Feature Article
Product Recalls:
What you don’t know might kill you!
Are you a Manufacturing, Product Distributor, Retailer or Returns Processing Service Provider? Perhaps you are a company reselling used or customer returned product into secondary markets through channels such as eBay, uBid, or perhaps your own company web channel. If so, do you have an effective means to handle recalled product and have you limited your company risk from recalled product?
A variety of product categories find themselves at risk of recall. Historically active categories are represented by Electrical Goods all types (~47%), Non-electrical toys (~17%), Childcare (~7%), and Clothing (~7%) products. A pareto of the likely recall reason include Electrical (25%), Fire/overheat (15%), Chocking (15%), Loosen/collapse (13%), Fracture (9%) and Electric shock (6%) [Product Recall Research, Department of Trade and Industry, 2000].
Over the 10 years since this Department of Trade and Industry study was conducted, the public has also witnessed significant recalls in the areas of automobiles (Toyota), tires (Firestone), jewelry (Walmart), over the counter drugs (Tylenol), and others. The timeframe FY04 through FY07 showed a 30% increase in CPSC product recalls from 359 products per year in 2004 to 473 products in 2007 [Consumer Product Safety Commission, “Product Safety Review”, Winter 2008].
Now, if you’re a major Manufacturer, Distributor, or Retailer, you probably already have a recall process established and resources available to support the program in reactive, proactive and pre-emptive ways. If you’re a returns service provider or a secondary market reseller you may not have prioritized this area in a significant manner. If this is true for your business then you may be at substantial business risk.
Consider a secondary market reseller who has no method of evaluating purchased product relative to recall status. You may be purchasing products that pose consumer risk and passing that risk onto your end-user consumers. To avoid this risk you should consider investing in resources to mitigate your risk. Potential mitigations include:
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Resourcing a recall administration activity to keep abreast of latest recall activity from the Consumer Product Safety Commission.
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Incorporate a recall product based risk assessment capability to be applied during bid proposal and product return scanning activities
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Conduct a Financial and Internal Audit risk analysis of your business practices to identify the level of corporate risk from current business practices.
Ignorance is not a viable risk prevention strategy when it comes to handling at-risk product and passing that product onto your customers. If you believe you may have organizational risk, as a result of your current resale/recall business practices, perhaps you should consider calling on experts to conduct a business practice risk assessment. Consider engaging the Service professionals at ASIL. ASIL consultants are Service and Supply Chain professionals with over 100 years experience in various Service and Supply Chain roles. We have a proven track record of pragmatic solutions and welcome the opportunity to serve you and your clients. Call us today and let us help you achieve new areas of profitability and success in this ever changing economic climate.
Contributed by Warren White
Spotlight
Back to Basics;
What is your Value Proposition?
All companies struggle to understand and turn around the declines in their revenue and margins. Has the market shifted? Why are we not competitive? Why are we not winning business? The struggle is increased as the Shareholder’s expectation that revenue and margins show growth now and continue over the foreseeable future.
The erosion in the business has been the only constant, and it has been occurring for a long period of time. Sound familiar? There are many ways to approach this challenge. Hasty actions may yield some benefits, yet a more thorough approach may be required.
We recommend that you start by thinking backwards. Begin with what the customer perceives as valuable to them. Stated differently, what is your value proposition? Why would someone want to buy from you? The objective is to define in simple measurable terms why you matter to the customer.
It is a given that you will provide a product or service that promises a bill of goods. The bill of goods is what we call your ante to play in the game. If you can’t provide the ante you can’t be considered. Now that you are in the game, we need to get to the meat of the story. What is your value proposition?
Value terms: Where $ make the most sense. The biggest winners are:
Reduce/Eliminate cost or overhead – generate savings, reduction or avoidance
Increase sales/revenues – old product new life, or new products or new markets
Higher Return on Assets – inventory to cash and faster turns
Less tangible terms: More about an effect, measurable, yet typically linked in terms of $$
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Increased Service or Product Quality
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Increased Customer Satisfaction or Loyalty
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Increased Operations Efficiency
Increased Asset Performance
Increased Market Penetration
Activities or services: This is what or how you will do something (the ante):
Typically, companies focus too much on themselves in terms of the activities or services and the related effect that may occur. These two areas got us to the table, yet the breakaway move is to focus on the $ value being provided. By stating the $ value terms upfront, you will know immediately if you are on target. Having the correct Value Proposition for the right target market, coupled with the required activities equals a high probability for success. Our ASIL professionals will team with you to deliver a powerful $ Value Proposition. Dream it, believe it, do it!
Contributed by Peter Pazmany
Industry Trends
Redefining Chaos
Chaos is thought by many to be a huge cause of turmoil and dismay in the workplace, able to bring whole companies to their knees with relative ease. Most companies perceive chaos in a negative light. We would argue that chaos entering the workplace can be treated as a change opportunity. Identifying and breaking down chaos in order to make reasonable sense can be used as an opportunity to initiate change.
Why is chaos perceived as a negative? It comes down to three fundamental aspects of chaos that are generally overlooked and mislabeled creating issues with forming solutions to disband the chaotic times.
Chaos has a very negative connotation. With this cloud of uncertainty already looming over the term, many become immediately disenfranchised and thus lose focus or drive towards a goal.
Chaos is perceived as an unsolvable force. Generally, chaos has a snowball effect as to how it works. Like a snowball careening down the mountain face picking up speed as it goes, will run rampant in an organization if not controlled.
Chaos has destructive tendencies. The conceptual snowball will continue until it hits a breaking point that either takes the company out or pushes it to taking drastic measures for success, neither of which help to move the company forward or address the root problem of chaos.
Breaking down chaos into simple terms and understandable language becomes a simple game of problem solving. Chaos according to Sean Michael Kerner (Managing chaos can turn a negative into positive. April - 2003) can be broken down into three main sections; personality, communication, and development chaos. Each has specific workplace dynamics that help to classify chaos down to its most basic form.
Personality chaos can be defined through the team you interact with and the personalities within it. Common team issues, individual resistance, and office politics all fit into this kind of chaos.
Communication chaos deals primarily with information processing and dissemination in the workplace, or more often deficient communication practices that segregate companies' teams and departments from each other instead of collaborating on mutually beneficial projects.
Development chaos deals with external elements of work, mainly; a consistent lack of direction, unmanaged expectations for the work, and unimplemented solutions for change.
By quickly identifying and creating necessary solutions to the chaos when it occurs you can avoid the snowball effect that comes from waiting too long to deal with the 'elephant in the room'. Chaos will inevitably infiltrate the workplace. Understanding its characteristics and leveraging them can create energy for your team. If you or your company needs help in identifying or managing chaos (change), please contact our professionals at ASIL.
Contributed by Joe Pazmany
Our Software Products
Click on the links below to view ASIL, Inc.'s MAX Partnering® self paced software demonstrations:
Strategies and Execution - This demo depicts the tools that organizations can utilize to embrace change effectively and implement it successfully.
Self Assessment Sample Questionnaire
- This demo will enable you to respond to a small sample of self
assessment questions focused on change management and create a Heat Map
of your responses to see areas that may need attention. The Driving
Complex Change® methodology addresses the six areas of Direction,
Ability, Incentive, Resources, Structure, and Action that can impact
your effectiveness of change management.
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