In the past decade, major recalls have involved many different products in a variety of industries. No company wants to pay the unexpected costs of a recall, but implementing an effective plan can help protect your business against the short-term costs of repair and replacement as well as the long-term financial consequences to your company’s image and reputation.
The best recall plans are established long before they’re actually needed. While your company should primarily devote its efforts to making the best product possible, having a recall plan in place in the event of product failure is very important.
Whether your recall plan is well-established or in the beginning stages, make sure to consider the following areas:
- Depending on the size of your organization, you may want to establish a formal product safety committee to develop quality control policies, audit product safety performance, and provide recommendations to management. This team should include members from across your company, including engineering, quality control, manufacturing, legal, safety, marketing, and purchasing.
- Create a company recall policy that includes detailed procedures and designates the parties responsible for authorizing the recall. After obtaining your legal department’s signoff, distribute the policy to the appropriate company personnel, along with your broker, insurer, distributors, and dealers.
- Have written notification procedures for informing customers, brokers, insurers, distributors, dealers, company personnel, and appropriate government agencies of a product recall. This might involve issuing press releases to broadcast and print media, along with placing ads with these same outlets.
- Establish protocols for stopping production, shipment, and sales of the recalled product. Complete risk assessments of proposed redesigned products to determine if the items can be repaired or taken out of use and recycled for salvage value.
- If your company operates or distributes through retail businesses, establish a system to prevent uninformed sales staff or merchandisers from putting recalled items back on the sales floor.
- Routinely label all components, parts, and completed products to identify the company name, model, serial number, date of manufacture, etc.
- Establish a record-keeping system that includes:
- The quantity of each product, by model and serial number, that has been manufactured on specific dates.
- The materials used and the identity of suppliers and contractors that supply parts and materials. Also record batches, processes, and product changes.
- The quantity and location of each product held by distributors or consumers. Although it’s difficult to keep track of customers and products, you can trace them using such methods as warranty registration cards, repair records, parts sales, and distributor records.
- Incident reports, accident investigations, and warranty claims that describe how specific products malfunctioned or how the users may have modified or failed to operate them according to instructions. Also include the actions taken to prevent each problem from recurring.
- Records as required by regulating authorities.
Be sure to test your recall program before you find out its shortcomings the hard way. Conduct a simulation in which you run through your plan’s procedures, such as writing press releases, creating advertisements, preparing a mailing to consumers, etc. No company looks forward to a recall of its products, but by being prepared, you’ll be better able to protect your customers and your company’s reputation.
At Folks Insurance Group, we can work with you to make sure you've got the coverage you need, while at the same time using all possible credits and discounts to make that coverage affordable. Just give us a call at 631.589.5100 or send us a note at jfolks@folksinsgrp.com. We want to help you meet your goals, and make sure what's important to you is protected!
Content provided by Liberty Mutual Insurance
