Product recall events are on the rise despite ongoing operational challenges experienced by global car and OEMs
Sedgwick has published its latest European product recall index report, which finds that pharmaceutical and medical device recalls have increased by 35% and 40% respectively compared to the quarterly average in 2020.
Within the pharma sector, safety and failed specification recalls were the biggest threats. There is a chance for these types of recalls to continue to increase as regulators find innovative ways to audit and inspect manufacturers and a resumption of business-as-usual inspections post-pandemic.
Automotive recalls in the first quarter of 2021 increased 26%, compared to the like-for-like average in 2020, and exceeding the quarterly average of a pre-pandemic 2019 by 20%.
This demonstrates recall events are on the rise despite ongoing operational challenges experienced by global car and original equipment manufacturers, said Sedgwick.
“The current global pandemic will have a continued impact on all industries, particularly those with global supply chains and a heavy reliance on efficient manufacturing,” said Mark Buckingham, recall consultant of Sedgwick’s international brand protection division.
”However, as we start to emerge, the risks will amplify (beyond manufacturing and logistics) as regulatory oversight and procedures return to pre-pandemic levels. It’s creating a perfect storm that has the potential to see a surge in recall activity – across the supply chain.
”Industries need to be primed and ready for any recall or market withdrawal situation and this report serves as a guide to ensure businesses are prepared,” he added.
Food and beverage recalls were up 11% compared to quarterly averages in 2020 but down from the fourth quarter of last year. Contamination is still the leading cause of recalls in this sector.
Electronic recall activity in Q1 2021 is 10% higher (62) than 2020’s quarterly average of 56 recalls. This suggests a continued focus on ensuring the safety of electronic products as consumers spend more time at home due to the pandemic.
“These trends, supplemented by developments in the regulatory and risks space, will give rise to a host of reputational risks facing manufacturers across all sectors, particularly in a legal environment that is being increasingly friendly to claimant actions,” warned Buckingham.
Looking ahead, the claims management and loss adjusting firms says transparency and planning will be the key to effective crisis management for any industry experiencing a recall situation.
Crisis planning must include these critical components: recall plans, complaint investigation and effective customer engagement.
The first step in protecting a business reputation is to establish a strong culture that ensures regulatory compliance, builds consumer trust, and prepares the company for the times when a recall or corrective action is required.
The report further suggests companies across all industries should re-evaluate all manufacturing processes, invest some time and resources to prepare their recall management, crisis and communication plans, and review insurance policies to ensure they protect the business in the event of a recall or safety inquiry.
To download the recall index report, visit European product recall index report.