Why Product Recalls Help Us To Expect The Unexpected

With a global pandemic still generating daily headlines, there is a defined need for quality management professionals to keep their eye on the ball, both in terms of the product lifecycle and the recall possibilities that may damage brand reputation in the near future.

Product recalls are an unfortunate part of the quality landscape, but companies that don’t put the right strategies in place from day one are likely to keep repeating the same mistakes. For the most part, the average consumer is blissfully unaware of when a product is recalled or has quality-related issues, but that doesn’t alleviate the duty of care that every company should have to its end user. 

This lack of actual awareness can alleviate some of the pressure that a brand faces when a poor quality product is identified through either a regulatory process or internal investigation, but the need for a culture of quality should be present throughout.

Product recalls are not something that can be planned for, but understanding that they may be both part of your present and future business optimization strategies is a critical part of the quality management process. This becomes even more clear when you look at data generated in the year to date.

The latest quarterly report from recall solution provider Stericycle notes that the ongoing challenges that the pandemic has created are only part of the puzzle. Product recalls can come from a variety of sources, but companies need to make sure that they have all of their ducks in a row when a recall is required.

According to Stericycle’s Q3 2020 Recall Index, the combination of the holiday season and the continued surging of the virus will make not only the end of the year difficult to manage in terms of product safety but also the first financial quarter of 2021. 

The problem that most companies will face, the report said, is it is almost impossible to predict what will happen if an economic shutdown contributes to the overall customer landscape. In addition, there is a defined need to manage risk during the immediate aftermath of COVID-19, albeit that there is a better understanding now of its impact on elements such as the supply chain then there was back in March or April.

“In reality, no matter your industry, recalls are only a fraction of the in-market remediation activities you deal with every day,” said Stericycle’s vice president of crisis solutions Chris Harvey, in a blog post. “As the regulatory landscape evolves, customer expectations grow, and plaintiffs’ attorneys seek vulnerable targets, you must adapt to protect your reputation and your ability to grow your business.”

Product recalls damage brand reputation

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 affected.

For the purposes of this blog post, we will be concentrating on three categories – Medical Devices, Pharmaceuticals and Automotive.

The full report can be accessed here 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 for our three chosen categories are as follows:

Medical Device

  • Medical devices recalls dropped to a six-quarter low, with 242 reported events in Q3 2020 – a 29 percent drop from Q2. However, the quarterly average for 2020 is still higher than at the same time in 2019.
  • Software was (once again) the top reason for product recalls. For the 17th time in 18th consecutive quarters, software issues were cited as the problem, accounting for 20.7 percent of events and 21.4 percent of units.Average number of units per recall was 901,833.
  • Total number of recalled units fell by 21.9 percent in Q3, from 29.4 million to 22.9 million. This represented the lowest quarterly number in 2020. 
  • Around 87.2 percent of all product recalls were distributed nationwide. From a global perspective, 55.4 percent of U.S. FDA recalls were shipped to international customers.
  • Quality concerns were cited as another top cause for recalls, with 6.2 million units impacted by poor quality.
  • October was the busiest month for medical device recalls: the month saw 77 recalls in total, impacting 31 million units and bringing the average size of an October recall to around 408,000 units. The leading cause of recalls was a parts issue (15 events), with quality concerns and mislabeling generating 12 and 10 recalls, respectively 

Pharmaceuticals

  • Recall activity returned to pre-COVID-19 levels in Q3, hitting 100 events – an increase of 49.3 percent. This milestone was the first time since Q4 2018 that 100+ events had been recorded. Affected units also doubled to around 92.7 percent.
  • Nearly a quarter of all impacted units achieved a class 1 severity level, totalling 7.8 million units. 19 events fell into this category.
  • Total number of recall events in 2020 to date is 260 (around 87 events per quarter). By contrast, there were 336 recalls in the whole of 2019.
  • cGMP deviations were responsible for 29 percent of all recalls, impacting 8 million units. However, quality concerns accounted for the recall of 8.1 million units, around 24.1 percent. It should be noted that one recall was the cause of these quality concerns, with 7.7 million units impacted
  • 83 percent of recalls were distributed nationwide. On the plus side, only 5 percent of affected products had international distribution. 
  • 85 companies initiated recalls, nine of which had more than one event.
  • Average size of a recall in Q3 was 338,000 units, although October (again) was significantly higher – the average recall size was 851,000 during this month
  • Product recalls were not the sole reason that the FDA issued warning letters – in September, the agency sent letters to 17 website operators, operating in China, India, New Zealand, Iceland, Pakistan and the U.S. All of these warning letters related to the illegal importation and sale of unapproved opioids.

Automotive

  • Recall activity dropped by 23.5 percent from Q2, with recalls totaling 156 events. This is the lowest number since Q1 2013.
  • The average number of recalled units also dropped in Q3 – around 34,000 per event. This is the lowest level since Q2 2019, but there is an expectation that planned investigations into seat belts and lithium-ion batteries will see an increase in recall activity in 2021.
  • Equipment was the top cause for NHTSA recalls, accounting for 17.9 percent and topping the table for 13 out of the last 14 quarters. Service brakes were the main culprit, generating 27.4 percent (1.4 million) of all recalls. . 
  • Automobile recalls continue to lead the way, with 140 recall events relating to this category of vehicle. Three recalls were tire-related, while 13 were traced back to equipment.

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 only. 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 stage of the product lifecycle

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 brand reputation, consumer confidence and the product lifecycle itself. To its credit, Stericycle rarely names or shames the most egregious offenders, but the product quality issues it raises are ones that should be on the radar for companies in each of our identified categories.

Medical devices have come under increased scrutiny in recent months, not least of which is the fact that there was an increased demand for products such as ventilators, face masks and personal protective equipment (PPE). The apparent lack of the latter in some hospitals generated negative headlines and led some healthcare providers to seek alternatives from other markets that may not have the same levels of required regulatory compliance and application lifecycle or quality management systems.

The pharma and automotive industries, for example, also need to maintain a focus on quality, as both of these sectors are – irrespective of COVID-19, it seems – reportedly facing the same sorts of problems every quarter, Stericycle says. 

Some of those issues can be linked to regulatory compliance, but the pharma sector has had a long-standing battle with its supply chain and the consensus is that this is unlikely to get better any time soon. That conflict could be pulled further into the spotlight as the pandemic lingers, even more so when you consider that the FDA – under the watchful eye of the Trump Administration’s “Operation Warp Speed” – deals with the potential requirements of a change in government oversight from January 2021.

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 – 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 will not decrease while business optimization tools such as quality management and adherence to good manufacturing principles are overlooked in favor of speed to market and a need to maintain brand visibility. If the last few months have taught us anything, it is that while you need to expect the unexpected, pushing forward with a flawed product is not a viable option. 

Ultimately, this is an imperfect strategy and companies must 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 the average person is the one that will be impacted by a product recall.

Orcanos does not believe that a culture of quality should vary between industry sectors and company size. Since our formation in 2005, we have consistently focused on alleviating the business-related pressures that occur within the product lifecycle and the quality management process itself.

Our software features built-in best practices and an end user experience that ensures that all the required boxes are ticked before the product enters the market. We know that quality matters, and our solutions have been designed with that as one of the guiding principles.

To find out how Orcanos can help your company on its quality journey, contact us for a demo.