Supply chain challenges: Reducing the impact of product recalls

Posted on 25 Oct 2024 by The Manufacturer
Partner Content

All manufacturing businesses have the potential for exposure to a product recall scenario, so minimising the effects and implementing a robust recall plan is vital.

Managing product recalls within the supply chain is one of the most significant challenges companies can face, and if not handled well, they can prove expensive, harm a company’s reputation, and pose serious threats to consumer safety. With product recalls, one of the first things to consider will be the costs associated with managing the recall process to reduce business and operational interruptions.

The cost to a manufacturer is both financial and reputational, so a solid communication plan must be rolled out quickly and effectively to limit damage to their brands and the bottom line.  A recall plan should include clear procedures for identifying and removing products from the market; this helps to mitigate the initial impact whilst communicating with stakeholders.

Product recalls occur when there is a potential to damage human life or a product fails on a production line, for example. A recall can be initiated when an item is found to have a potential or confirmed issue. This could indicate that the product is unsafe for consumption or use, or it poses a health and safety risk to consumers.

The leading causes of product recall are contamination (within the food and beverage sector), manufacturing and production defects, and safety hazards (think automotive or component part sectors).

No business wants to deal with a recall as the ramifications of issuing one reach far and wide, as well as the actual recalling of the product; investigations into any contamination or product failure must happen swiftly – will the products need repairing? Or replacing? Will the manufacturer be under scrutiny from industry regulators? How will brand loyalty and customer and supplier relationships be preserved? With so many repercussions to a recall, it is essential to have a set of clear and robust procedures in place. However, the costs attached to rolling these out can run into hundreds of thousands (sometimes millions) of pounds. This could be the difference between maintaining market space positioning and staying in business altogether.

Various measures can help ease a negative recall experience, including pre-and post-incidence planning

such as data analytics, continuous product testing, supply chain transparency and continuous improvement. These all help to manage and identify potential issues early on.

Contractual obligations with customers should also be reviewed to assess non-fulfilment penalties and how these are covered from an insurance perspective. Many organisations believe that product recall is included in their general or product liability policies, but in fact, product recall is typically excluded, leaving minimal coverage such as a recall expenses only limit. It doesn’t matter the size of the business either. If consumer products are manufactured, or products suited to more commercial and industrial use, recall policies and procedures (including insurance) need to be firmly in place to avoid disruption in operations and increased costs.

Adding a niche insurance product into a product recall strategy will help bridge any gaps in coverage, so when things do go wrong, consultant insurance experts can be called upon to help defend organisations during a crisis. Engaging with an insurance professional regarding the right level of coverage before any recall incidents will generate a crisis-ready, immediate response to all stakeholders. Knowing what coverage is in place before any recalls occur will help save valuable time and expense whilst navigating a contamination or product failure situation.

Insurance specialist Howden provides manufacturing business insurance, including product recall coverage. With a deep understanding of the complexities within the manufacturing sector, they offer tailored Business Interruption insurance to protect companies from the financial impact of unexpected disruptions. Through comprehensive risk assessments and customised insurance plans, Howden helps minimise the effect of interruptions on revenue and operations. If you’d like to find out more visit our dedicated manufacturing web page or listen to our recent podcast on product recall.


 Supply chain challenges: Reducing the impact of product recalls Ashley Prickett

Insurance Broker, Branch Director, Manufacturing Specialist

With over 21 years of dedicated experience in the insurance industry, Ashley has carved out a niche as a leading insurance broker specialising in serving manufacturers. Drawing on a deep understanding of the unique challenges faced by manufacturing businesses, Ashley and his team provide tailored insurance solutions that safeguard assets, mitigate risks, and ensure compliance with industry regulations.

Throughout his career, Ashley has developed strong relationships with clients, becoming a trusted advisor who takes the time to understand each business’s specific needs. By staying current with industry trends and changes he is able to offer innovative coverage options that protect against a wide range of risks, from Property and Liability to Business Interruption and Cyber.

Ashley is passionate about helping manufacturers thrive in a competitive landscape, offering not just policies, but comprehensive risk management strategies that support sustainable growth.

Connect with Ashley team today to learn how he can help your manufacturing business navigate the complexities of insurance with confidence.

E: [email protected]

T: 01604 666777

W: Howden Manufacturing


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