Product recall – and now what?

“A software error may cause unintended activation of the front airbags.”¹

Doesn’t sound very nice, does it? An airbag that instead of saving lives may endanger lives – no, that is certainly many things, but “nice” it is not! And logically, such a fact calls for consequences. An immediate one is a product recall, with which the manufacturer tries to correct the cause of the problem before it actually becomes a danger to life and limb.

Product recalls – everything but a rarity

Perhaps you have also been affected by a product recall? For example, my motorbike was found to have an assembly defect and there was concern that a massive riding problem could occur. I was asked by letter to make an appointment at the manufacturer’s workshop. No sooner said than done. No big deal! In the meantime, I ride another motorbike from the manufacturer. In my eyes, the manufacturer has lost none of its appeal despite the recall. On the contrary: he has acted responsibly, and that is what I expect in such a situation. It did not try to handle the situation with a naïve and even grossly negligent “Maybe we won’t get caught!”. That’s good.

Moreover, in this specific case, the manufacturer also “benefited” from three other things:

• My understanding of product development. I believe that even with the best knowledge and conscience, and exact manufacturing and production, mistakes can happen. Of course, companies try to guarantee a defined quality with safety measures, tests or acceptance inspections, but “you have to break an egg to make an omelette”.
• My expectations as a customer. Do I want a defective product? No, of course not. But the manufacturer won’t want that either. So we are practically in the same boat. We have a common problem that should be sorted out quickly. Ergo: if there is clear, transparent communication, and appropriate problem resolution – always assuming that no serious harm has come to me or my loved ones as a result of the error – then I can live with it just fine.
• My knowledge of product recalls or recall campaigns. In fact, product recalls are not uncommon. There are numerous sources on the internet that list and detail current and past recalls.²

The perception in case of problems or errors

Do you use a smartphone and update your apps automatically when you are on a Wi-Fi? If you do this, you may not even get to know which apps have new versions, what changes with them and which bugs are fixed, right?

This is a common practice in the software industry. Updates and patches offer new features and bug fixes. This is pleasant for the users and for the manufacturer in terms of software distribution of new features and bug fixes as well.

As a user, you may have considered an alternative procedure, either privately or in your company, because you do not want to use automatic updates immediately: You simply wait a few days. Why should you install an update on the day it is released if you can wait a little longer? Delaying updates gives you the chance to make use of the first experiences of other users – who thus become, so to speak, testers for you or your company – and to wait for short-term improvements from the manufacturers. People like to talk about the banana principle, according to which customers receive unfinished products from manufacturers that only mature through feedback and improvements. Even if manufacturers like to deny the existence of the principle, as a user it rarely comes down to a few days when it comes to new versions…

It is conceivable that the automated updating of software will also work in the automotive and motorbike industry in the future; in the case of incorrectly mounted screws, loosening brake parts or leaking drain hoses, on the other hand, only manual repair will help. And here lies the difference in perception: if a problem with a temporal urgency and accompanying danger to life and limb can only be fixed manually, then a recall is mandatory. For many other problems, the solution can be updated and thus many users do not even notice possible problems or errors.

The simplified procedure for a product recall

In somewhat simplified terms, many product recalls proceed as follows:

• There is an indication of a problem, a risk or a danger. The notification is received from outside – e.g. from users, customers, partners or test centres – or from inside – e.g. through new tests, calculations or observations.
• The problem is evaluated, including the identification of the hazards according to type and cause, the probability of occurrence and the extent of damage (as is relatively common in risk management), as well as the persons and products or product batches affected.
• Subsequently, necessary measures are derived. Depending on the risk or hazard, direct or indirect measures are agreed upon and, if necessary, responsible authorities, suppliers, partners, dealers or customers are informed.
• And, of course, the measures must be communicated, implemented and monitored.

Last but not least, companies should actively learn from the situation. The findings of the root cause analysis must lead to consistent improvement within the organisation. Why? Because recalls cost money and often the company’s image suffers massively. Because lessons learned offer a sensible approach to learning from damage. After all, it is often the case in organisations that the later an error, problem, risk or hazard is discovered, the more expensive it usually is to rectify and the more far-reaching the consequences.

Note: The European Commission’s website has a guide that provides a more comprehensive overview of the corrective action and recall process.³

The central importance of internal and external communication

“… and of course, the measures must be communicated…” is one point in the described process of a product recall. If you are actually forced to carry out a recall, what should you pay attention to when communicating the incident?

There are companies that first name a contact person through whom all communication with distribution partners, consumer associations, authorities and the press should go. On the one hand, this makes sense, but on the other hand, a great opportunity is already being wasted here. Employees are brand ambassadors! But they can only be that in the sense of a company if communication is done with them internally. As a company, you naturally want to avoid 1,000 employees telling just as many different stories and making assumptions. Even if companies regulate internally who the authorised contact persons are for scheduled external communication, the company’s comrades-in-arms will tell their side of the story in their families, among friends and acquaintances or via social media. And the recipients of the news will tell others. This is how opinions are formed about the specific incident and about the company in general, and a later correction by the company becomes very time-consuming and expensive. Therefore, it makes much more sense for companies to uncover the reasons for the recall and to communicate about the procedure for finding the cause. Internally and externally.

So after identifying the causes of the problem, companies should

• define primary internal and external contacts,
• communicate transparently and openly with employees and market participants,
• communicate a timetable and thus provide orientation internally and externally,
• publish factual information and do not play down causes and consequences,
• not speculate on reasons or apportion blame,
• ensure that they will henceforth produce products of the desired quality again.

And above all, companies should apologise to the people affected. This sounds particularly simple, but is avoided by many a company as an admission of guilt.

The magic word: trust

Why is internal and external communication so important in the case of product recalls, especially since producer and product liability, warranty, guarantee and liability for defects are regulated by law? The answer and the magic word is: trust.

Trust is a currency. Gaining the trust of customers, users, partners in times when products and services are becoming more and more similar is very important for many companies. In the case of product recalls, the trust of the parties concerned is shaken per se. Namely, the external trust of the market and also the internal trust of the employees. Communication can maintain trust and possibly also rebuild it. Lack of communication may destroy trust irretrievably.

Of course, communication offers only one perspective on the recall. Transparent procedures and actions are at least as important.

Conclusion

Of course, companies want to avoid errors or even recalls. Unfortunately, this is not always successful. Mistakes happen again and again – that is not a new insight. What could be new, however, is how to deal with these mistakes. Organisations should learn directly from their mistakes and fix them permanently.

A product recall must be the starting signal for a quality offensive of the company. The aim is to maintain or regain the trust of market participants. This trust, in combination with good products, ensures the company’s continued existence. In this way, better processes, higher quality standards and perhaps even a more open communication culture can emerge from crises. Even if it is not always directly visible at first glance, therein lies the opportunity in product recalls for companies!

Notes (Links in German):

[1] Federal Motor Transport Authority: Recall database
[2] See, for example, food warnings at the Federal Office of Consumer Protection and Food Safety, Product Warnings DACH, Consumer Advice Centre or Federal Motor Transport Authority.
[3] European Commission: Product Safety in Europe. A guide to corrective action including recalls

Michael Schenkel has published other articles in the t2informatik blog, including

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