7 Tips To Get Recall Ready

If you sell products – you need to be “Recall Ready”

Like it or not Product Recalls are a part of business life.
Are you ready to run your first recall?  

If you are successful at selling physical products – there is a high probability that your business will encounter a recall at some stage. Poor recall implementation can kill your company; done correctly, your recall will be an opportunity to build brand value.

There are a number of reasons we are seeing an increase in the number of recalls being launched. Some of these are the negative side effects of some common and effective business practices including: rapid new product deployment, on-going cost out exercises and the use of Chinese manufacturers.

3 triggers for a recall are:

1. Manufacturing process failure – a component is manufactured in a non-compliant manner, “breaking” the safety compliance eg incorrect plastic used so that it is not flame resistant and it should be.
2. User Safety Incidents: end users have used the product in a manner that has resulted in harm to them or property, albeit not how you expected it to be used.
3. Product Design Failure: resulting in potential harm to users or property

The 7 Tip Recall ready check list:

1. Risk assess your product portfolio: Early detection of failure is the best way to minimise the impact of failure. Invest more on the Quality Assurance of your products that represent the highest cost of failure to you, including: total sales, cost of goods etc.Remember:   Risk = (likelihood of failure) x (impact of failure)

2. Minimise the size of a potential recall – Batch code every thing: Use a batch coding system in your manufacturing process. That way if you have a manufacturing failure, you can limit the number of products you need to recall by manufacture date/batch, reducing the expense of the recall.
3. Include Recall provisions in all Supplier Contracts: Make sure your supplier/manufacturer contracts have explicate clauses covering your recall process. In particular, recovery of the costs of the total recall programme; noting that this will be over and above the purchase price of the goods.
4. Make it easy/cheap to contact your end users: Regulators are pedantic about ensuring a “reasonable” percentage of the sold product are “remedied” in the recall programme. Your challenge will be to cost effectively notify your customers, especially 2+ years after sale. Where ever possible maintain a database of end-user contact details including email, cell phone, address etc. A social media audience is a great way of contacting customers at recall time. It will be too late to establish social media audiences and channels post recall triggering event.  i.e establish your social media presence now – in the good times.
5. Identify key suppliers prior to crisis: Initiating a recall is an intense time of activity. Establish some key supplier relationships now, rather than at the time of initiating a recall. Your list of key suppliers should include: Specialist Legal Counsel (that have relationships with your regulators), PR, Web and general IT development (for recall management and reporting systems), a specialist programme manager (if you do not have any one capable on staff).
6. Assess and decide if recall insurance is appropriate or not: Depending on your business, recall insurance may be affordable or not. At very least review the appropriateness of this for your business.
7. Document a Recall Process: Prepare ahead of time your recall process. Be clear on how you will execute a recall in your business should the event occur. Pre-think  key decisions, considerations and what functions that will be involved in the recall process.

For example:
– How will you decide what is the appropriate remedy (repair, replace, refund)?
– Understand your legal rights as a supplier and how you can offer an affordable and reasonable solution to your end users and customers.

Break your recall process /project into phases:

1: Initiating event
2: Regulator notification
3: Activating recall
4; Locking in action plan
5: Pre-Launch activities
6: Go live
7: Monitor
8: Scale back

This is part of a series of blog posts on “Product Recalls” and “Managing Chinese Suppliers”. The content of this new series is based on experiences learned managing: three major home appliance recalls inside 12 months, involving hundreds of thousands of consumer products sold in Australia and NZ.

As a side note if you own one of the great Shark Vacuum cleaners please check it is not affected by the Shark Recall (www.sharkclean.co.nz/nz-recall.html)

 PS: Mark is currently looking for his next General Manager role or a Consulting assignment in NZ or Australia.  Contact him at: Mark@growthmanagement.co.nz 

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Avoiding Quality Fade with Chinese Manufacturers

10 Tips on avoiding “Quality Fade”

The China manufacturing machine is a force that can not be ignored. They have it as far as rapid and low cost tooling, volume production and quality output. But like any tool, used incorrectly the results can be disastrous.

For product developers and importers alike using a good Chinese manufacturer can give you great results at great prices, but be warned “Quality Fade” is built into the Chinese manufacturing ethos.

Chinese manufacturers will continually find new ways to lower their costs, they do not appear to do so with malicious intent – rather than, “that is the way it is”. My advice is that you should just treat this as a sport, albeit a extreme sport, you need to master the game to avoid major consequences of losing eg – excessive warranty claims and recalls etc wasting your time, money and eroding your company and product brand value.

10 Tips on Chinese Manufacturing:

1. Get your own Chinese speaking staff: Everything is lost in translation, particularly in times of crisis. You need both Chinese speaking staff on the ground in china and in your local office. Its amazing what ground you can cover quickly when you hear “the real conversation”.
2. Have your own people in China: One thing never changes – personal relationships are king. Video conferences, skype calls and email will not replace being there. By all means start with regular visits, but as soon as you can, get your own person resident in market or close by eg Hong Kong.
3. Proactively monitor for systemic product failure. With out fail every product issue will be meet by your supplier with a comment “you are the only customer with that fault’. If you are getting quality failures, then act. Anything over 1% of product failure from customer returns needs to be treated as urgent, and greater than 3% is a crisis and definitely systemic product fauilure.
4. QC every shipment: No matter what track record the factory has, QC both in market and at receipt in your market.
5. Contract with factories not brokers: In market brokers are great at helping you source product, manage relationships and get things done. However, when the shit hits the fan, they typically do not have the reserves to bank roll failure. Yes, include them in the commercial deal, but also have a contract with the factory direct.
6. Don’t stray from manufacturers specialty: When asked most manufacturers say “yes” we can build that. In reality, most if not all, Chinese manufacturers all specialise in one thing and they seem to congregate in a region. Eg all vacuum cleaner manufactures appear to be within a 100km radius, like wise all blender manufacturers.

Once you go high volume with any product line the impact of failure increases. At that stage you should step up your QA processes:

7. Make Notification of ECN’s and factory change mandatory: Make sure you are getting copies of all ECN’s (engineering changes notices) for your supplier. Particularly look for changes in quality of components that may effect EMC compliance or reliability of the product.
8. Do regular full break down tests: Continually randomly check all aspects of your product build.Check that the  manufacturer has not swapped our a key ingredient or component, particularly ones that you mention in your marketing or affect safety and compliance
9. Get Compliance Approvals retested in AUS/NZ : By all means use Chinese test lab reports to get you going in market with compliance certification, but if you want to eliminate risk of running foul of in market regulators, retest with Australian or NZ test labs
10. Do full technical due diligence on all high volume product – be aware in many cases Chinese manufacturers cut corners in product development avoiding some important steps of new product introduction including HALT (Highly accelerated life time testing) and tight supply chain management of critical high risk components eg lithium Ion battery assemblies.

Whether you are a product development company using China for contract manufacturing or just an importer distributing goods made in China, do not skimp on investing in appropriate Product Quality systems to protect yourself and mitigate against product failure risk.

A must read for any one contemplating or using China as a tool is “Poorly Made in China” by Paul Midler – the horror stories in this book are all true.

This is the part of a new series of blog posts on “Product Recalls” and “Managing Chinese Suppliers” and other key topics aimed at medium to larger organisations. The content of this new series is based on experiences learned managing: multiple major home appliance recalls inside 12 months, involving hundreds of thousands of consumer products manufactured in China and sold in Australia and NZ.

PS: Mark is currently (Dec 2015) looking for his next full time role or a consulting assignment in NZ or Australia.   You can contact him at: Mark@growthmanagement.co.nz