Consumer safety continues to be top of mind for federal agencies and companies, as recalls in the food, automotive, medical device, pharmaceutical and consumer product industries continue to make headlines. According to Sedgwick’s Q1 2022 U.S. Product Recall Index Report, there were more than 900 million units recalled, marking the highest number logged in a single quarter in the past 10 years ,and eclipsing average annual figures recorded across this timeframe.
Amid strained supply chains, heightened consumer demand, increased regulatory scrutiny and looming economic factors, companies must monitor for changes and implement clear procedures to ensure product safety in today’s environment. Not only does this include properly vetting suppliers and understanding what parts are being put into your products, but also having a plan to adapt to external factors such as the changing legal landscape, the labor shortage, interest rates and a potential recession.
Know What’s in Your Products
At the start of the pandemic, there was a huge demand for hand sanitizers, and companies rushed to fill it. However, consumers ultimately complained that some of the hand sanitizers smelled strongly like alcohol and weren’t good for their skin. It turns out that with limited ethanol due to production needs, some suppliers replaced this chemical with methanol, which has an FDA warning when included in hand sanitizers.
So, what do companies do next? It’s important to know the core reason why a recall occurred, but it can often be hard to get to the root due to limited visibility from suppliers. Whether it’s a verification issue, negligence, quality or something else, supply chains are often long, making it hard to identify what went wrong. While there are some preventive measures in place — including more stringent checks at ports, notifications of part changes and alerts on whether pieces have met specifications — companies can’t relax their procedures and must constantly update their parts and check products to avoid future issues.
Another big issue for companies during the verification process is identifying counterfeit products. Some technology certifications are a stamp or sticker that can be easily replicated, so it’s possible for companies to think they’re getting the right part even if it might be fake. If companies aren’t diligent about supplier verification processes, products could break down faster, fail to meet standards or contain hazardous materials, ultimately risking consumer safety and damaging brand reputation.
Adapting to What’s Thrown at You
It’s easy to prepare for obstacles that are within your control, but brands must be prepared for external factors as well. Key drivers of change include regulations, inflation, the labor shortage and backlash on social media.
The government has already taken several steps towards industry regulation and change. The STURDY Act, Reese’s Law, Safe Sleep for Babies Act and more all stemmed from high-profile recalls and advanced over the last year. Companies must be at the forefront of industry change and new regulations by keeping a pulse on new legislation, and ensuring products are compliant when they go to market.
Inflation, the labor shortage and a potential recession put the consumer goods industry at risk of not meeting quality standards. This previously happened in the recession of 2008, which may have contributed to an increase in recalls during that time. In the next 12 months, material costs are likely to rise, and layoffs are a real possibility, at time when many companies are already short-staffed. Finding individuals who are committed to quality and safety while also giving them proper training is no easy feat. These factors are likely to drive up the likelihood of more vulnerable products.
In today’s world, companies can damage their brand reputation instantly due to backlash on social media and failure to meet customer demands. They’re facing an uphill battle to provide the highest-quality products in a safe and timely manner, while also adapting to new federal laws and economic shifts. During uncertain times, those that adapt to this “new normal” will ultimately earn consumer trust, limit product recalls and safeguard their supply chains with quality products.
Chris Harvey is senior vice president of client services at Sedgwick.
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