The essential features of the Product Recall

The risks to business are becoming more diverse and increasing every day. Among the best known risks, it is the recall...

Sarra MADI
April 1, 2021

The risks to business are becoming more diverse and increasing every day. One of the best known risks is a product recall. In fact, no company is safe from a product recall! Neither the small ones nor the multinational ones!

Despite the quality delivered and the efforts to perfect a product to the maximum, product recalls around the world continue to persist in our daily lives in an abrupt and unintentional manner.

Therefore, it seems crucial to first understand the context of a product recall to clarify its abrupt appearance and to examine its course to eliminate any ambiguity.

Product recall : Definition, characteristics and process

What is a Product Recall?

A product recall: is the process of organising the return, replacement or repair of a product that was questioned as a result of a quality, manufacturing, technical, or safety defect affecting the health or safety of consumers.

Before we delve into the subject, many of us confuse a product recall with a product withdrawal. First of all, there is a slight difference between a product recall and a withdrawal.

Difference between a withdrawal and a product recall

After the failure of certain parts or the non-conformity of health and safety aspects of a product have been identified, product recall or withdrawal occurs at specific points in the life cycle of a product:

  • Before marketing, on the shelves, in the shops' warehouses, a market withdrawal takes place on products not yet sold.
  • The aim of a product recall is to remove the affected items before they are offered for sale to the consumer.
  • Post-market, in shops, at consumers' homes: a product recall occurs to repair or replace an unreliable good.
  • Purpose of a product recall: to bring back to the shop already sold non-conforming products owned by end-users and to have the customers reimbursed in a predefined way (monetary reimbursement, repair, replacement by a new one)

Companies tend to put a lot of emphasis on pre-study and pre-testing of products to ensure that they are "zero-defect" in the market. But the evolution of competitive quality as well as consumer expectations puts many products in question whether it is because of a real problem (technical defect, danger...) or a strategic problem (inferior quality compared to the competitor and or to the customers' expectations).

To deal with this sudden risk, you need to have at least a basic understanding of how a successful product recall works.

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Product Recall Process

Indeed, a recall is a product recall campaign. The word "campaign" refers to a set of operations carried out, more precisely a process.

Before going into the description of the process, let us keep in mind these two aspects that a product recall is :

  • Is governed by law; it is a legal obligation before it is a managerial obligation regardless of the type of product sold. Regardless of the legal specifications of each country, any company that evades this obligation will be subject to legal action.
  • Is a linear process, in most situations these steps differ in their conduct depending on the type of product, but can be communicated, operated, repeated and revised at the same time.

A product recall can be presented in 5 steps:

01. DETECTION OF THE NEED FOR RECALL :

This is not really a first step but it is the trigger point. Whether due to customer complaints, supplier quality control, inspection or other reasons, the discovery of a defect in a good forces the company into a product recall process.

Firstly, an investigation should be launched in this sense, in order to find out the origin of the defects or complaints in the first instance and take preventive and corrective measures in the second instance.

02. DEVELOPMENT OF A PRODUCT RECALL STRATEGY

Secondly, once the company has demonstrated the need for a product recall, the team appointed to manage the recall must develop a product recall strategy that includes

  • The risks to the company.
  • The risks incurred by the client.
  • An assessment of the scope of the recall.
  • Identification of the target audience to be informed of the recall.
  • Communication frameworks.
  • How to inform consumers who are not easily identifiable.
  • Establish a tracking system (traceability of the product to the consumer and distributor).
  • The speed, timing and frequency of communication.
  • Preparation of reports and papers relating to legal and regulatory requirements.
  • Identification of modalities and solutions for dealing with the recall.

In developing the strategy, the company defines the primary axes, chooses the right moment to launch the product recall campaign and reports the fact to the responsible legal structure such as DGCCRF in France.

03. PRODUCT RECALL COMMUNICATION :

Thirdly, this is the time when the company must warn its consumers as well as its suppliers. The recall alert is on two levels

  • Partner, supplier and distributor alerts: thanks to the monitoring system established during the strategy, the company defines any stakeholder who may intervene during the product life cycle. Thus, traceability helps to define the batch and characteristics of defective products and therefore the target suppliers to alert. In this way, the company can collect data from the end consumers of its suppliers in order to warn them.
  • Consumer Alerts: Depending on the type of product, end consumers remain the most important target of a product recall because usually it is their health, safety or even lives that are at risk.

This target can be split into two: on the one hand, the known target; the one we have their names, addresses, telephone numbers and on the other hand, the unknown target those users who are passing through and we know absolutely nothing about them.

Because this target is somewhat vague, companies tend to prepare in-store posters, communicate about the recall on radio and send out mailings to reach the known target as well as the unknown. This communication presents the product: name, brand, bar code and describes the solution offered such as replacement, repair, refund or any other solution.

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04. OPERATIONAL IMPLEMENTATION :

Finally, the company organises the operational process (the procedure for repair, reimbursement, replacement, etc.) of the product recall by calling on several teams: logistics, maintenance, compliance, repair, etc.

The operational process differs according to the type of product, the solution offered and the customer. Therefore, different operating modes apply between end consumers, distributors and partners.

Generally, the company tends to warn and remove its products from the shelves of distributors first in order to limit the distribution of the unreliable product.

05. EVALUATION OF EFFECTIVENESS

Finally, the company must evaluate the entire process. In fact, the company responsible for the defective good must carry out the recall in a timely and efficient manner.

Therefore, feedback and reporting should be implemented on a recurring basis to ensure the effectiveness of the process. The purpose of this step is to ensure that corrective, control and re-compliance measures prevent the process from repeating or failing.

Evaluating effectiveness is a step that seems so obvious after a long process requiring a lot of resources, commitment and organisation, but remains the cornerstone of a product recall. Because neglecting this step can land the company in much worse problems, a product recall can be considered one of the most expensive management processes.

Indeed, communication based on radio broadcasts and mailings and other processes can be very costly. Did you know that a product recall at SPANGHERO cost 500,000 euros? The expenses include the costs of the recalled products, the costs of crisis management as well as business losses. And these are not the only costs associated with a product recall, the logistics costs can be incredibly high.

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In fact, financial losses are not the only capital at risk. Also, brand equity includes customer satisfaction, brand image and partner trust that puts the company in a weak position during a product recall.

In conclusion, we invite ourselves to discuss an important question "is a recall a real threat or an opportunity?

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