Planning for a product recall
If News 5/2015 Liability. When something goes wrong with a product in a way that represents a potential risk of causing injuries, a product recall can be necessary. Recalls are typically related to a specific group of products. Foods and beverages, toys, electrical appliances, cars and car parts have all frequently been subject to recalls but virtually all products can be subject to a recall.
If offers a comprehensive recall wording. Part of the insurance contract with If is access to a hotline with crisis consultant assistance that can assist and give valuable advice when making decisions about the actual recall.
Risk Assessment, good quality procedures, insurance coverage and crisis consultants are important considerations in the risk management process but can however not eliminate the risk of having to recall a product. That is why it is essential to have a plan for how to act in case of a recall. Recall plans should always be tailor made to a company but there is a couple of elements that can be relevant to consider when drafting the plan.
How to get started with recall planning
First, form a Recall Team. The Recall Team will be responsible for making the recall plan, updating it regularly (e.g. once or twice a year), test the plan via mock recalls and coordinate an actual recall.
The recall team can consist of the CEO and representatives from:
- Quality assurance
- Distribution/ Marketing
What to consider in what stages
It can be constructive to consider the process and all the steps of a recall through and make as many preparations as possible ready in advance.
1. Identify the defect and the level of risk
The Recall Team needs to find out:
- What is the defect?
- What will be the consequences of the defect, and what is the risk for the customer/owner?
- How many products are affected?
- Where are the products located?
- Who is the user?
The relevant sources of information to answer these questions need to be specified in advance in the recall plan or in an endorsement to the plan. This includes contact lists of production managers, sales & marketing personal, laboratories/testing facilities and other relevant parties as well as information on where to find databases of suppliers and customers.
2. Prepare for initiation of the recall
Depending on the result of the risk evaluation carried out, decisions on actual actions needs to be made.
- Decide what needs to be done; where should the recalled product be returned to, will there be replacement/repairs/refunds and how are these handled.
- Decide on means of communication. Finalize the letter announcing the recall to the customers.
- Contact production/sales/marketing to determine how to trace the products and their owners.
- Contact national authorities if this is required or seems appropriate.
- Consult with lawyer as well as public relation experts if relevant.
- Set up a communication program if needed. Contact marketing to set up hotline, website information and the like.
The recall plan should contain information on whom in or outside the organization to contact including contact information.
3. The actual recall
Now it will be time to actually perform the product recall.
- Communicate with the customers. Make sure that communication is short and precise and describe the nature of the defect, what products are affected (e.g. batch or serial numbers) and how to treat the defective products. Include practical information on return warehouses, repair offerings or other relevant information regarding the actions decided when planning the recall.
- Isolate defect products in own stocks. If there is a possibility that products may continue to be produced with the same defect, production should be stopped or corrective actions taken in the production plant.
- Communicate with the media, suppliers, trade associations, police and others who need to be informed.
- Deal with incoming products that have been returned. Test, repair or dispose of the products depending on what is needed. The recall should be closely monitored to constantly evaluate if adjustments to the initial plan is needed or further action is required.
The Recall Team needs to agree on their internal means of communication and how often meetings/evaluations will take place during the recall.
How to perform these actions needs to be in place prior and noted in the recall plan; testing labs, return warehouses, who can perform a repair, where can the defective products be disposed etc. Make a list of possibilities including contact information.
4. Follow up When the recall is finalized, an evaluation considering the following should be made:
- Changing the design of products.
- Changing the production method.
- Improving the quality procedures.
- Improving the instructions supplied with a product.
- The effectiveness of the internal communication as well as the communications with customers, suppliers, media, authorities and other relevant parties.
Learnings from the evaluation process should be implemented in the recall plan so the company is even better prepared for a potential new recall situation.
5. The practicalities
When the recall team has been through all the considerations it’s time to structure the information in the recall plan and endorsements to the plan. This can include: List with names and contact information regarding:
- The Recall Team
- Laboratories for testing
- Insurance company
Drafts of letters/mails to:
- Public authorities
The letters will have blanks fields where product type, defect type and other specifics will be filled out. But the structure should be ready and contain general information on whom in the organization to contact in case of questions.
Finally, make sure that the recall plan is known and available for everybody in the organization. Don’t let it collect dust on a shelf. In case a recall needs to be performed the plan can be the anchor and the compass that will ensure customer trust and safety.
Rikke Berlin Rasmussen