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Apr
23

Birth of a recall

When a consumer’s smartphone spontaneously combusts, the word-of-mouth news spreads to millions within days if not hours. If a certain blood pressure medicine is contaminated with a potentially cancer-causing agent, it could take months before routine testing uncovers the defect, and weeks more before the news and notifications slowly trickle.

With other kinds of disruptions to business – like a natural disaster or data breach –  manufacturers at least know where to look and what to monitor for their preparedness efforts. But recalls pose a higher level of uncertainty because a product defect can spring from so many sources.

Consumers airing their product troubles on social media can spread like wildfire well before the manufacturer is aware of the problem. Sometimes recalls originate from testing by a regulatory agency… or a distributor…or a customer such as a hospital or a major food enterprise. Other times a defect turns up during the manufacturer’s own post-production testing. And we’ve a seen an uptick in third-party organizations spearheading a recall request, such as recent efforts by the American Academy of Pediatrics to pressure a manufacturer to recall its life-threating infant sleeper.

This diversity of recall sources is further complicated by the diversity of regulatory agencies with product safety oversight, spanning the Consumer Product Safety Commission (CPSC), the Food and Drug Administration (FDA), the Food Safety and Inspection Service (FSIS) of the United States Department of Agriculture (USDA), and the National Highway Traffic Safety Administration (NHTSA). Each industry has its own set of regulatory mandates when it comes to announcing a recall.

The birth of a recall poses a uniquely chaotic environment for risk management. Yet across all industries and recall types, there are a number of standard steps manufacturers can follow to help contain the damage.

First is determining the severity of the hazard. Removing a contaminated food product that can sicken or kill thousands of consumers requires far greater urgency than, say, a washing machine experiencing excessive vibration. There are specific standards to follow from each regulatory agency when a truly dangerous hazard is discovered. For example, the CPSC provides a Fast Track Product Recall Program that spells out how to classify the hazard’s severity, the reporting requirements, and how to put together a corrective action plan.

Next is to engage with the appropriate regulatory agency with a cooperative spirit. Regulators wield a lot of power, so it is understandable that manufacturers sometimes become intimidated and defensive. But it is critical manufacturers understand that regulators want to be seen as partners, not punishers. Their sole concern is keeping the public safe. If the manufacturer acts fast, is transparent, and communicates openly, the regulatory agency becomes its most valuable resource in mitigating risk.

Developing a notification plan is the third step. To protect the public, a comprehensive notification plan is necessary to pinpoint those customers affected by the recall, whether they are direct or indirect customers. Direct notification only to those impacted is best, but when that is not possible, widespread announcements are necessary. The plan could include sending direct mail, setting up a hotline, using social media, issuing a press release, sending a letter to consignees, leveraging smartphone apps, or other communications methods. Regulators expect to see a plan that meets, and ideally exceeds, their requirements.

Lastly, enlist a recall specialist. Recalls have serious consequences if mishandled. The birth of a recall is no time to start learning about the many logistical and compliance challenges at play. A recall specialist can get a recall program up and running within 24 hours, setting up a recall notification infrastructure and all required processes including multichannel communication and response management, contact center facilities, confidential data registries, traceable direct deliveries and safety alerts.

When the birth of a recall is managed expertly, it can mitigate financial and legal risk, increase customer loyalty, and prevent irreparable brand damage.

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