Safety recalls come in all shapes and sizes. Sometimes cause bad press, sometimes a positive proving moment for a brand. Big ones make the news, smaller ones send a couple tremors through the word-of-mouth channel. All will connect back to supply chain.
Not two hours ago, I was speaking with a client about the ability to track and trace components through the supply chain and the benefits related to product quality and customer service. And shortly there after, I read about the 11 million unit recall that Fisher-Price just announced today. Much like the Toyota recall, it’s amazing how a relatively few exceptions can cause major disruptions in supply chain.
7 of the 11 million products being recalled are tricycles and, according to AP, this action comes as a result of 10 reported injuries (6 of which needed medical attention). The injuries occurred as a result of design in which a plastic ignition key near the seat hurt the riders. I’m not going to focus on what’s right or wrong … or take a stance on what Fisher-Price should do, but I do think this issue warrants some exploration on what these recalls can mean for other manufacturers.
Because I cover the High Tech industry, I have several clients who have been through a safety or quality issue. High Tech, which has heavily leveraged OEM manufacturers to outsource portions of their supply chain, has figured out how to get early warning to product failures and proactively respond as a control for risk of outsourcing. In this Fisher-Price case, it’s interesting that they were able to get insight to the cause of the problem with only 10 reported injuries. And their quick response is getting positive communications from the Consumer Product Safety Commission (CPSC).
The second thing I thought of when I read the story is how Fisher-Price will get products off shelves and back for rework. A couple things stood out to me as issues to consider in this process… Where are the rework centers and how will distance play a role in total cost of this recall? Does this flow through a typical logistics nodes? Recalls always make me think of reverse logistics. Returns processes force companies to figure out how to move product back through different portions of the supply chain (ie: to a distribution center, re-engineering, original factory, disposal, etc), but a recall is a new beast. I imagine the level of rework is somewhat tied to price points. For High Tech clients, it’s issues like these that provide a nice time to reflect on reverse logistics capabilities as well as how globalization has extended supply chains.
Back in June, two major supply disruptions hit the mainstream press. One was the 13 suicides of employees at the Foxconn China OEM and the other was a Nichicon processor failure and it’s impact on a couple major PC manufacturers. I took that opportunity to talk through some best practices for risk management including early warning (as discussed above), risk planning and it’s relationship to S&OP and creating a crisis playbook. That research is available here: http://www.gartner.com/resId=1427432
What do you think? Do companies plan and/or react better today to major recalls than they did 10 years ago? Does this vary by industry? Do you think companies put enough focus on the reverse supply chain?
Category: Supply Chain Risk Management Tags: Fisher Price, Reverse Logistics, Risk Management, Safety Recall, Supply Chain
1 response so far ↓
1 Anand Ramakrishnan September 30, 2010 at 11:43 pm
Product recalls are a painful process. Industries have definitely evolved in the recall process due to these reasons. For example, in the food industry, a) there are label claims being made – trans fat free, gluten free etc but the product itself does not meet these requirements leading to recalls b) there are genetically modified products that are being induced that are not safe
Another thing to be aware of – RFID tags on pallets may become the norm which will help in reverse logistics.
Regards,
Anand