Product recalls are increasing in frequency and cost. Keith Nichols, a consultant at industry technology analyst Cambashi, considers how PLM software can help manufacturers avoid these unwelcome burdens and the damage they can incur.
Experts at industry analyst and market consulting firm Cambashi contribute a regular blog to TM titled Silos Changing exploring how new software applications enable manufacturers to implement business initiatives for the new economy.
Manufacturing companies build their reputation on the quality and safety of their products. Serious design faults, manufacturing errors or even incorrect labelling often result in widely publicised product recalls which carry the risk of unwelcome commercial and brand image fall-out.
Although it is difficult to find an official figure for the total cost of recalls, it is clear that the number of incidents is rising.
The number of product recalls in the UK hit a 10 year high in 2010-2011 according to research from law firm RPC which recorded 291 incidents. This dropped slightly in 2011-2012 to 26o but still remains high.
RPC noted an upswing in the number of companies taking out product recall insurance as a consequence.
More on this to come.
Recalls are generally expensive because they involve locating the problem, re-designing it then correcting it in the field.
Not too long ago, Toyota spent £2billion to recover from several vehicle recalls. About the same time, Mercedes recalled 1.3M of its vehicles. Very few automotive manufacturers have avoided recalls altogether, either from the expensive luxury ranges or the high volume versions.
The problem is not only symptomatic of the automotive industry.
Recently Bosch recalled 632,000 of its dishwashers because of a potential fire hazard at full load. Samsung recalled 186,000 of its washing machines. Hoover, Beko, and Hotpoint did the same for its fridge freezers. The list is exhaustive and includes a wide range of products such as toys, power tools, TVs, microwaves, mobile phones, and many other products.
Damage to a company does not stop at cost and reputation. It can also result in competitors grabbing sales of other company products whilst the recalled products are being fixed. It could even impact the ability of the company to attract and retain quality staff.
This makes for a bad scene. So why are we seeing this unwelcome trend?
Some companies have put it down to the pressure of bringing new products to market faster, leaving little time to identify flaws and faults.
Others point towards increasing outsourcing of the product with the possible introduction of weaknesses. Most bought-in parts or subassemblies work well if operated within their specified limits.
But depending upon how it has been configured within an increasingly complex product design, or what external conditions it has to endure later, can amplify the loadings, resulting in failure. The irony is that a £50,000+ product can fail because of a £20 part or even a £2 label.
Given the potential size and growing impact of these recalls, what is being done?
Many of the product life cycle (PLM) software suppliers are focusing their IT products on this issue to help identify and design out potential problems. For example, Dassault Systèmes has just launched its ‘target zero defect’ initiative, focused on the automotive industry, in which it is packaging existing features to enable its customers to prevent this serious problem occurring. Siemens PLM and PTC have similar capabilities within its software offerings, but it is not marketed with the same clarity in addressing this significant industry problem.
Some of the key application capabilities which address this business problem include:
- Collaboration between OEMs and suppliers within the same 3D digital environment to analyse selected amounts of the design and predict their performance long before they are made.
- Simulation to verify the full operating capabilities and conformance of the product
- Visualisation of the 3D digital design to gain an understanding of its operational effects and ergonomics.
- Virtual manufacture of parts and simulation of production lines
These capabilities will enable examination of the product and how it is likely to perform in operation, long before it has been physically built. At the same time parts within the overall assembly design can be assessed for potential failures and designed out at this early stage.
We may wish to question the overall cost of such an advanced IT system. However, with the growing trend in recalls as product complexity increases to meet newer customer demands, it sounds like a small price to pay for such a significant business gain.