How Business Owners Can Minimise the Impact of Product Recalls

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At some stage in time, it’s very likely that most business owners will experience having to manage a product recall. While having to implement a product recall certainly is not ideal, there are some key steps businesses can take to make the process as pain-free as possible.

It is essential to have processes and systems in place to manage product recalls effectively. Failing to prepare for these types of events can put your business’ reputation at risk, not to mention seriously compromising the business’ inventory management and moreover, profitability.

What is a product recall?

A product recall is essentially the process of pulling a certain product off retail shelves and online stores because it is faulty or hazardous in some way. Obviously, this is the last thing a business wants after going to the effort of manufacturing and distributing products, but it is not an uncommon occurrence.

In the United States, for example, the instances of product recalls have been on the increase since the 1980s. In 1988, the U.S. Consumer Product Safety Commission was involved in some 221 recalls, and by 1993, that number had risen to 367 recalls.

Product recalls usually occur because during the manufacturing process, a faulty component of the product has gone unnoticed, or perhaps the hazardous nature of the product was only realised once a consumer reported a bad experience.

This type of situation has obvious negative consequences for business: customer dissatisfaction, potential legal issues, decreasing sales, and of course, the loss of the cash assets tied up in now obsolete stock that cannot be sold for a return. This can mean the business is left with an excess of inventory which is no longer sellable, leading to decreasing profitability.

How can business managers handle product recalls effectively?

So, if this happens, what can business owners do to mitigate the risks and associated consequences of a product recall?

Tip 1: Invest in inventory software

Our first step in dealing with a sticky situation like a product recall is to invest in good quality inventory management software. Inventory software will allow you to track all of your products in real-time, from any device with an internet connection. By having this oversight of your products, the recall process will be much quicker, and it will be much easier to identify where the product has been distributed. Like pulling off a band-aid, you want the process of a product recall to be done as quickly and painlessly as possible.

Good inventory management software will also allow you to batch and serial track your products so you always know exactly where your products are.

Tip 2: Step up your customer service

When something goes wrong like a product recall, customers need reassurance that the business is doing all they can to resolve the issue. We advise stepping up your customer service and ensuring the company is staffed to the level required to deal with the inevitable influx of customer queries, concerns and complaints in a timely and polite manner.

Tip 3: Pay careful attention to your manufacturing processes

A product recall can teach you, as a business owner, the valuable lesson of the importance of attention to detail. While many new business owners are often in a rush to ‘make things happen’ it is important to take your time and be thorough when producing and distributing every type of product you sell — this is the best preventive measure you can take to avoid another product recall.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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