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Body of Content
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500-550 word count unless otherwise specified. Ensure
that your content matches that of the provided requirements (neutral or
company specific) and is informative to the general population. Domain
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Metal manufacturers take on significant risks every time they bid on
and accept new jobs from original equipment manufacturers and value-added
resellers. Fabrication shops build metal structures by cutting, bending, and
assembling of raw materials. While the end products of other common types of
metalworking, such as machining, metal stamping, forging, and casting, may be
similar in shape and function, they are not classified as fabrication. Metal
fabrication shops bid on jobs based on precise engineering drawings before
moving into the fabrication stage and finally to the installation of the
final project. This puts them at significant risk further down the road
should any design or manufacturing defects occur during the production
process, which makes product recall coverage for metal manufacturing jobs
vital.
Product Recalls are at an All-Time
High
Product recalls cost companies more than $1 trillion
every year, according to the Consumer Product Safety Commission. The Canadian and American governments have both
developed online resources to help consumers stay informed about product
recalls and keep track of potentially harmful products in the marketplace.
With products from seemingly every industry affected by inaccuracies in the
production process, it is important for all companies in the supply chain of
a given operation to obtain product recall coverage.
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The Real Costs of a
Product Recall
While governing bodies do their best to act quickly and remove defective
products from the market or supply chain, product deficiencies can still slide
through the cracks. Product recalls can have serious short and long term
implications beyond the direct costs on a company’s bottom line, impacting a
brand’s reputation and affecting future sales revenue. According to a report
by Lockton, about 80% of the total financial losses incurred during a
product recall take place long after the offending products have been discarded
from store shelves.
When conducting a product recall, companies can expect to incur some direct
costs right off the bat. Some of these direct costs include:
· Notifying retailers and regulatory bodies,
· Pulling products off of the shelves (reverse
logistics),
· Storing and disposing of contaminated or
mislabelled products,
· Any labour necessary to carry out these tasks
and/or investigate the problem.
While these costs can certainly add up quickly, they are
often miniscule in comparison to potential litigation costs, government fines,
lost sales, and the long-term damage done to a brand’s reputation. In the event
of a product recall, companies are encouraged to handle matters honourably and
responsibly. Almost nine
out of ten customers (87%) surveyed by Relational Capital Group said that
they would be more likely to purchase and remain loyal to a company or brand
that handles a product recall honourably and responsibly, even though they may
have clearly made mistakes that led to a safety or quality problem.
When it comes time to conduct a product recall, companies should be transparent
about their mistakes and take the necessary steps to remedy the situation as
soon as possible. It is important to obtain product recall coverage for metal
manufacturing companies that are looking to manage their perceived level of
risk, as it protects them against any expenses associated with a product
recall, including third party liabilities.