Quality control plays a major role in the prevention of product recalls. Many product recalls and failures are avoidable. Products that do not undergo thorough analysis and testing during all phases of the design and manufacturing process are susceptible to a higher failure rate, which increases the risk of all companies in a given supply chain. Managing the risk of product recalls can be difficult without proper insurance coverage. Human error, design flaws, and manufacturing inaccuracies are just some of the causes that force companies to remove their products from the marketplace. Product recall coverage for tool and die shops is imperative for shops that are serious about managing the risks incurred during a project. Tool making typically involves making tooling used to produce products, which can make them vulnerable to all sorts of third party litigations and lawsuits.

Recovering from a Product Recall
Product recalls can force companies to incur significant direct costs, while also subjecting them to lost sales, punitive fines, lawsuits, and a damaged brand reputation. When a product is recalled, especially from a major manufacturer, the ripple effect can be felt by all companies in a given supply chain. While some recent high profile product recall cases have shaken consumer confidence in the quality and safety of the products people use every day, several companies have shown the ability to bounce back from major product recall cases, including brands like Coca-Cola and Tylenol. Having the proper insurance coverage in the event of a product recall can protect your company against unwanted expenses, lost sales, and litigations.

Transparency & Integrity
Transparency is arguably the most important step a company can take when a product or part is found to be defective. In the event of a product recall, companies can protect the identity of their brand by handling the situation honestly and with integrity. Creating an immediate public announcement that accepts responsibility for the deficiencies of a product is the first step in maintaining consumer trust. Using proactive and attentive PR strategies, a path can be found to build positive relationships with unsatisfied customers and build customer loyalty within the brand.

Repairing Brand Image & Consumer Relationships

Product recalls cost companies over $1 trillion each year. When products are taken off the shelves, companies are forced to expend tremendous resources to repair the image of their brand and rebuild strong customer-brand relationships. Some companies offer full refunds or reimburse customers for repairs whenever possible in order to keep customers loyal to their brand, while others implement several customer service solutions focused on easing the minds of frustrated consumers.

Product recall coverage for tool and die shops is part of a sound risk management strategy. The right insurance policy can go a long way towards protecting your company in the case of a product recall. Without the right coverage, the combination of direct expenses, fines, litigation, and lost sales could do irreparable damage to the long-term health of your business. Protect your brand image, and contact a local insurance broker that can assist you with protecting your business.