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Product recalls have serious financial im lications for com anies! "ith consumer safety and #rand erce tion on the line, ensuring timely action and customer convenience can mitigate the costs involve
The cost of preparedness is high. In recent weeks, General Motors India has learnt that the cost of unpreparedness is far higher. t the ti!e of going to press, the world"s second#largest car!aker was facing a fine of at least $s %.& crore for 'iolating technical specifications in the !anufacturing of its sport utilit( 'ehicle. )hile the co!pan( had suspended production and sales of two Ta'era 'ariants earlier, last !onth it recalled o'er *.*& lakh units of the +rand sold since 200,. GM has also reportedl( sacked !ore than two do-en e.ecuti'es in the countr( for possi+le o'ersight and was facing a +ig +low to its +rand i!age. India is not new to product recalls. /ut things ha'e co!e under the spotlight +ecause of the intense !edia ga-e and the proliferation of social !edia now. Sectors like auto!o+ile see! !ost 'ulnera+le. 0ata !ade a'aila+le +( the Societ( of uto!o+ile Manufacturers 1SI M2 shows that +etween 3ul( 20*2 and 3une 20*% !ore than % lakh 'ehicles ha'e +een recalled in the countr( +( 4onda Motorc(cle and Scooters 14MSI2, 5ord, Mahindra 6 Mahindra, To(ota, 7issan, 4onda 8ars, and $enault put together. 9ishnu Mathur, director general of SI M, sa(s e'en until a few (ears ago, car !anufacturers recalled 'ehicles without using the ter! "recall". :;arlier a product recall situation was disguised as "special ser'ice". Toda( no co!pan( can resort to such ca!ouflage and put consu!ers at risk,: he sa(s. 9G $a!akrishnan, M0, 5rost 6 Sulli'an South sia, adds, :8onsu!ers in India are e.ceptionall( well# infor!ed a+out their rights. )hile product failure rates are higher in categories like to(s and fast !o'ing consu!er goods 15M8G2, it is not eas( for consu!ers to swallow the +itter pill of recall in auto!o+ile as the upfront pa(!ent is wa( higher.: Indian corporations are still not co!forta+le discussing the issue. )hen The Strategist approached the countr("s top fi'e car !anufacturers to understand the challenges related to product recall for this article, all of the! declined to participate. :;'en when recalls are done +( co!panies 'oluntaril(, the a'erage consu!er looks at it with suspicion,: sa(s a !arketing e.ecuti'e with one of the auto co!panies, who didn"t want to +e identified in the article. :Manufacturers consider this a sensiti'e !atter which should +e resol'ed without it i!pacting their +rand i!age. lso, !arketers think the !o!ent (ou utter the word "recall", the co!petitor will use the opportunit( to gain so!e sort of !ileage,: he adds. ;'entuall(, !ost of the! degenerate into <$ crises with the co!pan(, the go'ern!ent and consu!er foru!s and 7G=s pitted against one another. nd the whole issue of protecting consu!er interests gets lost in the kerfuffle. So what is the +est wa( to handle a product call#+ack so it doesn"t turn into a full#+lown <$ crisis> there an( international e.periences fro! which co!panies in the countr( can pick up cues> $%&''(N)%A*)&N N++D, *& -+ *RAN,PAR+N* AND *)'+./0 In the last few (ears, the Indian auto industr( has not ?ust risen in nu!+ers +ut also !atured in re
te one1 &wn u Man( co!panies ha'e faced the dile!!a facing GM now. faced a huge crisis when se'en people in 8hicago were reported dead after taking e. !anufactured in 8hina for Matsushita. a su+sidiar( of 3ohnson 6 3ohnson. 5ord wrapped up a recall progra!!e for the diesel 'ariant of its newl( launched . Take 7okia. FD2 'ehicles were recalled to relocate the glow plug control unit within the engine +a( to a'oid the co!ponent fro! catching !oisture. =n the first da( of the opening of its centre 1 ugust *E2 for ad'ice on the fault( +atteries. The co!pan( !ust put itself in the shoes of the consu!er.000 calls and recei'ed *. )hat is worth noting is the wa( the( ha'e swung into action. and 7o'e!+er 200E.perception. its !ost profita+le. These +atteries were used in a +road 'ariet( of phones. which draws fro! glo+al +est practices in handling such situations.te two1 Don2t delay The second challenge for co!panies doing recall is how to co!press the ti!e fra!e of e. fro! the +argain +ase!ent 7okia **00 up to the 7okia 7F*. Mc7eil 8onsu!er <roducts. conducted an i!!ediate product recall fro! the entire countr(. It can +e seen 1and co!!unicated2 as a proacti'e step +( the co!pan( to ensure consu!er co!fort and safet( and address en'iron!ental concerns.tra#strength T(lenol capsules. The +iggest take#awa( fro! the 8ode is that a recall is not so!ething that is necessaril( negati'e.8 +atteries.coSport was into its third week when the pro+le! was diagnosed and recall issued.coSport in three weeks. The recall of 'ehicles is a serious situation that needs a !easured response. 7okia issued a recall 1the co!pan( prefers to call it a "product ad'isor(" and not a recall2 for certain /L#. =nce the connection was !ade +etween the T(lenol capsules and the reported deaths. the leading pain#killer !edicine in the United States at the ti!e. 5or instance. which a!ounted to a+out %* !illion +ottles and a loss of !ore than H*00 !illion dollars. 'ehicles !a( need to +e recalled to adapt the! to new nor!s. In =cto+er that (ear. +etween 0ece!+er 200. lakh SMSes. +oth with consu!ers and with other stakeholders. one should keep in !ind that . In 200D. including the !edia The +iggest concern should +e the con'enience of the consu!erA so there should +e clear co!!unication a+out which 'ehicles are +eing recalled. s part of this. 4owe'er. 7ow co!e to the T(lenol recall of *FG2. set up a separate we+site and put the entire ser'ice !achiner( into action. . s nor!s and regulations change. These are so!e of the !ust#dos: 4a'e a co!!unication S=< 1standard operating procedure2 in place so that (ou can get into gear @uickl( 8o!!unicate proacti'el( once (ou take the decision to recall Take (our dealers into confidence and include the! in (our plan /e transparent a+out the situation and the reason for recall. 3apan. 7okia India answered 20.&. there should +e a helpline2 Make the use of digital platfor!s like 5ace+ook and Twitter +ecause the( gi'e consu!ers a sense of real#ti!e Bhu!anC support . what the process is and who he or she should get in touch with 1ideall(. The Societ( of Indian uto!o+ile Manufacturers put in place a 9oluntar( 8ode on 9ehicle $ecall last (ear.ecuting a recall acti'it(. It will take longer . The co!pan( also halted all ad'ertise!ent for the product. )hile the risk of the +atter( o'erheating or +ursting appeared to +e fairl( s!all # 7okia clai!ed *00 !inor incidents worldwide against the possi+le &E !illion +atteries +eing recalled # the co!pan( announced the recall through the !edia. according to the co!pan(. T(lenol. This depends on the nu!+er of 'ehicles to +e co'ered in a gi'en recall.
It was a dou+le wha!!( when insects were found in this +atch of products.tra step to re#esta+lish lost connection with the consu!ers. In 7o'e!+er last (ear. :4is deep +aritone was the "'oice of reassurance" that infor!ed us of the !easures the co!pan( had taken to ensure @ualit( and safet(. Sa(s 7iran?an 7adkarni. In his latest +ook 0arwin"s /rands. a co!pan( should not sh( awa( fro! seeking help outside. it changed the packaging to !ini!ise the scope of infestation later. So after !aking arrange!ents for a thorough assess!ent of stock and logistics. distri+utors and retailers in the loop lies with the co!pan( facing the challenge.0. 8ad+ur( responded with a two#pronged strateg(. !anaging director of Spearhead InterSearch.00 units of 8/$ 2. :5or this. strong co!!unication s(ste! is indispensi+le in this. certification and training co!pan( TI9 SI0.pired in'entor(. things are changing as !ore and !ore co!panies de!onstrate the( are willing to press e. sa(s Jad'inder Singh Guleria. e. right packaging and a closel(#!onitored suppl( chain can significantl( reduce 'ulnera+ilit( to recall. +rand e.0 !odel is co'ered in the recall progra!!e +( punching their 'ehicle identification nu!+er.: . 'eteran actor !ita+h /achchan was roped in for a new ad'ertising ca!paign that was ai!ed clearl( to win +ack consu!er confidence.= of Munich#+ased consulting. South sia 8. The contro'ers( threatened to +low up 8ad+ur("s face and erode its reputation in India.0 1standard 'ariant2 to rectif( a defecti'e front#+rake s(ste!. let us recall the infestation case in 8ad+ur( chocolates.=s and the +oard !e!+ers. testing. Unfortunatel(. 5irst.pert nand 4al'e sa(s.. Man( co!panies ha'e senior co!!unication specialists to assist the! +ut few gi'e the! a free hand to tackle such situations. This can +e done without incurring an( additional hiring cost.to e. 0o (ou know a custo!er who would retain receipts of e'er( chocolate.te three1 )nvolve all sta3eholders )hile ro+ust product design. Toda( 4onda clai!s to ha'e !et G0 per cent . the co!pan( had co'ered D2 per cent of the o'erall +ikes eligi+le for recall. co!panies can create tea!s specialising in product recalls. . Since product recalls are relati'el( a new ani!al for consu!ers in India. Usuall( the cost incurred in a recall is shared +etween the !anufacturer and co!ponent 'endor. $ather sales and !arketing tea!s can +e trained in product recall !anage!ent. sales 6 !arketing. 3(orden T Misra. :Though a paradig! shift in hiring is (et to happen. the co!pan( realised it was crucial to take that e. wafer and +a+( care product she +u(s> To understand the repercussions of an( dela( at an( stage on +rand i!age. it helps to +e recall read(..ecute recall for a +atch of .pired in'entor( worth $s &0 crore was found in the warehouse of one of the 8ad+ur( distri+utors. Under the ser'ice ta+ on 4onda"s we+site a we+page was created for custo!ers to check if their 8/$ 2. The co!pan( shared a list of 'ehicle owners with dealers who !ade phone calls infor!ing custo!ers a+out the recall. The procedure was clearl( defined. 4MSI recalled **. 'ice# president. The onus of keeping consu!ers. sa(s that the co!!unication !andate for product recalls should co!e under the pur'iew of the 8.: he sa(s. /( March this (ear. the co!pan( +egan its recall dri'e +( educating channel partners on the nature of co!ponent replace!ent and the right wa( to get in touch with +ike owners. 4MSI was fortunate +ecause the 8/$ owner ca!e fro! a !ore affluent seg!ent and was digital sa''(.perts into ser'ice to handle product recall progra!!es.000 or !ore 'ehicles. That is +ecause it is i!possi+le to trace the consu!er as a !a?or chunk of the transactions are !ade in cash and happen at kiranas. lso a recall is e'en !ore challenging in a low#ticket product categor( like 5M8G. this ca!e to the notice of the Maharashtra 5ood and 0rugs d!inistration +efore the co!pan( could pick up the e. 4MSI.: If e!plo(ees with desired skill#sets are not a'aila+le in#house. fter so!e initial hesitation. Second.ecuting a recall progra!!e for two#wheelers is far !ore challenging +ecause of the low awareness le'els a!ong the target audience. In 200%.
it !a( not +e appropriate to +la!e the auto industr( for so all the +ad things associated with recalls. That said. 7adkarni sa(s. If the +atch of 'ehicles to +e co'ered in a recall was !anufactured *0 (ears ago. .: /ut in India. . 9G $a!akrishnan. This !akes it difficult for a !anufacturer who is tr(ing to get in touch with the owner during a recall progra!!e.'en when a co!pan( has set standards for these co!ponents. =wners of second#hand 'ehicles take the registration for!alities casuall( and often don"t +other to get a new registr( on their na!es. In such a situation. the faster and low#profile a recall. o+ser'es custo!er representation is !issing in this e@uation and the recall is a three#wa( e. : s the second hand !arket !ushroo!s in co!ing (ears. :In a !ature !arket like the US. Talking of the auto sector. This is one of the pain points during product recall. it will +e difficult to trace the owner.of its recall target.'identl(. it will +eco!e tougher to track the current owner.: he sa(s. product recalls continue to +e closed#door affairs. =n an a'erage. co!panies understand that during a recall the risk to one"s +rand is wa( higher than 'isi+le financial loss. the cheaper it will +e for the co!pan( in the e(e of the stor!. Sa(s Mathur of SI M. :)e ha'e chosen to report the progress of our recall progra!!e to the go'ern!ent and the !edia fro! ti!e to ti!e. 4onda"s !arketing tea! sta(ed awa( fro! putting together a !ass !edia ca!paign to dri'e awareness a+out the recall. 5rost 6 Sulli'an South sia. The second challenge relates to handling the re'erse logistics. I +elie'e this recall has strengthened the +ond +etween 4onda and its custo!ers.: . :The stakeholders !ust find a wa( to !ake consu!ers part of the recall process. M0. a strong consu!er !o'e!ent together with tough legislations will dri'e product recalls +( +rands that cannot afford costl( litigations and the possi+le loss of goodwill in the !arket.000 co!ponents outsourced to different 'endors. The a'erage 'ehicle ownership c(cle in India is fi'e (ears. there is roo! for @ualit( lapses as @ualit( checks can at +est +e rando!. a car has !ore than *..ercise in'ol'ing SI M.: adds Guleria. the go'ern!ent and original e@uip!ent !anufacturers. There is a registration process that needs to +e followed once 'ehicle ownership changes fro! one person to another.
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