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Planning for Failure — How to Mitigate Recall Risk

Monday October 8, 2018


Supply chains thrive on continuity. Through strategies such as kaizen, statistical process charts, and multiple sources of supply and risk analysis, professionals strive for improved, efficient and predictable daily operations. Yet, despite their best efforts, things still can and do go wrong. In the United States alone, there were 72 consumer product recalls in the just first quarter of 2018, according to Statista. Companies can save time, money, embarrassment and legal issues by taking a proactive approach. A solid risk mitigation plan should contain the three C’s — control, containment and communication.

Control

Standard operating procedures (SOPs) control manufacturing and operations by setting guidelines for efficient production and maintaining quality control. However, most SOPs are written based on the expectation that an iterative process will succeed. But what happens if the process doesn’t happen as planned?

Companies must revise their SOPs to consider numerous potential failure scenarios and create counter SOPS that detail the preferred methods to follow for each potential deviation. These worst-case-scenario guidelines should include clear and concise directions and the contact information of a manager or other superior employee to be informed about each issue. The goal is to have a ready action plan that anyone at any skill level can utilize. This also mitigates the inherent human responses of both second-guessing and implementing emergency ad-hoc solutions during a crisis.

Don’t wait until a crisis to review and revise SOPs. Be prepared now for scenarios that most likely could occur.

Containment

If a critical event occurs, and a counter SOP is enacted, the next step is to contain the issue. Have a plan in place to put a figurative barrier around the problem to minimize lost production time, damage to raw materials or finished goods, potential harm to the public, and financial losses. Then, conduct a critical event analysis. This can include recording statements from workers involved and near real-time documentation and photos of affected areas or goods to determine what happened and the extent of the damage. The information gleaned in this analysis can help inform future proactive and reactive protocols.

Some other proactive methods can assist with containment. For example, the practice of routinely collecting a reference sample of a product can be a highly valuable tool in destructive testing, chemical analysis or even in customer service disputes regarding quality issues of discrete shipments. These samples can be retained or stored for a predetermined period of time, and the associated cost becomes an additional line item charged on an invoice.

In addition, a mock recall is an excellent exercise for both companies and their customers. This controlled event tests the validity of current procedures and protocols and also offers an opportunity to train workers on new safeguards. After the test, responses should be revised and compared to the procedures that best-in-class companies follow to see if there are ways to further improve the process.

Communication

When a recall happens and containment plans are put into action, use communication to further mitigate risk and prevent future recalls. This is a great opportunity to communicate with customers and strengthen relationships. Tell them what happened, what the cause was, how it was fixed and the plan to prevent similar issues from happening in the future. Mistakes happen, and customers should understand that, but sharing insights with them demonstrates honesty and respect.

The post-recall time period also is a crucial time to have conversations with supply chain partners. If, for example, the failure was caused by an issue with a piece of equipment or a component, the supplier should be informed, and suggestions should be offered for design or material improvements. This benefits the company by identifying a flaw in the system, the supplier by having new information to analyze, and customers by receiving improved products in the future.

Lastly, take this time to communicate with employees. The team that handled the recall now has a shared a critical experience and, likely, a similar range of emotions and challenges. Use this to help workers bond as a team. Also, show them that their hard work and dedication are valued. Host a roundtable debriefing to discuss the issue and ideas for improvement. When team members feel their contributions will be considered by executives, they will be empowered to be more diligent and productive in the future.

Learning from mistakes and planning for potential issues can empower any supply chain to better manage risks and control and contain situations when they happen. By communicating about these issues with members of the entire network, stakeholders will have the tools to create a better product and maintain a safer operating environment.