Recalling a product is a situation that no company ever wants to be involved in. Despite the extreme unpleasantness associated with them, we hear about product recalls involving everything from contaminated food to unsafe furniture on a daily basis.
In the industries of consumer products, food services, and beyond, building a product recall risk management strategy involves several critical components. According to Stericycle Expert Solutions, the first lines of defense to protect your company are prevention and preparedness:
- Invest in automated technology. Utilizing automated technology can reduce the chances of human error and can ensure perishable goods are kept at the right temperature at all times.
- Collect employee feedback. Creating an environment which encourages employees to notify management of potential issues right away will give your company a better handle on quality control.
- Conduct a “mock recall.” A mock recall can help expose gaps in recall execution or identify weaknesses in supply chain traceability of ingredients or components.
- Use regulatory bodies as a resource. Opening a line of communication can help your business understand expectations and procedures better. You may also benefit from maintaining a relationship if an issue that might trigger a recall arises.
Even with the best prevention and preparedness strategies in place, the chances of a product recall still exist. Here are four reasons why your company should strongly consider purchasing a product recall insurance policy to protect your balance sheet:
- Recalls occur more often than you think. The U.S. Consumer Product and Safety Commission (CPSC) and the Food and Drug Administration (FDA) are just two of the regulatory bodies tasked with recalling products deemed to pose a potential health or safety risk to the public.
- More than 4,200 product recalls were issued by US federal agencies in 2015 and trends are rising.
- Governmental oversight is more present than ever. Between the Consumer Product Safety Improvement Act of 2008,the FDA’s Food Safety Modernization Act of 2011, and new EU regulations, laws are becoming stricter and compliance continues to be a challenge for businesses.
- 47% of food recalled in the US in 2016 was because of microbiological contamination.
- 50% of surveyed food manufacturers spent more than $9 million when a product was recalled.
- Some of the top product groups commonly recalled are food, electronics, children’s products, clothing, furniture, and appliances.