Product recall and planning

Logistics Spectrum, Jul-Sep 1999 by Ramaswamy, Melkote

Product recall should be factored as a logistical element in the product planning phase under risk management.

Product recall-for whatever reason (defect, hazard or preventive measure)makes news. This phenomenon is visible only in countries where consumerism is strong. It is unheard of in developing countries.

This article discusses the following: when is a product recalled, what is not "recallable," how customers are notified, time limit and remedies, life-cycle cost considerations and impact on customer and manufacturer.

Recalled Products

The products recalled may range from toys to hypodermic needles to jumbo jet aircraft. Recalls may be voluntary (manufacturer-initiated) or mandated by government. Recalls within the last two years include pacemakers, radio cassette players, cartons of milk, fruit and nut snacks, corded electric screwdrivers, videos, children's bunk beds, lawnmowers and jumbo jets. Software (even with serious bugs) is never recalled-only upgraded or revised.

The spectrum of products recalled and reported include the following:

Soups

Medicines (Tylenol tampering-led to tamper-proof caps)

Meat (Mad Cow disease)

Breast implants (Dow Corning)-too late to recall (class-action suits)

Pacemakers

Fruit candy (with allergy-causing chemicals, colors and additives)

Boeing 737 rudders

American Airlines' AR-1472-for inadequate de-icing

Boeing 747-for fuel tank problems (prompted by the TWA flight 800 crash)

School buses for potential brake failure.

Recall may be too late for certain products that are quickly consumed and do not lend themselves to immediate remedy Examples are disposable diapers (already discarded), perishables (fruits and vegetables), and dated products (milk).

A product is recalled as a result of customer complaint, accidents, or fear of malpractice suits (liability issues). Occasionally, recalls occur when a company realizes a mistake on its own.

Customers are usually notified via newspapers, radio, TV and individual mailings (if in a database; for example, automobile manufacturer). Often, many customers never get the word.

As a result, millions of productssome potentially lethal-continue to be used. This use is particularly true of children's products that tend to be handed down in families or passed on through garage sales. The average effectiveness rate for recalling products is generally only 1020 percent.

Limits and Remedies

Remedies include repair, replacement with no time limit (warranty becomes irrelevant), return to place of purchase, and return to a service center. If the customer does not avail of the remedy, the manufacturer is absolved of all liabilities.

Software manufacturers have a unique way of handling defective products. They issue a revised version or an upgrade.

A recall raises interesting and reasonable questions. How did the product get into the market? Did the company have adequate quality assurance procedures? How about ISO 9000 certification? Is it the first time the company has problems or part of a pattern? How well has the company handled a previous recall?

The impact on the manufacturer can be both positive and negative:

Goodwill-if a company initiates a recall on its own before problems develop

Cost-depends on quantity recalled; in any case, recall is cheaper than settling liability suits

Customer-power awarenesspositive response to consumerism

Improved and stringent inspection procedures-reduce or eliminate future problems.

Several lessons have been learned concerning product recall. They include the following:

Review existing product launch plans

Coordinate engineering, sales and marketing efforts

Change philosophy from competition-driven to customerdriven

Re-examine testing and fault simulation programs

Maintain a customer database on products.

Table 1 lists recalls that have occurred within the last two years.

Other recalled products in the last two years include:

Playpens that can strangle toddlers whose pacifier strings or loosely woven clothes catch on protruding rivets

Power Wheels, ride-on batterypowered vehicles by Fisher-Price

Horizontal under-cabinet toaster (Optima Model T1000 Type 1) by Black sz Decker

Models 207 and 482 of "On My Way" Infant car seat-carrier by EvenFlo made before July 27, 1997

Miniature hammocks without spreader bars (several brands)

Halogen torchiere floor lamps (40 million) made before February 2, 1997

Lexington Furniture Industries bunk beds

Cosco's "Quiet Time" infant swings (models 08-975 and 08-977)

Century Products "Lil Napper" infant swings.

Although product recall may not occur, this possibility should be factored into the product planning under risk management and life-cycle cost analysis. This step entails a breakdown of possible "unplanned" failures and deficiencies that might require customer redress. Experiences of other manufacturers can also contribute to the planning task.

Conclusion

Product recall has become a way of life. It results in added cost to the manufacturer and is, therefore, a life-cycle cost consideration.

The phenomenon will continue as long as inadequate inspection, poor product design, and disregard for customer needs continue. However, prompt action can minimize harm to consumers and restore manufacturers' trust and reputation. The recall possibility and associated costs should be included in the product planning phase under risk management.