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  • How to Manage a Product Recall in the Electronics Industry before Your Profits Go Up in Smoke

How to Manage a Product Recall in the Electronics Industry before Your Profits Go Up in Smoke

The world has seen an explosion of product recalls in recent years. Reasons for these recalls have varied; however, some of the top business motives have included an increased focus on safety and regulation by authorities, growing consumer awareness and the influence of social media, the advances in product testing establishing links between an incident and a company, and even an increase in malicious product tampering and extortion.

Statistics also show that product recalls within the electronics industry is on the rise. According to SGS, electrical and electronic product recalls increased by 8% in the EU and by 29% in the USA in 2019, in comparison with Q4 2018. From combustible mobile phone batteries to the overheating of fitness smartwatches and even the inclusion of counterfeit components, faulty products can pose a significant health and safety risk and sometimes lead to hazards such as fires, and culminate in huge financial losses. A good example of this was the recall of the Samsung Galaxy Note 7 in 2016 after some units burst into flames. Samsung was forced to recall 2.5 million devices costing the company billions.

With safety concerns top of mind, the electronics industry has needed to think about how to manage a recall – including traceability software, crisis management plans and even mock recall simulations. Below is a list of top ways to manage a product recall in the electronics industry.

  1. Prepare, prevent and practice

In order to mitigate as much risk as possible, it is vital to prepare, prevent and practice. This includes the creation of a recall policy and a documented procedure designed to ensure professional, efficient and effective removal of unsafe products from the market.

A plan has little significance without having full visibility across the organization. By implementing the right business systems such as Enterprise Resource Planning with an integrated Traceability functionality, a company can easily make reporting data available quickly as well as have a single source for all mission-critical business information.

For example, G&B Electronics, a SYSPRO ERP customer, embarked on a drive towards transitioning their business model from design to manufacturing. The company had to implement new processes for dealing with warranty support, re-calibration and product re-configuration, but also needed to track the movement of all manufactured items through the production line and the wider supply chain. By implementing SYSPRO ERP, not only did G&B Electronics reduce the time it previously spent on administrative tasks by automating standardized processes, but it also introduced the ability to trace and account for every suspect item throughout the value chain.

  1. Early detection through discovery

What happens after the visibility? The action you take on the visible data is what helps you minimize the risk in your organization. Frequent product testing allows for an electronics manufacturer to detect product faults more proactively.  Regular Mock Recalls prepared the organization to quickly identify and trace all components in preparation for the day it was needed.

For this, your ERP system needs to have complete and immediate overview capabilities to minimize the impact of a product recall.

  1. Galvanize into action

Should you ever find yourself in a situation where you need to recall products, well-informed decisions are critical. These will be based on the well-developed Recall plan, and mock recall scenarios that have been played out in advance; however, there is still a probability that the information gathered in the early stages of an investigation will be flawed. Revisiting information will be vital along with the detailed documentation of the process.

Additionally, it goes without saying that all defective products need to be accounted for, the defective batch should be scrapped or recovered.  If recovered, then new pallets, labels as well as packaging should be considered.  This is one of the most problematic areas in traceability, so a carefully considered and documented process needs to be prepared for this eventuality.

Make sure your ERP system assists with minimizing risk before, and mitigating damage during a recall when time is of the essence.

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