1. Product Liability Recall Assessment & Grading
Pre-Workshop training sessions
Product Liability Recall Assessment & Grading
Albert Kleeli
Zurich Risk Engineering Global Workshop
Frankfurt, Germany
September 5, 2006

2. Learning objectives Understand: Product Recall Process and reasons
Risk Factors that make up a Recall Grading Assessment
Recognise what is required in an effective Recall Plan
Factors Affecting Recall Effectiveness
Communication Strategy
Evaluation of Recall Capabilities
Risk Engineering Global Workshop 2006

3. Agenda for training Reasons for a Product Recall Recall Process
Recall Plan Assessment and Grading
Case study- example of a recall
Effective Product Recall Plan
More on elements of an effective product recall plan
Summary, Questions and Answers
Further details with contacts
Risk Engineering Global Workshop 2006

4. 1. Reasons for Recall Requested by Regulatory Agency
Initiated to prevent Future Liabilities
Indicated by Field Monitoring/Complaints
Required in Response to Tampering Threats
Suggested by new R & D emerging issues
Recommended to protect Company Reputation (Brand Protection)
Typical products that are subject to recall
Automobiles-foods-toys-pharmaceuticals
Risk Engineering Global Workshop 2006

5. 2. Product Recall Process
Product Recall is reverse of the Product Distribution Chain
Manufacturer
Warehouse
Wholesaler
Customer
Retailer
Risk Engineering Global Workshop 2006

6. 3. Recall Plan Assessment and Grading Ability to conduct an effective product recall
Linked with Risk Factor # 23 in Product Liability Grading
6 exposure risk factors are designed to assess-
Susceptibility of a product to a need for recall
Magnitude of a recall
Complexity of a recall
Sensitivity of a recall
11 Control risk factors
Management commitment
Occurrence or prevention risk factors
Response risk factors
Risk Engineering Global Workshop 2006

7. 3. Recall Plan Assessment and Grading
6 Exposure Factors
Sensitivity (H)
A measure of likelihood
of a recall occurring.
Criticality (H)
Severity & Response Speed.
Batch Ratio (M)
Potential recall volume.
Extent (H)
Potential recall size.
Complexity (M)
A measure of difficulty.
Effectiveness (M)
Probable success of recall.
11 Control Factors
Management Commitment (H)
Occurrence Controls
Quality Management (M)
Hazard Analysis (L)
Product Testing (L)
Compliance Review (L)
Complaints Management (L)
Response Controls
Upstream Traceability (H)
Downstream Traceability (H)
Recall Planning (M)
Recall Decision Making (M)
Plan Review & Testing (M)
Risk Engineering Global Workshop 2006

8. 3. Grading Product Recall
Risk Engineering Global Workshop 2006

9. Recall Grading
Risk Engineering Global Workshop 2006

10. 4. Case study / exercise
Recent recall- Cadburys recalls 1 million plus chocolate bars in UK-Ireland in Jun-Aug 2005 (traces of salmonella due to a leaky pipe)
Recall cost- 20 million Pounds plus lost sales
50% specifically for recall costs
50% for advertising to bring back customers and manufacturing improvements
700 complaints- 50 reported illnesses
UK profits for confectionary products dip- other product lines doing wells
15% market share loss against competitors- Nestle and Mars
CEO apology to customers
Another recall in Canada for pieces of plastic chard in chocolate Easter eggs in March 2006 eggs!!!
Risk Engineering Global Workshop 2006

11. 5. Effective Product Recall Plans
The main parts of an effective Product Recall Plan are:
A structured recall plan
A recall organisation with defined roles
A retrieval strategy and decisions (including initiation of recall!)
Strategy for notification of users (e.g. preparation for selection of type of notification)
Advance preparation of notifications (e.g. pre-prepared text)
Storage & disposal strategy
Recall termination procedure
Communication protocols (internal & external)
(cont.)
Risk Engineering Global Workshop 2006

12. 5. Effective Product Recall Plans
The main parts of an effective Product Recall Plan are:
Media management strategy (damage control)
Production intervention guidelines
Design procedure for replacement of product
Documentation
Access to production, storage and shipping records
Contact lists for relevant service providers
Product re-introduction and marketing plan
Recall team, testing of Recall Plan and Mock Recalls
A process for regular review and updating
Risk Engineering Global Workshop 2006

13. 6. More on Elements of an effective product recall plan
Coordination
Management Decision
Responsibilities
Corporate/Division/Plant
Traceability
Internal (Upstream and Production);
Quality control on raw materials
External (Downstream)
Risk Engineering Global Workshop 2006

14. 6. More on Elements of an effective product recall plan
Post-Sale Monitoring
Solicited (surveys, comment cards, customer cards, parts sales, service reports)
Unsolicited (complaints, litigation)
Situational Analysis
Recall Decision
Recall Action Plan
Crisis Management - Communication Strategy (including media)
Periodic Reviews - Mock Recall
Risk Engineering Global Workshop 2006

15. 6. More on effective product recall plan
Nature of Problem
Design Defect Versus Mfg./Quality Defects
Seriousness of Problem
Recall Classification
Number of Products/Lots Affected
Validity of Data
Critical Response Time
Risk Engineering Global Workshop 2006

16. 6. More on an effective product recall plan
Management Decision:
Technical (facts) Vs. Business Considerations
Recall Impact
Estimated Direct and Indirect Costs
Financial and Liabilities
Company Image
Customer Confidence/Brand Rehabilitation
Risk Engineering Global Workshop 2006

17. 6. More on an effective product recall plan
Factors Affecting Recall Rates (15-70% range)
Type of Product and Shelf Life
Seriousness of Hazard
Unit Price and Number of Units Involved
Distribution Chain and Markets
Consumer Notification Methods: Direct and media
Recall Program
Risk Engineering Global Workshop 2006

18. 6. More on an effective product recall plan
Recall Options
Regulatory Requirements
Post-sale Legal Duty
Remove - Replace - Refund
Retrofit/ Field Modification
Repair
Risk Engineering Global Workshop 2006

19. 6. More on an effective product recall plan Key Actions
Suspend
Production
Sales and Distribution
Notify
Regulatory Agency
Legal Counsel
Insurance Company
Compile
Model Numbers / Date Codes
Sales/ Distribution/Shipping Records
Traceability records
Risk Engineering Global Workshop 2006

20. 6. More on an effective product recall plan Key Actions
Instruct
Sales, Service, Receiving/Returns
Dealers and Distributors
Publicize
Recall Notification: Methods and Contents
Product ID, Reason for Recall, Action Required
Communication Strategy: Crisis Communication
Risk Engineering Global Workshop 2006

21. 7. Summary
Understand:
Understanding the Product Recall Process and reasons
Risk Factors that make up a Recall Grading Assessment
Recognize what is required in an effective Recall Plan
Questions and Answers
Risk Engineering Global Workshop 2006

22. 8. Further details Where due we find all the information/guidelines
Risk Engineering Global Workshop 2006

23. 8. Further details THANK YOU!
All presentations will be posted on the Risk Engineering intranet site – RE Connect
Contact details:
CoE Liability team members
Ashutosh Riswadkar, North America- team leader
Andrew Webb, Asia Pacific- Australia
Albert Kleeli, Europe- Switzerland
Christoph Sigrist, Europe- Switzerland
David Gunn, Europe- UK
THANK YOU!
Risk Engineering Global Workshop 2006