Product Foresight: Avoiding Recalls and Their Reputational Effects

A product recall takes place when a company has sold a defective or hazardous product and is then responsible for retrieving and fixing or replacing the product.

This can have a large number of negative effects on a company. In addition to the financial loss due to fines, lawsuits and the recall itself, the loss of brand reputation can be significant and difficult to repair.

One of the largest product recalls to happen recently was the so-called "Dieselgate". This recall occurred when it was discovered that VW had been cheating on diesel engine emission tests in many countries.

The effects of this were huge. VW had to recall and refit around eleven million vehicles. The cost of the recall to VW, combined with the fines and lawsuits, came to $14 billion. Furthermore, their stock price was 30% down from the previous year, and sales dropped dramatically across all markets.

Needless to say, this recall has dealt a huge blow to VW. However, they were far from the only company in a similar predicament, with Toyota and Ford vehicles both being subject to recall. Outside of the auto industry, a notable example is Keurig, the coffee machine maker, who had to recall 7.2 million coffee makers a few years ago.

What Causes Product Recalls?

Each product recall has its own individual specifics, but overall, recalls can be split into two broad categories. The first, like VW's, is a knowing attempt to sell a product that is defective or does not meet mandatory regulations. In many countries, this constitutes a crime and obviously, no company should ever attempt this.

However, even a law-abiding business can fall victim to the second type of recall: one that happens due to unknowingly manufacturing and selling a defective product.

Such recalls can happen for a variety of reasons, but most commonly, they take place due to the global nature of modern manufacturing. In the past, a manufacturer would buy raw materials, then build each component and assemble the product all in the same factory. If there was a problem with, for example, door hinge assemblies, you could just walk over to Dave's workbench and find out what's going on.

Nowadays, with globally distributed supply chains and outsourced and offshored manufacturing, it is becoming much harder to ensure that products maintain their level of quality. Businesses that outsource their production often only get to see the finished product, and by that time, it’s too late to interfere in the manufacturing process if something has gone wrong.

How Can a Recall Be Avoided?

The most effective way to avoid a product recall is to monitor your manufacturing processes and inspect your products to ensure their continued compliance with your specifications.

It is not enough to only perform an initial quality assurance test on the first batch. Just because you haven't changed anything, you shouldn't assume that some important aspect of the product has not been altered without your knowledge. Any such alterations can potentially make your product fail mandatory regulations.

To ensure that your products remain compliant, you need product inspections spanning your supply chain. The components used in your product must be continually subjected to inspection, as it is quite common for suppliers to make changes to their products without telling you (for example, to cut costs). If you are the importer of the product to a market like the United States, then you are responsible for the product and any subsequent recall.

This means it is also your responsibility to know exactly what’s going on in your supply chain.

AI - End-To-End Product Inspection

Rigorous, independent, and certified product inspection is best left to the experts. AI operates in over 85 countries, with 20 offices and over 2,000 inspectors and auditors specialized by product range. We guarantee to have an inspector in any factory in the world within 48 hours.

We are able to inspect your product at all key stages of production:

  • Initial Production Check - Manufacturing facilities and initial products are inspected prior to the production run and during its initial stages, to ensure the production begins to your specification.
  • During Production Inspection - Your product is inspected during production.
  • Pre-Shipment Inspection - Samples are inspected from all batches, so any last-minute changes can be made.
  • Container Loading Check - The final product, packaging, and labeling are inspected along with quantities and destinations.

In addition, we offer:

  • Production Monitoring - An inspector is present in your factory every day of your production run, enforcing adherence to specifications and eliminating defects.
  • Onsite supply-chain monitoring - An AsiaInspection inspector will visit your supplier's manufacturing facility to ensure they are complying with your agreed specifications.

Get in contact with AsiaInspection today and stop worrying about product recalls.