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Corporate Social Responsibility: What Business Owners Should Know about Product Recalls

console, richard, console & hollawellA dangerously defective product is every company’s worst nightmare. A product you sold – or worse, a product you manufactured –did or could have cost an unsuspecting consumer’s mobility, eyesight, a limb, or even his or her life. How should business owners and managers exercise their corporate social responsibility and handle the difficult situation of being involved in a defective product accident, or even the chaos of dealing with a product recall?

Hundreds of consumer products prove to be dangerous each year in the more than 15,000 categories of products that the United States Consumer Products Safety Commission (CPSC) is responsible for regulating. Though the federal agency announces product recalls in an attempt to protect consumers, dangerous products still cost the nation $900 billion each year in injuries, deaths, and property damage, the CPSC reported. The CPSC announces product recalls are every day, but the recall process remains shrouded – and it can be every bit as confusing for retailers and manufacturers as for consumers. If your company cares about corporate social responsibility and is facing a recall, here’s what you need to know to keep your business – and your professional reputation – going strong.

What to do When the Products You Sell Are Recalled

Being a retailer in the midst of a product recall is tough. Most consumers don’t have the option to go directly to the company that manufactured the hazardous product, and instead, they have to go through your business to exchange their defective products for refunds. “Don’t shoot the messenger,” you may want to say to the flock of annoyed, even indignant customers. It’s not your fault that the manufacturing company was negligent in designing, assembling, or testing their product, but the situation could result in financial losses for your company, and it’s vital that you maintain your corporate social responsibility values to avoid damage to your reputation.

The good news is that consumers are more likely to take out their frustrations on the manufacturing company rather than the retailer. Your company’s short-term financial outlook might be bleak, especially if the recalled item was a popular seller and you have lost both the money you were forced to issue in refunds and the profits from making additional sales. However, a product recall can offer you the opportunity to improve your relationship with customers. A May 2013 incident highlighted an ingenious example. When an E. coli outbreak in certain Farm Rich brand food products led to a recall, Kroger grocery stores went into action, Patch.com reported. The company used its existing loyalty program – one of the ever-popular cards that many retailers use either to offer consumers special incentives or as a requirement for getting sale prices – to notify customers who had purchased one of the recalled items. After all, this is the kind of news that consumers want to hear before they make the mistake of using that dangerous product.

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