Product recalls are more effective the more they are actively overseen by a regulator, a recent ACCC review has found.
The Product Recall Review, conducted by the Australian Competition and Consumer Commission (ACCC), found that recalls were more effective the more the regulator was actively overseeing it, suggesting Australian consumer goods companies will need to establish and invest in more stringent, measurable and coordinated approaches to their product recall program.
The review is due for release in 2012 and the measures outlined in the review are not yet legally required. However, the ACCC has made it clear that it will review companies’ responses to changes to its recall guidelines over the next 12 months. Depending on that response the ACCC may recommend amending Section 65 of the Trade Practices Act to make some areas mandatory.
The ACCC review makes it clear that regulators will be looking for companies to provide details of their intended actions to ensure the recall is well executed before launching a recall.
Given this intention companies will need to develop robust product recall strategies, according to Global Crisis Management leader for Chartis International Tracie Thompson.
“Many companies are impacted severely in a crisis because they are unprepared; a well prepared first response to a crisis is crucial and is an integral part of a company’s strategy. The key to surviving any crisis, including product recalls is planning as this will enable companies to respond to crisis incidents more rapidly and effectively,” Miss Thompson said.
“The practical and physical costs of withdrawing a product from the stream of commerce include inspection, destruction and replacement of a defective product. But the cost to a company’s reputation can be significant and can have a detrimental effect on a company’s bottom line, regardless of company size,” Miss Thompson added.
The review also placed a heavy emphasis on the importance of effective communication and the use of range of performance indicators to measure effectiveness. The channels through which companies should now target their consumers include online communications such as blogs and other social media.
