Global Logistics and Supply Chain Strategies - May 2008 - (Page 30)

‘Be Prepared’ Is Motto that All Companies Should Follow When It Comes to Recalls BY JEAN V. MURPHY Companies need a rigorous, multi-pronged approach to prevent faulty products from ever reaching the market, and careful plans for efficiently executing a recall should one become necessary. L ast summer’s spate of headlinemaking product recalls was a frightening reminder to many companies of the quality and safety risks lurking in global supply chains. The loss of visibility and control that often occurs when sourcing and manufacturing move offshore is one major contributor to risk. But there also are factors closer to home, where competitive pressures for a constant flow of new, low-priced products can easily lead to design flaws. Toymaker Mattel had to deal with both situations during 2007’s “summer of recalls”—high lead levels in paint on products manufactured in China and design problems that allowed powerful magnets to come loose, posing a danger to toddlers who might ingest them. Mattel took aggressive action in all cases, recalling millions of toys, beefing up its testing procedures and quickly changing the flawed designs. Still, the recalls cost the company millions of dollars and untold damage to its brand. To mitigate and manage such risks, experts say, companies need a multipronged approach that includes rigorous measures to prevent faulty products from ever reaching the market and careful plans for efficiently executing a recall, should one become necessary. With recalls, “preparing for the worst” is the only policy to have, says Gil Hobson, vice president of sales, Carolina Logistics Services (CLS), Winston-Salem, N.C. “Being prepared is the primary way that companies can mitigate their risk and properly control a recall,” he says. CLS provides reverse logistics services, including recall management, to leading companies in the consumer packaged goods and health care markets. It processes more than a billion items annually of returned, recalled or withdrawn products as well as conducting thousands of audits and mock recalls. The best first step in planning is to develop a recall protocol, Hobson says. “Multiple people within the organization need to be included in the protocol planning—anyone that is part of the supply chain. This includes logistics, marketing, sales, finance, legal, IT and quality. Each area plays an important role.” Hobson says that a contingency plan for recalls should be reviewed with all the parties involved once a year, at a minimum. “People change positions, so those that initially understood all the details may no longer be part of the team and new members need to be updated,” he says. Some of the elements that Hobson says a protocol should include are: • How to communicate information on the recall, internally and externally • Methods for notifying customers, such as email, fax, letter or business reply cards • Product retrieval procedures • Product storage and disposition • Credit or payment procedures • Reporting to executive management and any government agencies. “Plan A for most companies is to assume 30 MAY 2008

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Global Logistics and Supply Chain Strategies - May 2008 Contents Editorial GL and SCS Exclusive Fast Forward Up Front Cover Story: 'Be Prepared Is Motto that All Companies Should Follow When It Comes to Recalls Here and There 1+1=One Opinion Can't Happen Here Industry Voices

Global Logistics and Supply Chain Strategies - May 2008

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