Product non-compliance is one of the highest risks that your company can face. The scale of recalls is becoming more and more significant: production chains are more complex with globalisation, legislation is becoming increasingly global (European Consumers Product Safety and Market Surveillance Regulation, Consumer Product Safety Improvement Act in the United States, etc.) and technologies are more and more efficient in detecting production defects.
Requests for compensation in the event of product recall cost the manufacturing industry an average of €722,000, but can be as high as 10.5 million for the largest of these. And that is without taking into account the loss of profitability, productivity and reputation that follow a recall campaign.
With this article, identify the stakes and the consequences of a recall campaign on your production, and the measures to put in place in order to limit the risks:
To optimise the operation and the performance of your supply chain, it is necessary to carry out regular quality checks, and to trace your products at the various stages of manufacture. These checks should identify the malfunctions of your production lines, and should guarantee the compliance of the finished products to your customers' specifications.
Three conditions are essential to ensure a correct traceability:
IIt is recommendable to collect some information upstream and downstream of your production line, and not just internally. The following summary table shows you the different data to be kept up-to-date to be in compliance throughout the supply chain. This information will help you to prepare in the event of a product return campaign.
|
DEPARTMENT CONCERNED |
INFORMATION TO KEEP |
B |
PURCHASES |
- List of suppliers and items purchased: raw materials (RM), components, and packaging materials (PM) |
QUALITY |
- Prioritisation of the risks of RM and PM- List of technological aids (machine lubricants, glues, cleaning products, etc.) |
|
INTERNAL TRACE-ABILITY
|
RECEPTION |
- Reception procedure for RM, PM, and technological aids - Transporter quality follow-up sheets |
STOCK MANAGEMENT |
- Product identification (name, date of receipt, supplier, batch number, etc.) - Storage procedures (location, temperature, restrictions, safety measures, etc.) - Production delivery procedures |
|
QUALITY |
- List of RM and PM with technical data sheets and safety data- Certificates of supplier analysis - Planning of internal and external quality checks
|
|
|
- Manufacturing schedule - Technical file and/or manufacturing formulas - Recording of the use of RM and components - Manufacturing steps and possible hazards - Management of manufacturing waste and its recycling or destruction |
|
PREPARATION OF ORDERS |
-Packaging procedures - Checks during packaging - Labelling of units or batches (product name, date of manufacture, line, packing time, quantity) - Recording of pallet/case movements |
|
MAINTENANCE | - Planning, frequency of calibration, inspection certificates - Recording of internal and external interventions - Hygiene and safety procedures during and after intervention |
|
AFTER |
MAINTENANCE | - Labelling according to standards and internal specifications - Preservation of packing lists - Logistics management procedures - Contracts and specifications with customers |
The effectiveness of your traceability system can only be verified by regular checks. Each check must show the non-compliant products that exist, and accurately track the number of products or pallets recalled and the time required for their recall. You can facilitate the management of the recalled batches by setting up a dedicated storage area.
For identification purposes, you can use a nomenclature that complies with the GS1 France coding standards for your sector. The identifier can be recorded directly on the product, its container, or any identification medium that will not be erased, or will not detach from the product.
For data recording, you can either use a spreadsheet (Excel, Numbers, Google Sheets, etc.), or a software solution. In the latter case, consider harmonising your system with those used by your suppliers and customers. These tools will need to be regularly audited to verify their suitability for your business.
The notification of products having a safety risk can be made, either by consumers with the authorities of their regional department, or within the framework of the surveillance mission of the DGCCRF (General Directorate for Competition, Consumer Affairs, and Prevention of Fraud). Depending on the scale of the crisis and the sector affected, the DGCCRF and the government may take various measures against your company: segregation of products, suspension of sales, seizure or destruction of batches, etc.
Identifying the affected products and the malfunction in your production line will slow down your production rate, or even force you to close certain lines during the time needed to fix the problem. This investigation will impact many departments, including quality control and manufacturing.
It will also be necessary to coordinate with the customers from whom you have made the recall, and determine with them the necessary compensation for the damage suffered. If the items are simply damaged, can you repair them? Will you replace the defective products or simply refund the customer? In any event, you will have to use your internal resources.
The consequences of a recall campaign can be heavy for a company:
When a non-compliance problem arises, it is necessary to act quickly, especially in this digital age. However, hasty decisions can cost you much more than the recall campaign itself. It will therefore be necessary to set up a crisis unit and to carry out training for this to be effective. According to the Product recall study: managing the impact of the new risk landscape, 70% of company recall plans are inadequate.
Ask yourself the right questions:
How to organise a recall campaign in 5 key steps :
Recalling a product will disturb your supply chain and reduce your trading margins. However, managing the crisis is just as important as making sure your company gets back to production.
Feedback is necessary at several stages to draw concrete conclusions:
Many specialised firms and insurance companies can help you train your teams for crisis situations. Remember to test every facet of your production chain to identify weaknesses and correct them.
Product defects are only one of the industrial problems which you can act upon. Other factors can be the cause malfunctions in your business. Take stock of your situation with our ebook, and improve the industrial performance of your company.
[1] PRODUCT RECALL : Managing the impact of the new risk landscape page 8