Product Recall Levels Hit Five-Year Peak

In managing quality, companies may be faced with defects that arise in the production of a good.  Perhaps the most pressing issue is a widespread defect found after the customer receives the product, often times resulting in massive external failure costs by means of a recall.  A recent study by law firm Clyde & Co. found that product recalls have peaked over the last five years, with their research based primarily on the food and car industries.

This data can be a result of many possible factors.  Clyde & Co. notes two prevalent trends causing this hike in the rate of recalls.  For one, in the food industry, regulators are paying closer and closer attention to the making, processing, and creating of food.  More advanced detection methods and technology have given food safety organizations a better ability to spot anything harmful within food items that would put consumers at risk.  Also, in the automotive industry, cars are becoming more and more complex, resulting in a greater room for error.  With such a vast range of features in cars now, it is simply becoming harder for companies to ensure products are completely free of any defects before releasing them into the market.  Finally, looking at an article posted by The Guardian, social media plays a huge role in the spread of complaints about faulty products or defects.  For instance, Apple has recently been hit with severe backlash over their old iPhone 7 models as well as the new iPhone X models not working, primarily by means of customers taking to social media to voice their complaints.  In posting tweets or statuses, consumers have the ability to collectively show displeasure in a product, in a less formal yet even more effective way than a customer service hotline or website.

However, looking again at the Clyde & Co. study, they found that even though product recall levels are high, companies are only moderately successful in ensuring their success, with organizations having a difficult time in persuading consumers to actually return the faulty products.  Their analysis states that convenience will often times outweigh the “cost” of using a defected good, so many consumers will simply disregard the defect altogether because they deem it too much of a hassle to send the product back for a new one.  For instance, many large-scale automotive recalls in the United States were found to have success rates of just around 50% (Financial Times).

In connecting these trends back to the discussions we’ve had in class, clearly a big issue with recalls from product defects are external failure costs.  Recalls are incredibly expensive, with the average value of a large scale recall in Europe being €12.4 and €7.9 million in the auto and food industries respectively (Financial Times).  Furthermore, these changes will alter how companies utilize quality management to ensure their customers are satisfied.  With greater risk for scrutiny, companies must place more and more weight on the employee involvement and continuous improvement principles of TQM.  In finding different ways for employees to contribute to quality management, such as better monitoring the various new ways consumers are voicing their opinions, as well as evolving the PDCA process to be more effective considering these recent trends, companies can work to eliminate the possibility of recalls and increase overall customer satisfaction.

 

Sources:

https://www.ft.com/content/e02969fc-0dc0-11e8-8eb7-42f857ea9f09

https://www.theguardian.com/media-network/2015/may/21/customer-complaints-social-media-rise

4 thoughts on “Product Recall Levels Hit Five-Year Peak

  • February 13, 2018 at 4:54 pm
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    Customers can harm a firm´s name. They are the ones that stablish if a product has quality or no, so sometimes, even though the product has good quality, the customer can make it look like as a low quality product if it does not meets his spectations. That´s why appraisal costs are so important, because the firm needs to know what level of quality the customer is expecting. And once they know, they need the right process to make sure that they deliver that quality. When they do not deliver that quality, it might be because there are some defects in the process or because they did not identified the right expected quality. When this happens, the firm enters into external failure costs; the customer identifies the defect and they damage the name of the firm by telling other customers that the product is not good enoguh (not good quality). So, even if the customer do not return the damage product, the cost is already there because their future customers will not purchase a product that is known for low quality.

  • February 14, 2018 at 6:36 pm
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    Another aspect that could be leading to the increase in the rate of product recalls, specifically in the food market, could be increased specificity. There have been a variety of recent trends in how people consume food, most focused on food with higher quality or more specific ingredients. From increased focuses on organic foods to the gluten-free trend, a market that grew 63% from 2012 to 2014, it is clear that food producers and vendors have a lot more to worry about than they used to. Perhaps firms were not used to paying attention to the gluten levels or organic certifications of their products, as they were not as big of consumer specifications in the past. Now, though, with many people insisting on being gluten-free or eating food that they can certify is responsibly produced, companies do not have the liberty of slacking. There also may have been an adjustment period. Prior quality controls for food producers may have simply involved ensuring food was not rotten or spoiled, that it was the correct amount, or that the packaging was not damaged. Dealing with more specific demands requires a more nuanced quality control system. It takes a lot more to double-check that a product has not been contaminated with gluten, or even come into contact with it. While there may be many factors behind the rise in product recalls, customers with more specific demands and companies that are not used to navigating these territories could be a major factor in the food market.

    http://www.eatingwell.com/article/285160/unraveling-the-gluten-free-trend/

  • February 14, 2018 at 6:49 pm
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    The uptick in recalls by many companies, especially Clyde and Co. mentioned by Justin is very interesting. Just states that the “convenience will often times outweigh the “cost” of using a defected good”. But a key word here is “often”. I can recall many times that a defective product has needed to be recalled because the original product has been destructive and harmful to the customer. Many of these recalls are through food and drug products regulated by the FDA. For instance, I remember reading about a recall this past summer of a very popular baby bottle soap called Dr. Browns. As stated in this article: (http://fortune.com/2017/08/31/dr-browns-soap-bottles-recall/), “the soap could contain “harmful bacteria” that “poses a risk of respiratory and other infections.” This is just one instance of many where a product has needed to be recalled in order to save the lives of individuals, especially young children. This makes me think back to our previous discussions about managing projects. A large amount of recalls makes me wonder if companies do not effectively plan their supply chain process out. They may skip steps that are necessary, such as testing, in order to shrink their critical path. I think recalls are a extremely important topic in a consumer based economy like the U.S. and the companies should be punished if their product is recalled, in order to incentivize them to create a product that does not need to be recalled in the first place.

  • February 15, 2018 at 1:47 am
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    In this day and age, the power is in the hands of the customer. Given the multitude of useful avenues for customers to not only voice their opinions about any given product, but also to spread negative reviews of product, companies face very limited room for error.

    Furthermore, some companies have needed to recall products based purely on the customer not liking something about the product, even if there isn’t a failure or problem with the specs of the product. Not only do these companies in the automotive and food industry need to take all precautions in terms of testing their products pre-sale, but they also need to do much more research and surveys to obtain a precise feel for the customer’s desires. The customer has all the power at their fingertips. At any moment, if enough customers dislike a product, they can take the time to type a few words into their phone and within minutes it could go viral and destroy a company’s sales, and often times forcing a recall of products.

    On the opposite side of the argument, Snapchat has received a major
    backlash from its users because of the new update, with multiple tweets and posts going viral on twitter, receiving hundreds of thousands of reposts demanding that the interface returns to its previous update. However, the difference in this situation compared to the other companies highlighted previously is that Snapchat users use the app for free, generating no revenue for the company. The company generates its revenue from advertisements and news outlets who display their news in the app. In the new update, it is evident that these advertisements and news displays are getting much more screen time in the eyes of the user, thus generating more revenue for Snapchat, which is why the sudden outburst by the users has not caused the workers at Snapchat to revert to the previous update.

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