In the last few days, news of yet another product recall was released. Abbott Labs, a global pharmaceutical company, informed customers that one of their baby formulas called Similac was contaminated with small beetles. This time, the damage is limited and the worst of the symptoms is a sick tummy. In other recall cases, there are serious consequences for errors in judgment on the part of the manufacturer. Case in point: Toyota. Product recalls are on the rise – Why? In the flurry of new quality management techniques such as “six sigma”, what is causing companies to miss the mark and release potentially dangerous products to the unsuspecting public?

Industry Week recently featured an article which discussed the cause of product recalls. Surprisingly, one of the key findings related back to product design and not product manufacturing. Therefore, companies are not having trouble making the product; they are having trouble getting the design right before it goes to production. From a global perspective, the CEO of Toyota admitted that the company was unable to “connect the dots” between product design issues happening in Europe and those happening in North America.

So does this mean all bad news for everyone? Of course not. A new industry is popping up as a result of the increase in product recalls. Insurance companies are extending policies to companies that carry a risk of releasing a faulty product. One insurance company even offers a service to create a contingency plan in the case of a recall. This service provides risk assessments accompanied by marketing plans to fight poor consumer sentiment. It also includes the most effective way to get the impacted products off the shelves as quickly as possible.

Cultures play an integral role in how recalls are recognized and reacted upon. In the case of Toyota, one of the cornerstones of their brand is quality (and therefore trust). When products fail to live up to the expectations set by their manufacturers, the impact can be devastating. When approaching international business and exporting, it is highly important for a company to remember how different cultures will react to products. One rule of thumb is to make sure there is clear and honest communication to the impacted groups. The easiest route to avoid product recall dilemmas is to design and manufacture a quality product and not worry about the rest.

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