The logistics of a recall
How do recalled products, whether they're lead-tainted toys or defective laptop batteries, make their way back up the supply chain?
By Corinne Kator, Associate Editor -- Modern Materials Handling, 9/1/2007
Mattel's current recall of 19 million toys—along with recent recalls of toothpaste, pet food, laptop batteries, spinach and contact lens solution—is pushing a lot of product back up the supply chain. But is it a logistics and product handling nightmare?
Probably not, says Tim Konrad, president of reverse logistics for Genco, a third-party logistics provider that processes returned items—including recalled items—for many of its clients.
Retailers have procedures in place for moving expired or out-of-season merchandise off their shelves, says Konrad, and manufacturers have procedures for picking up those products and disposing of them. When a recall occurs, the companies simply add the recalled items to the stream of products already flowing back through the supply chain.
“There is a spike in volume after a recall,” he says, “but it’s no different from the spikes that happen right after Christmas.” If a distribution center already has good software and solid returns procedures in place, he says, then managing a recall is probably just a matter of adding a second shift of workers to handle the increased physical volume.
And these days, he says, most public companies do have reliable procedures for processing returns, thanks to the Sarbanes-Oxley Act of 2002, which requires companies to keep meticulous inventory records.
Reaching consumers
But no matter how organized a company is, says Diane Mollenkopf, a professor of marketing and logistics at the University of Tennessee, Knoxville, recalling products that have already reached individual consumers is a serious challenge.
“The more visibility you have into the volume and timing of returns, the better you can plan your operations,” she explains. And while it’s fairly easy to track pallet-loads of goods returning to your distribution center from a retailer, it’s much more difficult to monitor individual items coming back through the postal system from consumers.
Companies try to create as much visibility as they can. When Dell recalled laptop batteries last summer, the company provided a Web site where laptop owners registered their recalled batteries before sending them back. For its current recall, Mattel is providing pre-paid mailing labels that should help predict the timing and volume of toys it’s receiving from consumers.
Disposing of recalled items
Safely disposing of defective products is the final step of most recalls, and it’s an important part of the process, says Scott Hurren of Accu-Shred, a company that specializes in rendering products unusable.
Accu-Shred literally shreds electronic devices. Baby formula, says Genco’s Konrad, is often incinerated. Recalled car seats are compacted.
“If the product goes to the landfill in its normal state,” Hurren says, “someone could take it home, use it and be harmed by it. The landfill is always the cheaper option, but it’s not as secure.”
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