Top tips for dealing with product recalls
The recall of a product in any industry sector, whether to protect...
Retrieving products during a recall demands precision at every stage in the process.
The recall of a product in any industry sector, whether to protect customers, a brand or to gather intelligence, can have a devastating impact on a company, its finances and its reputation. Managed well, the result can underline a company’s commitment to its customers and their safety. So the process doesn’t just have to be fast, it also has to be precise.
Recalls are often in the news with consumer products and food retrievals regularly hitting headlines. But according to the latest Stericycle Recall Index, it is recalls in the automotive sector that have been rising quarter by quarter, and in Q2 2016 reached record highs.
If a complaint or an acknowledged problem with a product forces the manufacturer to initiate its removal from the supply chain, a proactive product retrieval plan can assist every link in the recall process from the manufacturer through to distribution, retail and ultimately the consumer. There are several factors that should be considered in a recall, whether it is a simple case of collecting a product from a customer’s home or removing thousands of units from retail stores, or indeed any other point along the supply chain.
If a problem with a product comes to light and it is clear that it will necessitate a response from the manufacturer, retrieving products from the market as quickly as possible is essential. Any delay and there is the potential to expose manufacturers and retailers to possible legal action and brand damage. It is at the start of the recall that the manufacturer, or an outsourced field team, has to outline the product retrieval plan to every stage in the supply chain. This may mean disrupting day-to-day operations, while retrieval logistics are coordinated.
A company’s image and reputation are often on the line, so accurately retrieving all affected products is vital for the long-term integrity of the brand. If products remain on shelves, in the warehouse or in homes, a company’s liability increases along with the risk of regulatory or legal action and brand damage. To prevent non-affected products from the same manufacturer also being wiped from shelves, the field team could visit distributors and retailers in person to ensure the focus is only on the affected product.
3. Chain of custody
While navigating potentially complex regulations it is important to account for all products and maintain the integrity of a product for additional testing and analysis. This means that the product’s journey must be meticulously documented, not only for potential legal issues but to maintain consumer trust in the brand. This requires a high level of attention to reverse logistics, and a strict chain of custody to properly document, execute and complete a retrieval event. It is important for companies not to get so caught up in the physical logistics of a product retrieval that they forget about documenting the entire process.
4. Efficiency and Effectiveness
Product recalls usually happen without warning so it’s difficult for companies to fully prepare in advance. With a complex supply and distribution chain, it may not be financially feasible to hire full-time staff to manage a recall and tempting to put internal resources onto the process. But this may backfire because taking staff away from their normal work interrupts day-to-day business and can delay the retrieval process, resulting in higher costs. Third-party solution providers who focus on retrievals are an alternative and often more efficient method of implementing a recall.
The pressure on companies if they are handling a recall can be intense and it can require action to be taken anywhere in the world. Any contingency planning should focus on the ability to scale operations to manage the process, even if that means looking for help from a specialist company. An important part of preparation is building in the flexibility to handle any type of event anywhere in the world at a moment’s notice.
A recall means that the reputation of a brand is already at risk. To protect the integrity of the brand, manufacturers and retailers must ensure that any customer facing communication represents the brand in the right way. It’s important to maintain the highest quality standards and document every step of the process, from transporting and storing products with a secure chain of command, to handling subsequent product testing or product recalls in a regulatory compliant manner.
Farzad Henareh is VP Europe at Stericycle
Follow @SupplyChainD on Twitter.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”