Tips for Dealing in the Event of a Recall

Alliston Ackerman

5/12/2008

In 2007, the Consumer Product Safety Commission recalled 447 products for safety concerns. In 2008, the incidence of recalls doesn't seem to be slowing down. Already, Westland/Hallmark Meat Co. conducted the largest beef recall in U.S. history. And another major recall hit the toy industry in March when MEGA Brands Inc. recalled approximately 3.5 million toys with potentially deadly magnets, reviving safety concerns over design that were initiated by Mattel's recall of more than 22 million toys in August 2007. A company's ability to react quickly and effectively in the unfortunate event of a recall has a profound impact on rebuilding brand trust. So, CGT picked the brains of industry experts on everything from avoiding the primary causes of product recalls to preparing the supply chain to react if and when a recall hits. The following is an excerpt from our two-part series, "In the Event of a Recall," featuring commentary from:

Lora Cecere, Research Director, Consumer Products, AMR Research
Alison Smith, Research Director, AMR Research
Rich Essigs, Director, Industry Solutions, Consumer Products Industry, IBM
Chuck Desmond, Vice President in the Consumer Products National Practice, Hitachi Consulting
Keith Scovell, Business Director in the Consumer Products Practice, Hitachi Consulting

CGT: Of the 447 recalled products, only 62 were made in the United States. How can consumer goods companies better monitor production operations both in the United States and overseas to ensure that products meet the utmost standards of quality and safety?

Cecere and Smith: With today's technologies, detailed traceability across the value chain is eminently achievable, especially within the manufacturing environment. But re-sourcing and enforcing the business processes is expensive. And, in highly competitive industries where margins are thin, making those investments simply isn't desirable. The starting point for manufacturing side is having agreements with manufacturers that stipulate information transparency for material genealogy, process genealogy and quality testing data. Meanwhile, companies who choose to treat their providers of contract resources as strategic partners should make investments in supplier development, engage in collaborative scorecarding and make select investments in technology to support suppliers who can't afford to make those investments.

Desmond: According to a November 2007 Action Plan for Import Safety, commissioned by the Bush Administration, 'A careful examination of import safety has been motivated by the recent challenges presented by an increasingly global economy, in which U.S. consumers are purchasing approximately $2 trillion worth of products that are imported by over 800,000 importers through over 300 ports of entry.' No matter where the product is being made, it's critical that the proper quality control steps be in place. The steps, the frequency, measurement methods and tolerance levels should all be part of the product information system. Quality control results should be maintained and tracked closely, especially if a supply chain partner is performing the control.

Essigs: Companies that manufacture products globally understand that consumers will continue to increase their expectations regarding visibility into the supply chain associated with the brands which they purchase. To achieve this required level of visibility, given the increasing global nature of supply chains, many manufacturers are focused on building business process capabilities to support supply chain visibility by converting paper-based data collection to electronic processes. This conversion is best supported by the mass serialization of products with barcode, RFID and other sensors. Global standards and products for mass product serialization offer manufacturers with global supply chains a rich set of tools for remotely monitoring and managing manufacturing and supply chain processes.

CGT: Which consumer goods company do you think responded most effectively to a product recall?

Smith and Cecere: The best example of effective brand management in a recall remains Johnson & Johnson (J&J) in the recall of Tylenol. Using its credo, the J&J organization quickly mobilized to pull the product from the shelf, redesign the containers and ensure effective consumer communication. Contrast this to the pet food recall that spanned many organizations and brands. Customer communication was not clear, and there were mis-shipments within the multi-tier supply chain.

Desmond: J&J's reaction to the Tylenol lacing incident still represents the standard for responding quickly and effectively to a product contamination. Odwalla's response to their apple juice contamination [in 1996] was equally impressive. It's very important to act quickly, comprehensively and openly about what you're changing. Both companies did that effectively.

Scovell: Leading companies have implemented a 'preventative' mindset - putting in place processes and systems that prevent occurrence of contamination - instead of testing only. There exists significant diversity across manufacturers in what approach they each take today.

To read this Special Report in its entirety, please follow the links to the full articles below:

In the Event of a Recall, Part 1

In the Event of a Recall, Part 2

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