Steve Dollase | November 26, 2014

Best Laid Plans: Recalls Demand Preparing for the Unexpected

No company wants to have a product recall, and fortunately these events are not common. Yet I'm surprised at how many companies are completely confident they will never have one. Recalls usually arise from unforeseen circumstances, or more commonly, due to factors that are simply beyond a company's control.

Every consumer-goods company should plan for these contingencies, particularly with their potential impact to consumer safety and brand equity.

Many companies do take some measures to reduce recall risk, implementing strong quality controls and even positioning for quality to be their brand differentiator. But there's more required than that. Think about these unexpected external factors in some memorable high-profile recalls:

  • The plant in China turns out to use paint with high lead content on a product used by children
  • Dog treats made overseas turn out to have ingredients toxic to dogs

Striving for best-practice quality, with safety baked in, isn't the whole picture. There's a world of variables to contend with in today's economy, not the least of which are component outsourcing, overseas manufacturing and any number of suppliers providing raw materials and ingredients for your product. You can impose and monitor quality standards with vendors and suppliers, but can you monitor all of their suppliers? A focus on quality and supply chain integrity is critical to recall prevention, but measures must be taken to plan for the defects… those low-probability, high-impact events like product recalls.

Good recall preparedness isn't being able to look at your quality controls and say "That kind of thing will never happen here." It's knowing what you'll do if it does.

Don't make the mistake of thinking you can just plug into your reverse logistics (RL). And remember, reverse logistics is more than just the reverse version of your forward supply chain. For companies that have a reverse logistics program, it is only a component of a recall — it is not by itself a solution to a recall. The process you have in place for everyday returns, seasonal product withdrawal, liquidation, etc., is designed for efficiency, economy and value recovery. It is a continuous process that runs relatively predictably and at scale.

By comparison, recalls can be very audience-specific and driven by safety and regulatory requirements. Companies that are good at reverse logistics may have the general agility and capabilities that are necessary for effective recall execution, but recalls are issue-driven, so the same process used in everyday returns management won't completely meet the requirements of a recall.

There are often specific handling requirements for the product to be removed. It may have to be destroyed onsite; it may have to go to a designated facility to be destroyed; that disposition may be very market-, location- or audience-specific. Those factors begin to move the process further and further away from the standard, everyday reverse process — if you have one.

The three most important factors are advance planning and preparation, having the right expertise and capabilities, and collaboration. The key in planning is having an appropriate strategy built to compliment your company's product portfolio, and ensuring that the plan is tested.

At the end of the day, the recall strategy has to be something people can execute. They have to understand the strategy and process, they have to have the resources and capabilities to execute it, and they have to know how to execute it efficiently and effectively.

Recalls are highly complex, high risk and fast moving. You're better off planning ahead than you are trying to simultaneously build and execute a strategy. Collaboration among the many stakeholders is essential to success. But you won't pull it off just by having a strategy on paper. You can only be sure by testing the process.

I almost always recommend staging a mock recall. It's really the only way to know your strategy is good and the people are capable of executing according to plan. It's often the only way to identify issues, see threats to success and plan contingencies.

Mock recalls force you to evaluate your resources, possible regulatory contingencies, capabilities to meet them and your ability to do it all with minimal impact to customers, trading partners and your bottom line.

A good mock recall has to be more than just a traceability exercise and checking to make sure you have the resources in place in case you need them. You won't know how well those resources fit the bill until you test them, see how they perform and adjust to accommodate the insufficiencies you will undoubtedly uncover.

Having faith in your quality controls is one thing, but being prepared is another thing entirely. I'm a former Navy man, and this reminds me of an old sailors' proverb that serves as a good reminder to be pragmatic about such things: Pray toward Heaven, but row toward shore.

Feel free to download Inmar's Top 10 Recall Best Practices.

What do you think? Agree or disagree? Share your comments in the comments section below.

Steve Dollase