Product Recall Costs Can Sink Your Company
Product recalls can cost a company millions of dollars, and liability suits resulting from harm to consumers can rack up millions more in settlements. So, what’s a business owner to do? Answer: Avoid these situations. Take the following measures to minimize problems with your products and steer clear of recalls and lawsuits.
Check the details. What are the industry code standards for your product? Be sure to examine every aspect, including color, texture, and size. Ensure your product’s specs meet the exact requirements for production.
Check with suppliers. Will your products include parts or materials from suppliers? Most do. If so, make sure the supplier will be able to provide exactly what you need. Create formal legal agreements. Include expectations of the supplier and consequences if these are not met. Conduct quality audits of plants that are supplying your materials.
Check quality control. It’s essential to have a quality control system in place. Inspect materials to ensure they’re up to par. If you’re handling a high volume of product, you may need a sampling plan as part of this system.
Check your system. Conduct a mock recall once a year. This will ensure your quality control system works. Tracing your products verifies that communication channels and distribution systems are functioning properly.
Check your coverage. Even with these precautions in place, it’s important to have insurance. Product recall insurance can help cover the costs of the recall and, most important, assist in reestablishing your reputation. Consult with your provider to determine what coverage is appropriate for your business.