4 Stats That Show How Quality Management Impacts Product Recalls
This is the the latest in a series of blog posts detailing results from ETQ's 2020 industry trends and attitudes survey on the changing role of quality as a strategic business initiative.
When we started surveying businesses in the Life Sciences, Food & Beverage and Manufacturing industries, our goal was to get a better understanding of the state of quality management—not just in 2020, but over the next three to five years.
The full research report taught us a lot about the shift in how organizations view quality, how organizations are investing in quality as a strategic initiative and how quality spending impacts business performance.
But one interesting piece of the research highlighted trends in product recalls. These 4 stats will give you a better idea of how important strategic quality management is in the mitigation of product recalls.
1. 96% of organizations report having a product recall over the last 5 years
Product recalls are costly to any organization but especially to those in heavily regulated industries. Recall costs can be financial, as the organization pays for faulty product removal and replacement, as well as compliance penalties and warranty claims. But intangible costs to brand reputation are significant and can be as hard to rectify over time.
Despite the fact that 94% of our survey respondents have a dedicated quality function and 97% have quality management processes in place, product recalls continue to be a problem. This could be the result of a number of factors, including stricter compliance requirements and the demand for faster business operations.
To keep product recalls from becoming a fact of life, more needs to be done from a quality management perspective to avoid them in the first place and respond faster when they do occur.
2. 56% of organizations experienced an increase in product recalls compared to 24% that saw a decrease
Even though so many organizations have experienced a product recall in recent years, it would be encouraging to see that the events are trending downward. However, we found that companies are experiencing more product recalls than in years past.
Rather than focusing on what the 56% of organizations seeing increases in product recalls are doing wrong, it may be more valuable to consider how the 24% seeing a decrease are improving operations. Even if product recalls don’t disappear entirely, having quality management tools and processes in place to speed up the recovery process can protect your business from a multimillion-dollar incident.
3. 68% of organizations were using a QMS solution at the time of a product recall
Quality management systems (QMS) have become fundamental aspects of dedicated quality functions. Compared to traditional paper-based or spreadsheet-based processes, running quality management through an automated QMS solution unlocks benefits such as improved data management, increased visibility, streamlined corrective actions and greater workforce productivity.
All of these benefits contribute to an organization’s ability to respond to product recalls. And while a QMS solution won’t suddenly eliminate product recalls altogether, survey respondents say that they certainly help in the recovery process.
4. 83% of organizations say a QMS solution helped them recover from a product recall
Recovering from a product recall can be stressful. While maintaining an open dialogue with customers, you need to audit internal quality operations, evaluate supply chain quality and consider corrective actions to mitigate immediate damages and prevent future incidents. There are a lot of moving parts involved and organizations -- especially those in heavily regulated -- industries can’t afford missteps.
We found that 83% of organizations believe a QMS solution at least somewhat helped them recover from a product recall. Having an automated QMS in place makes it easier to understand existing processes, evaluate potential corrective actions, and assess the financial impact of quality-related decisions. Increasing the efficiency of each of these processes will make product recall recovery much faster and reduce your costs.
Committing to Quality in 2020
The fact that a QMS solution can play such an important role in recovering from product recalls proves why organizations are committing to quality as a strategic initiative in 2020. More and more, companies are looking at quality management as more than an operational compliance issue. And as result, investments are increasing both from budget and headcount perspectives.
This year, 42% of organizations say they’re increasing quality spending at an average rate of 21%. And while product recall recovery is a major motivator, it’s not the only reason for this new commitment to quality.
If you want to learn more about the state of quality management in 2020 and how the space will change in the next three to five years, download a free copy of our eBook with the complete survey results.