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The costs of a product liability claim which may result in a product recall can be enormous to any manufacturer. In addition to the prospect of costly litigation, the damage to a company’s brand can be immeasurable. However, if the right procedures are put in place and followed, such damage can be limited or avoided altogether.

What is product liability?

An area of law that deals with claims arising from any product defect including:

  • Manufacturing
  • Design
  • Manufacturer’s failure to warn
  • Product related warranties
  • Repairs or service failures relating to the product.

Avoiding product liability claims

  • Have written safety policies and an agreed recall plan in place, and share with suppliers
  • Appoint a product safety manager/committee
  • Carry out regular audits and maintain record-keeping
  • Manage supplier risks by ensuring transparency and traceability throughout the supply chain
  • Address issues before they become claims – be proactive. 

Dealing with product liability claims

As well as preserving all physical items, documents and information and notifying insurers, there are several factors that should be considered in a recall, whether it is a simple case of collecting a product from a customer’s home or removing thousands of units from retail stores or, indeed, any other point along the supply chain:

  • Act quickly and initiate the recall plan. If a problem with a product comes to light and it is clear that it will necessitate a response from the manufacturer, retrieving products from the market as quickly as possible is essential. A proactive product retrieval plan can assist every link in the recall process from the manufacturer through to distribution, retail, and ultimately the consumer. Any delay could potentially to expose the manufacturer, distributor and retailers to possible legal action and brand damage.
  • Draft your recall message clearly and simply and consider new technologies to deliver your message to the market.
  • Work with relevant agencies and statutory bodies. While navigating potentially complex regulations, it is important to account for all products and maintain the integrity of the product for additional testing and analysis. This means that the product’s journey must be meticulously documented, not only for potential legal issues but to maintain consumer trust in the brand.
  • Appoint/notify PR agency and third parties to deal with consumers/suppliers. Product recalls usually happen without warning, so it’s difficult for manufacturers to fully prepare in advance. With a complex supply and distribution chain, it may not be financially feasible to hire full-time staff to manage a recall and instead utilise internal resources. But this may be counter-productive because taking staff away from their normal work interrupts day-to-day business and can delay the retrieval process, resulting in higher costs. Use of a third party specialist to oversee and manage recalls is an often used alternative method.
  • Monitor recall and measure success. A manufacturer’s image and reputation are often on the line, so accurately retrieving all affected products is vital for the long-term integrity of the brand. If products remain on shelves, in the warehouse or in homes, a manufacturer’s liability increases along with the risk of regulatory or legal action and brand damage. To prevent non-affected products from the same manufacturer also being removed from shelves, it is essential to ensure that the manufacturer’s representatives visit distributors and retailers in person to ensure the focus is only on the affected product.
  • Consider how to re-launch your product. Once the recall has taken place, thought should be given to how and when a re-launch can take place. Any long term absence of the product from the market will weaken consumer confidence and allow competitors’ brands to establish themselves. 

The recall of a product in any industry sector, whether to protect customers, a brand or to gather intelligence, can have a devastating impact on a manufacturer, its finances and its reputation. However, if managed well, a successful recall can underline a manufacturer’s commitment to its customers and their safety.

Published: April 2018


Focus on Manufacturing - Edition 7

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Andrew Jackson