicity was a trade publication article after it was over and it was about how well the companies involved had handled it.
The potential was for millions of dollars in financial liability. The manufacturer of one component of a major household appliance discovered one of their suppliers had substituted a defective “washer” that had been built into half-a-million components that they delivered to their customers. Their customers built the final product and had sold and installed almost all of those items, when the original parts maker discovered the defect and called us.
The end user product would likely fail in a few months.
We helped them develop a communication strategy to alert their customers of the problem and a communication plan for the end user manufacturer to use to notify their customers. Meanwhile our client went to three shifts a day, seven days a week, to make replacement components, and committed to pay for the cost of delivery and installation of the replacement parts.
There was cooperation up and down the product chain and there was no evidence any of the original appliances failed before the homeowners were notified and scheduled their repairs.
We wrote a few weeks ago about the hazards of the supply chain. This is just another link in that chain.