In certain industries, recall rates are high enough to be factored in as part of the business process. For example, the industry average for automotive recalls currently stands at 1,115 per 1000 cars sold, as a single vehicle can be recalled multiple times for different reasons. In the food industry, recalls have nearly doubled since 2002 and half of these food recalls have cost the affected companies over USD $10 million. And as the medical tech industry grows, the rate of medical device recalls in the U.S. has increased by 97% over the last 10 years.

Recalls can be caused by product issues or health and safety concerns, and they can be a costly affair for any affected business. After all, on top of the costs of replacing the product and rectifying the issue at hand, a recall can affect other areas of your business as well.

How can product recalls affect your business?

With over 2500 product recalls annually in the USA alone, recalls should be considered a potential threat to any business, particularly in areas like brand perception and customer confidence.

Here are three ways to minimize the impact of recalls on your business:

  1. Be prepared

    Being prepared at all times is key to limiting the damage to your business in the event of a product recall. This means you’ll need product traceability so you can communicate the problem to key stakeholders, ensure the recall progresses smoothly, and reassure your customers.

    Any delay in announcing a recall or the failure to take prompt measures can result in a negative impact on your brand, especially if it reaches the media.

    The use of an easy-to-implement batch tracking system like QuickBooks Commerce will provide your business with vital information around the sales orders related to every batch of your product. This approach can save you a huge amount of time by allowing you to focus your resources on tracing the product and notifying your customer(s).
  1. Communicate quickly and clearly
    Communication via devices
    If your customers see that you’ve communicated clearly and acted promptly, you can minimize any negative impacts of a recall upon the credibility of your brand and business.

    Recent statistics highlight how crucial expedient and clear communication concerning recall products can be. According to the data they gathered, 93% of consumers said that they believe how a company handles a recall indicates whether they care more about profit than customer safety.

    Meanwhile, 87% indicated that they would be more inclined to purchase products from companies that they perceived had handled recalls in an honest and responsible way.

    Utilizing a reliable batch tracking system will enable your business to respond in a prompt and professional way once you start a recall. Once you identify where the products are, your priority should be to inform your customers about the recall procedure and ensure their safety, so that you can limit any damage concerning the perception of the brand or business.  
  1. Managing recall logistics

    When you’re running a recall, you need to retrieve all affected products. After reaching out to your customers, you’ll need to be ready for all the returns coming in. When you’re planning the logistics around a recall, you’ll need a plan.
    Planning the logistics around a recall
    For starters, think about where your customers will return the items and your refund process. Should they send the faulty products to your warehouse, to your manufacturer, or to a local office? Or will your recall plan depend on your supplier and their return procedures? By setting up a plan for the recall process, you’ll be able to save time and money.

    With batch tracking, you’ll be able to locate the affected batches and inform your customers of how to go about returning the recalled products. Since you have a record of the affected batches, you can track your returned products as they come in, and even follow up with customers who did not respond to your first recall notification.

Turning a recall into an opportunity

Planned action is always preferable to reaction, especially with something as potentially harmful to a business and brand as a product recall. With batch tracking functionality like the one offered by QuickBooks Commerce's order management system, you can overcome the headaches of a recall by taking proactive steps. By taking the right measures in the event of a recall, you can turn it into an opportunity to enhance the public’s perception of both your brand and your business.

Next: Simplify batch tracking and streamline your operations


See also:

Introducing: Batch and expiry date tracking for F&B businesses

3 things to consider when choosing the right software for your wholesale business

Product Bundling - How to increase sales