Strategic recall readiness for businesses
In the landscape of product manufacturing and distribution, the prospect of a recall is an omnipresent risk that can affect any item on the market – from a simple toy to the most complex automobile.
If understands this reality and offers not just comprehensive recall insurance coverage, but also a lifeline through its crisis consultant hotline. This service is designed to support and guide businesses when the decision to initiate a recall is on the horizon.
Risk assessment, stringent quality control, and robust insurance coverage form the pillars of sound risk management. However, these measures, while they reduce risk, cannot entirely prevent the need for product recalls. It is not just advisable but imperative for companies to have a structured response ready. An effective recall plan is bespoke, crafted to align with the specific needs of a business, yet incorporates universal elements that should be considered.
“Our approach ensures that businesses are not merely reacting to recalls but are actively learning from them, turning potential setbacks into opportunities for growth and development”, says Matti Sjögren, Nordic Liability Risk Management Specialist at If.
Initiating the recall protocol
The inception of any recall strategy begins by forming a dedicated Recall Team. Tasked with the development, periodic review, and simulation of the recall procedure, this team is a company’s first line of defence in times of recall crisis. The team can include, for example, representatives of the following functions:
The Recall Team needs to agree on their internal means of communication and how often meetings and evaluations take place.
The recall response: a step-by-step framework
When a recall becomes a reality, the clarity of the response can define the future of a brand. You need a framework for a response that is both strategic and comprehensive, ensuring that you are not only prepared to act, but can do so with precision and authority.
According to Sjögren, this is a critical moment that tests a company’s resilience and integrity: “A well-planned and executed recall can enhance consumer trust, showing that a company prioritises safety above all.”
1. Identify the defect:
- This is the reconnaissance phase, where the team pinpoints the issue and assesses its potential impact.
- What is the defect? Where lies the root cause of the defect?
- What will be the consequences of the defect, and what is the risk for the customer or owner?
- How many products are affected?
- Where are the products located?
- Who is the user?
Sometimes, a recall can be caused by raw materials that emerge through the subcontracting chain. The policyholder prepares a product utilising these partners and then launches it. Unfortunately, a defect might not be discovered until the customer or consumer receives the product. In the investigation, it can be uncovered that some raw material in the supply chain has had a slight deviation from the regulations or quality control regarding, for example, insecticide residues or sub-quality materials. This has resulted in the policyholder’s product being faulty or even dangerous, and can lead to a withdrawal from the market.
“In this regard, it is important to also ensure that the company that supplied the faulty material has the necessary evidence of the case or situation in which the defect occurred, so that the money can be reclaimed”, says Matti Sjögren.
2. Prepare the response:
This is the planning phase, where strategies are formulated.
- Be detailed on what products are affected (e.g. batch or serial numbers) and how to treat the defective products. Gather practical information on return warehouses, repair offerings, replacements, refunds, or other relevant information for the customers.
- Decide on means of communication with customers. Make sure that communication sent to them is detailed and concise while containing all the information necessary.
- Contact internal stakeholders, such as production, sales, and marketing on how to trace the products and their owners.
- Contact national authorities if this is required or seems appropriate.
- Consult with a lawyer as well as public relations experts if relevant.
- Contact marketing for a hotline, website updates and, for example, information for a frequently asked questions document (FAQ), a press release (if needed) and the like.
- Understand social media impact in relation to corporate reputation management. Social media is very important nowadays, especially if the product recall is related to a consumer product. Food products, for example, are quite often the subject of recalls. Have an FAQ prepared and respond selectively when needed with accurate information and compassion. Also, knowing when to react (and on which platforms), as well as how to respond, will make a significant difference.
One new consideration comes with social media. Managing your company reputation online is a multifaceted effort. It is not uncommon for there to be a response on social media platforms to the company and product in question during a recall. Sometimes, an immediate and aggressive response from individuals on social media will erupt swiftly, especially if the recall involves serious illness or death caused by the defective product. However, the response on social media can also be slower, limited in reach, or non-existent.
When it comes to preparedness, social media planning is an important element in product recall situations, as it can be difficult to predict how online communities will react to the specific case in question. Negative comments can erupt from a ripple on a single platform to a wave of criticism and attacks on the product and the company, leading to mainstream media coverage. This type of reputational damage can be difficult to recover from. There are several examples available on this topic from around the world ranging from significant market share losses to cases leading up to bankruptcy.
3. Initiate the recall:
Now the plan rolls into action. The Recall Team acts as a central command, overseeing the communication to stakeholders and managing the logistics of product returns or repairs.
- Contact the impacted customers.
- Communicate with the relevant external stakeholders, from media to suppliers, trade associations to police and others who need to be informed.
- Deal with incoming products that have been returned. Test, repair or dispose of the products depending on what is needed.
- The recall should be closely monitored to constantly evaluate if adjustments to the initial plan is needed, or further action is required.
Isolate defective products exiting company warehouses and stock inventory. If there is a possibility that products may continue to be produced with the same defect, production should be stopped, with corrective actions taken in the production plant.
A proactive recall strategy not only addresses the immediate issue but also sets the stage for strengthened customer relations and enhanced operational protocols.
Finalising the recall: ensuring a legacy of safety
The conclusion of a recall is not the end of the matter. The Recall Team must ensure that every lesson is catalogued, all feedback is captured, and every process is scrutinised to reinforce the safety net that protects both the consumers and the brand. The finalisation should include the following steps:
- Post-recall evaluation: A comprehensive review of the recall process. What worked well? What could have been better? This is a strategic session to dissect every decision and action to build upon the strengths and address any weaknesses.
- Actionable improvements: Post-recall insights should lead to actionable improvements in product design, manufacturing processes, quality assurance protocols, or communication, such as improving the instructions supplied with a product.
- Communication continuity: It is crucial to maintain open lines of communication with customers, suppliers, and stakeholders even after the recall has been executed, ensuring that all parties are informed of the improvements and measures taken to prevent future issues.
Preparing for the future
The Recall Team’s work continues as they refine the recall plan with the insights gained. This living document should evolve, incorporating new strategies and procedures to prepare for any future challenges.
- Knowledge sharing: Disseminate the findings and updated strategies across the organisation. This is fundamental to ensuring that the entire company learns from the recall and is better equipped for the future.
- Accessibility and familiarity: The updated recall plan should be easily accessible, and its contents should be familiar to all relevant parties within the company, ensuring swift and coordinated action if required.
- Contacts: The recall plan should contain information on whom in or outside the organisation needs to be contacted, including their contact information. The contacts can be, for example, suppliers, authorities, laboratories for testing, experts, media, or your insurance company, as well as customers. The document can also include pre-written drafts of communication materials that address known potential risks.