Let me put a historic event of product recall.
In November 1994, Intel Corporation was confronted by angry customers demanding replacement of their Pentium microprocessors, which had been reported to have a flaw affecting mathematical calculations. The company’s first response was to demand that customers demonstrate that their chips were faulty; only then would Intel issue replacements. Intel claimed that the flaw was unlikely to affect most users—that it occurred only once in every 9 billion random calculations—but consumer confidence in the product already had begun to waiver. The company stubbornly held its ground for more than a month in the face of a storm of protest. Then IBM, a major purchaser of the Pentium microprocessor, halted shipments of its computers containing the chip. At last, on the brink of market disaster, Intel instituted a no-questions-asked returns policy.
Here, its not the regulatory bodies who compelled the Pentium company to return its product but well aware public and IBM company who believed in quality product.
But in case of Nepal, how is the situation? Yes, Nepali market hardly see any product recall, because there is no astringent rules and even if rule can be executed, due to lack of technology, man power and well aware customers( health workers and consumers) we are unable to recall back the product.
Each pharmaceutical company in market wants its market share and its goodwill, but majority of them failed to land safely during product recall.
So why aren’t more companies prepared to deal with recalls?
We are going to answer this question but at same time, lets us discuss more on product recall.
A recall is a serious process. It highlights a dangerous situation that requires fast and effective action to protect the public from harm. Product recall can be due to:
a. Customer complaints (which may includes health workers, patients or consumers/users): Eg. Recently A USFDA approved company withdrew the whole batch of Product just because a customer(health worker) found different tablet in the primary container.
b. Company discovery: When a pharma company finds some issue in product, be it in packaging materials, in product quality.
c. Regulatory inspection: When Regulatory bodies finds any failure in product quality. Last time, DDA found quality control parameters failure in three products from national and Indian company, it immediately put notice for product recall.
d. Adverse drug reactions: When a pharmacovigilance program in each health centres or Department of drug administration finds any Adverse drug reactions in particular product or batch or make, in life threatening, critical drug reactions.
Product recall is a challenging job and it’s a complex procedure for a country like Nepal where the distribution channel is not proper and each batch is not tracked in a proper way. During the procedure, a company has to mobilize all its distribution channel man power along with Quality assurance personnel.
But, at present context, if company uses it communication power and track all the record through digitalization, its quite easy to recall the product. Hence a sound strategic recall management system has to be established by a company. If product recalls are handled properly, a company not only can keep damage to a minimum but also may find opportunities to reap unexpected benefits. Lets take an example, if a company ABC wants to recall its product from a market which has been distributed for more than 3 months, if its strategic recall management is well managed, for a country like Nepal, within few weeks a particular batch can be recalled or can be dumped locally approved local site.
How can a company prepare itself properly for a recall that it doesn’t even know will happen?
Each of the four functions delineated earlier must make advance preparations, must react appropriately during the recall, and must take the right steps afterward.
Policy and Planning (Overall Coordination of a Recall).
Long before a recall becomes necessary, senior managers should be fostering an organization wide recognition of the need for recall readiness. They should ensure that employees understand the link between recalls and consumer safety and satisfaction, as well as the effect well-run recalls can have on corporate success. They also should fight any signs of a “kill the messenger” culture that might prevent news of a product’s problems from reaching the appropriate people. Thought of broadly, this task is difficult—a company’s culture does not become “open” overnight, and it isn’t easy to identify weaknesses in the chain of communication when it is not being tested with a real-life situation. But there are a number of steps managers can take to move their companies in the right direction.
A User’s Guide to Managing Product Recalls
First, the overall responsibility for product recalls should be assigned to one senior executive. It might be the senior vice president for marketing, another senior vice president, or even the CEO, depending on the size of the company, its organizational structure, and its individual circumstances. That manager should require the development (and regular review) of a recall manual that details the company’s policy and guidelines in the event of a recall. The material in the manual should derive from marketing; in effect, a recall operation is based on a reverse-marketing plan. Customer satisfaction and other marketing goals remain paramount; however, the task is to use marketing skills to retrieve the product from the customer.
In creating a recall-ready organization, the person with overall responsibility should identify key managers throughout the organization who might be called on to act in a recall situation. The idea is to avoid blindsiding anyone. Some companies also enlist the help of people outside the organization in anticipation of a recall. The vice president of marketing for Netscape Communications Corporation offered cash or prizes to anyone—inside or outside the company—who found problems in a test version of its software designed for browsing the Internet.
In the event of a recall, the senior recall manager should appoint a response team, including a “recall champion,” to manage the recall on a daily basis. The response team should be made up of those people the manager has tapped in advance from the various areas in the company. The team members’ first task is to establish the seriousness of the situation. Such an evaluation will help them determine the speed and type of response and will be especially useful when there is a risk of customer injury or illness. An incorrect assessment of the severity of the problem can lead to lasting trouble.
After the team evaluates the situation, it should determine the scale of the response necessary. It should also decide what type of recall is warranted. Does the situation require a full recall, a selective recall, a repair or retrofit offer, an optional recall, or a change in the production and distribution of the product? Can the problem be solved by offering customers an opportunity to exchange the product or by issuing an advisory? If a department of drug administration has called for the recall, is it truly warranted? Are the charges accurate? Should the company refute them? If recall action is warranted, the response team should also determine the announcement (who will make it; when and where; who should be notified; and what the script will be) and coordinate the field response program (who will be accepting the faulty products; how the company plans to monitor the products that have been returned; and who will be providing repairs or replacements).
The team should keep in mind that it is critical to arrive at a decision regarding the recall as swiftly as possible. But a decision doesn’t necessarily have to mean taking action. A recall made too soon could give credibility to an unsubstantiated charge.
Another factor militating against hasty recall action is the company’s liability exposure. Although delaying the recall may increase the size and number of claims against the company—not to mention potentially endangering consumers and creating ILL WILL—issuing a recall amounts to admitting that there is a problem and may open the door to a flood of lawsuits. Sofar in spite of some products being recalled we haven’t found any lawsuits in Nepal. The recall response team should weigh all factors carefully before making a decision.
The management task is no less important after a recall. The response team should design a resolution plan to bring the effort to a satisfactory close. Team members must set goals for closure; for example, a given proportion of distributed units returned. And they must anticipate stragglers. If the recall process is effectively shut down, how will the company deal with an unhappy consumer who somehow missed the boat?
The team should also figure out how to reintroduce the product to the market. A reintroduction plan—which ideally would be developed and implemented with the participation of several of the people who originally designed and launched the product—might include a relaunch marketing effort to reassert brand identity and to build share.
And team members should keep an eye on the competition. A product recall situation is a critical phase for a pharmaceutical company where it can lose its many loyal customers. So the team member especially the marketing response team has to keep an eye on those competitors keenly.
Finally, the recall team should audit the recall. There is a lot to be learned from how a company’s recall plan worked in practice. What gave rise to the recall? What factors influenced its effectiveness and success? By conducting a review after the fact, managers can identify strengths and weaknesses of the effort and plan for a more effective response should another recall situation arise in the future?
When the recall is over, the recall champion should recognize and reward the major participants, especially members of the response team. During the recall, most team members will have had to perform their regular duties under intense time pressure or be covered by other personnel. Because a recall can have dire consequences for a company, one might think it would not be necessary to motivate a recall team. However, recalls are often takes few weeks to over several months and can become exhausting. Rewarding all participants, including retailers, is critical as well. For example, if a retailer played a major role in facilitating the process, the company might consider—within the constraints of the law—allowing preferential access to any of its products that are in short supply.
Product development/Pharmaceutical production team (production, quality control and quality assurance personnel)
Once a recall is issued, the product development team should focus on finding the cause of the problem and the best solution. On occasion, that team may be too close to the problem to assess it effectively. If necessary, an outside expert should be consulted to expedite the process and provide an impartial analysis of the problem.
After a recall, the product development team should conduct additional studies of the product defect with an eye to identifying any glitches in the development process that contributed to the problem.
Finally, the company should be involved in gathering customers’ reactions to the product recall, or at least be well informed of that feedback. Are customers satisfied?
Communications
The communications function plays a central role in preparing an organization for recalls. In fact, the effectiveness of communication during and after a recall depends on prior communication.
As part of recall preparation and to aid people in communications, the manager with overall responsibility for recalls should identify major recall stakeholders (beyond immediate consumers). These might include distributors, dealers or retailers, financial institutions, employees, service centers, sales forces, and regulatory agencies. All those parties have a vested interest in how the company weathers a recall, and all should be kept abreast of the company’s plans and actions (as appropriate) as the recall unfolds. Clearly it is important to build the organization’s credibility in the eyes of those stakeholders in anticipation of the need for a recall. Many companies already have crisis-management communications plans that can address a variety of crises, whether they be labor relations issues or regulatory or criminal investigations. Recalls should be included in those plans. For companies that are in the process of developing crisis-management communications plans, a recall scenario might provide a suitable prototype issue.
During a recall, the response team should keep customers properly informed. Customer communications can reinforce the company’s image as a responsible organization. Team members also should decide on and release appropriate messages to the media. For example, they might decide to preempt their current advertising with specially designed recall advertising. To carry out recall communications successfully, the recall response team should draw on the experience and expertise of people from public relations, advertising, and other sales and marketing resources.
After a recall, communications should focus on restoring and strengthening the company’s reputation and the reputation of the product in question. The extent of that effort should be determined by the impact the recall has had on the stakeholders. We recommend, however, that as general practice, the communications members of the recall response team take at least some form of the following two actions.
They should inform and reassure customers and other stakeholders, customizing the message to the various audiences. That action—which might take the form of letters, press releases, or advertising—may be conducted in tandem with the marketing efforts to relaunch the product.
Performing effective recalls also requires the company to take appropriate preventive steps so that similar problems should not occur in future. Implementation of such steps helps the firm to strengthen its brand. Similarly, companies should take the opportunity to build consumer confidence in the company brands, and positively influence customer satisfaction and loyalty with increasing profits.
We have seen very rare product recall in Nepal not because our product( marketed products) are in perfect shape, but because of fear of a company to lose its Goodwill.
References:
1. Harvard Business review
Tags:
Regulatory