Happy New Year to you and your family, I hope you enjoyed a wonderful holiday season! Since you’re reading this, you must already be rolling up your sleeves and making plans for 2018 to be your best year ever. Taking steps to protect what you have right now might be a great place to start.
Let’s face it, product safety is not currently at the top of the list in the promotional products industry. What’s new and shiny, what you can get for a great price, and what competitors are up to are much more likely to lead the conversation. The risk of product failure is lightly brushed off, and a recall is something that “could never happen to me.” But, if you think financial and reputational risk is just for the big boys, think again. According to insurance industry publication PropertyCasualty360, a third of product recalls are from companies with five or fewer employees.
There is no arguing about the growth in number of recalls over time. While the focus on safety and regulation by the current administration may have blurred a bit, the rise of complex global supply chains, the knock-off effect from the current competitive price landscape, and growing consumer awareness from social media keep the potential of a recall happening to you a reality. Advances in product testing using DNA technology makes it easier to establish the link between product failure and the supplier of that product, even if that supplier is halfway around the world.
Overall, defective product or work is the largest contributor to recalls worldwide, with product contamination next. While automotive manufacturing is the largest driver of recalls, two categories from our industry—food and beverage, and electronics, are the next two in line. When your client asks about candy, mints, or branding on a beverage, did you know that category accounts for 16 percent of all recalls? According to Allianz Global Corporate and Specialty Insurance (AGCS), the average cost of a significant product recall claim in the food and beverage category is almost $9.5 million. Undeclared allergens (including mislabeling incidents) and pathogens are the major issues, along with contamination from glass, plastic, and metal parts. Malicious tampering and even extortion incidents are also an increasing threat, and when it’s deliberate, it even has been named: “food fraud.” Recalls in the food and beverage category are becoming a major issue, resulting in reputational damage and major losses.
Defective electronics are in the news often enough that they should have already earned your attention. In the last month alone, an exploding battery in a backpack delayed thousands of holiday travelers in the Orlando airport, and another in an Indianapolis apartment sparked a fire that left 10 people homeless. These are real-life, and recent, examples of battery failures in products you could have easily sourced and sold to your clients. When the failure profile is high, so is the likelihood of lawsuits resulting in additional business expense, and damage to your reputation. Fortunately, nobody was seriously injured in either of these recent incidents.
Product failure and recall is a real risk to you and your company, but it’s one that can be managed. When you have a detailed plan of action, and can promptly and effectively execute it, it demonstrates your commitment to customers and their safety. When you have a product failure (and you will), instead of scrambling around trying to figure out what to do, you’ll be prepared for swift action. Building safety into every part of your business operation, and thinking proactively will go a long way to protect you, the reputation of your business, and your customers. And when accidents (or recalls) happen, being prepared, and stepping up and doing the right thing will ultimately enhance your reputation and grow customer loyalty. Now isn’t that a great way to start out the new year?
Jeff Jacobs has been an expert in building brands and brand stewardship for 40 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. You can find him still advising Global 500 Brands on promo product initiatives, working as a volunteer Guardian ad Litem, traveling the world with his lovely wife, or enjoying a cigar at his favorite local cigar shop. Follow Jeff on Twitter, or reach out to him at jacobs.jeffreyp@gmail.com.