This damaging formula is one that should be both feared and respected. Unfortunately the reality is that it is often ignored.   When the probability of an event is low, the risk of not analyzing or focusing on the severity of the consequences increases. This line of thinking leaves companies vulnerable when the unfortunate event happens to them. One can argue that being vulnerable in a low probability, severe consequences scenario can be one of the most disastrous situations a company will ever face. This is exactly what can happen if a recall strikes.

So how can you prepare for this type of situation? Can you really plan for risk? Yossi Sheffi, Professor of Engineering, MIT, spoke to this at the RILA (Retail Industry Leaders Association) annual logistics conference in a presentation titled The Resilient Enterprise - Overcoming Vulnerability for Competitive Advantage.  He says that it’s possible for a company to be resilient, but only through both redundancy and flexibility.

But isn’t that a little tough? How would you establish redundancy with a recall scenario? Especially when it doesn’t happen that often if ever, and if it does, it typically is never the same product. Flexibility offers more opportunity to be prepared, but can only be effective if the company has a culture of flexibility. With a recall, you have to be able to react fast, really, really fast. Even the best-in-class forward supply chains have trouble operating at a rapid speed….in reverse. Remember a recall travels through the reverse supply chain, not the forward.

To become a resilient organization and reduce the vulnerability when faced with a recall, what can you do?

One way to accomplish this is to work with CLS MedTurn, a third-party reverse logistics supplier. By the nature of our business model, we are positioned to help companies be resilient through both redundancy and flexibility. Redundancy comes into play because of the amount and variety of recalls that are handled on an on-going basis. In a twelve month period, CLS has handled more than forty recalls of various sizes, product types and risk levels. That type of knowledge benefits a company that has very little experience in dealing with recalls.

Flexibility is also a component of our business model. The key is that the model’s flexibility is in reverse. This translates into processes and procedures experienced in dealing with the rapid implementation and notification, product retrieval, and individual item returns as well as full cases. These are all steps that are reverse-oriented and different than the flow of a forward operation.

Successfully handling a recall plays a vital role in the brand’s survival. Don’t be complacent. Plan accordingly for the low probability, severe consequences scenario. You’re right. It may never happen to you. But if it does, wouldn’t you rather be prepared?

Share your thoughts with us by leaving your comments on our blog or contact us at cls.solutions@inmar.com. �

Whether you are experiencing a product recall or seeking to minimize your recall risk, following these best practices can be helpful from planning through execution. These best practices are a  combination of industry recommendations and the lessons we’ve learned firsthand managing many of the highest profile, highest volume and highest risk recalls of recent years. This experience is imbedded within our processes to ensure every stage of every recall is executed in a manner that minimizes negative impact on your customers and your brand equity.

1. A detailed Recall Management Plan or Protocol, which includes Mock Recalls, will ensure that an actual recall event is handled with the best interests of your customers and your company in mind.
2. A Recall ‘Point Person’ and Recall Team should be established prior to the recall event.  Cell phone numbers and back-up personnel should be included in the Recall Team Roster.
3. Notification to customers and consumers must be clear and concise and should communicate the seriousness of the recall.  Industry notification should occur simultaneously to all distribution channels. Notification templates can help speed the notification process.
4. Business Reply Cards are a highly effective means of documenting receipt of notification.
5. Call Center staff must be trained quickly to field inquiries appropriately from customers and consumers.
6. Product retrieval should be executed in a manner that has minimal impact on stores, Distribution Centers and consumers.  Dedicated resources should be used if product is being removed from store shelves.  In most cases, use of a third-party rather than broker network ensures the most expedient execution. 
7. Payment/credit should be issued quickly and accurately.  (Establish upfront whether the payment/credit will be based upon claims or actual product received.)
8. Replacement product must be available to customers immediately.  Often, a coupon for free or reduced-cost product helps retain customer loyalty/confidence.
9. Product disposition should be managed by a reverse logistics facility equipped with an automated processing system.  Product destruction must be handled in a cost effective and regulatory compliant manner.
10. Reporting must be accessible and updated on a daily basis, preferably Web-based. 

Share your thoughts with us by leaving your comments on our blog or contact us at cls.solutions@inmar.com  for more information about our recall management solutions.