Report: Regulatory Landscape Continues To Influence Product Recalls
"Quality is everyone's responsibility" - W. Edwards Deming
Product recalls may be the least welcome part of the quality landscape, but companies that don’t put the right strategies in place to prevent these events happening are likely to keep repeating the same compliance and poor quality mistakes.
The latest quarterly report from recall solutions and quality audit provider Stericycle bears out the common wisdom that recall-related headlines about the regulatory compliance environment are unlikely to diminish in the near future. According to Stericycle’s Q3 2019 Recall Index, the ever-changing scope of federal regulatory oversight is having an impact on product quality, with companies and consumer advocates keeping a close eye on what products are likely to be recalled both before the end of the year and the first months of 2020.
Product recalls come in a variety of shapes and sizes, but there were some trends that are more worrying than others, Stericycle said. Ineffective supply chain management, outdated software, connected devices and undeclared allergens were all responsible for poor quality products reaching consumers, with the report noting that many of the identified problems could be filed under "preventable."
Quality defects in consumer products are the ones that advocacy groups will continue to get their teeth into – children’s products, for example – and Q3 certainly had its share of recalls that could be linked to new product introduction (NPI) or even so-called “improvements” in existing products by manufacturers. By the same token, there has been an increased focus on how effective the federal agencies are in actual regulation and rule-making, with the report citing vaping and cannabinoid-based products as areas that need guidance now and not later.
“One thing has proven to be true over the years - the regulatory environment is evolving,” the authors of the report said. “Companies most likely to successfully navigate the changes are the ones that learn from the past and adjust their future plans accordingly. For companies that produce consumer goods, that translates into effective recall planning and management.”
Product recalls are a quality pain point
Stericycle has been collecting and collating product recall data for several years. As a result, the quarterly report offers a snapshot of five defined product categories – Consumer Products, Pharmaceuticals, Medical Devices, Food and Beverage, and Automotive. Each one of these sections takes a deeper dive into what factors accounted for recalls in the last financial quarter and the number of units or products effected.
The full Q3 report can be accessed here [PDF] but there are defined “trends” in each category that give a taste of not only the potential quality pain points but also where companies should focus their attention. With that in mind, the most prominent recall highlights are as follows:
- Product recall numbers remained steady at 76, second highest quarterly number since Q3 2016.
- Total recalled units decreased by 7.6 percent to 8.6 million in Q3 2019
- Sports and recreation products scored highest, accounting for 25 percent of all recalls in this category. However, kitchen products also scored highly and were responsible for 67.6 percent of recalled units, the first time since Q4 2014 that these products had been the top individual recall category.
- Fire and “fall out of” were the top hazards identified, and both accounted for 13.2 percent of all product recalls. The latter is (one assumes) more related to children’s products rather than adults falling out of things. Choking and/or small parts were the reason for 71.2 percent of recalled units.
- Two more deaths were attributed to consumer products, making 2019 the deadliest since Stericycle started collecting recall data in 1998. In fact, there were around 1,250 consumer incidents or injuries that were the direct result of a poor quality product.
- Number of recalls in Q3 2019 were on a par with quarterly averages in 2017 and 2018, but these recalls were significantly smaller in size. One element to note is that the numbers from the recent round of Zantac recalls have been factored into Q3, but the full extent of this product recall will not be felt until Q4 2019 or beyond.
- 84.7 percent of all pharma recalls had nationwide reach.
- Deviation from Current Good Manufacturing Practices (CGMP) was the top reason for recalls – 25 percent of all recalls and 93.1 percent of all recalled units.
- Average size of a product recall was 309,944, a seven percent decline from Q2 2019. Total number of recalled units was 22 million.
- Total number of pharma recalls was 72, the second lowest over the last 12 quarters.
- 54 companies announced recalls in Q3, with eight companies announcing more than one recall.
- Software was (once again) the top reason for product recalls – 54 percent of all recalls were attributed to software. The caveat is that these recalls impacted less than one percent of all recalled units.
- Average number of units per recall was 901,833.
- Total number of recalled units hit 219.2 million – a 1010.8 percent increase from Q2. This significant jump was attributed to one recall that accounted for 83 percent of all recalled units.
- Just under 66 percent of all product recalls were nationwide.
- Quality issues were cited as the top cause for recalls, with 85.3 percent of unit recalls traced back to poor quality.
- Class 1 recalls – defects or failures that have a reasonable chance of causing severe adverse health consequences or death – were the dominant element, with more than 201 million units falling into this class. This was also related to the one major recall noted above.
Food and Beverage
- More than 21 percent of all FDA food recalls had nationwide distribution.
- Undeclared allergens continue to lead the way as the top cause for food recalls – 35.5 percent of all FDA recalls and 37.5 percent of United States Department of Agriculture (USDA) recalls.
- Foreign material impacted 46.9 percent of recalled units.
- Bacterial contamination was the cause of recalled pounds of food – 537,000 pounds of food was recalled by the USDA in Q3, bacterial contamination accounted for 31.6 percent.
- A full 24 percent of all FDA-generated product recalls were allocated to prepared foods, with produce and flavoring scoring 19 and 14 percent, respective.
- Poultry is the top food category impacted by recalls – 33.3 percent of all USDA recalls was related to domestic fowl.
- Equipment was the top cause for NHTSA recalls, accounting for 14.7 percent. In fact, equipment has been in the number one spot for nine out of the past 10 quarters.
- Around 88 percent of recalls related to automobiles and 98.4 percent of recalled units were in this vehicle category.
- Average automobile recall size was 56,355 – the second highest since Q1 2018.
- Total number of vehicles or units impacted by recalls was 9.6 million – a 77.3 percent increase from Q2.
- Service brakes were the top unit recall cause, with 36.3 percent of vehicle recalls attributed to braking problems. This is the first quarter since 2010 that this quality failure has been at the top of the list.
The Stericycle index is built on cumulative data, and the quarterly report tracks the data from a variety of sources that include but is not limited to the four primary federal agencies that are responsible for monitoring and (in some cases) initiating product recalls in the United States. Recall information from other countries or non-U.S. regulatory agencies is not included in this report.
Each of the four agencies – the Consumer Product Safety Commission (CPSC), the Food and Drug Administration (FDA), the Food Safety and Inspection Service (FSIS), and the National Highway Traffic Safety Administration (NHTSA) – produce recall announcements on a regular basis and every agency allocates its own criteria in terms of enforcement, incident reporting and the recall process itself.
Quality matters at every level
The average consumer remains blissfully unaware of product recalls – around 70 percent of Americans said that they had not heard about a recall for something they own in the last five years, according to Consumer Reports – and that can alleviate some of the unwelcome pressure that comes to light when a poor quality product is identified. The caveat is that this does not reduce the need for an effective quality management system, rather it makes the need for a culture of quality and continuous improvement more acute.
As you might expect from a report that shines a light on the problems as opposed to the solutions, the questions that it generates are more likely to be directed at how these recalls impact both brand reputation and consumer confidence. The Stericycle index does not name and shame, but the product quality issues it raises are ones that should be on the radar for companies in each of the identified categories.
The automotive and pharma industries, for example, need to maintain or increase their focus on quality, as both of these sectors are reportedly facing the same sorts of problems every quarter.
Some of those issues can be linked to regulatory compliance, but the pharma sector has a long-standing battle with its supply chain and the consensus is that this is unlikely to get better any time soon. By the same token, automobile manufacturers are still recalling vehicles due to failures in core components – airbags, seat belts, to name just two. The reason for this is quite simple; most components are produced by a handful of companies – original equipment manufacturers, basically – that supply the entire industry and that makes it difficult to track down problems until they become something that needs to be fixed.
One element in the product lifecycle for all of these identified industries remains clear. Recalls will continue and they are unlikely to decrease while business optimization tools such as quality management are overlooked in favor of speed to market and a need to maintain brand visibility.
However, this is an imperfect strategy and companies should think very carefully about whether this is the path they want to take. At the end of the day, a commitment to quality should be the bare minimum for any industry, even more so when brand reputation and a loss of consumer trust are at risk from a product recall.
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