This damaging formula is one that should be both feared and respected. Unfortunately the reality is that it is often ignored.   When the probability of an event is low, the risk of not analyzing or focusing on the severity of the consequences increases. This line of thinking leaves companies vulnerable when the unfortunate event happens to them. One can argue that being vulnerable in a low probability, severe consequences scenario can be one of the most disastrous situations a company will ever face. This is exactly what can happen if a recall strikes.

So how can you prepare for this type of situation? Can you really plan for risk? Yossi Sheffi, Professor of Engineering, MIT, spoke to this at the RILA (Retail Industry Leaders Association) annual logistics conference in a presentation titled The Resilient Enterprise - Overcoming Vulnerability for Competitive Advantage.  He says that it’s possible for a company to be resilient, but only through both redundancy and flexibility.

But isn’t that a little tough? How would you establish redundancy with a recall scenario? Especially when it doesn’t happen that often if ever, and if it does, it typically is never the same product. Flexibility offers more opportunity to be prepared, but can only be effective if the company has a culture of flexibility. With a recall, you have to be able to react fast, really, really fast. Even the best-in-class forward supply chains have trouble operating at a rapid speed….in reverse. Remember a recall travels through the reverse supply chain, not the forward.

To become a resilient organization and reduce the vulnerability when faced with a recall, what can you do?

One way to accomplish this is to work with CLS MedTurn, a third-party reverse logistics supplier. By the nature of our business model, we are positioned to help companies be resilient through both redundancy and flexibility. Redundancy comes into play because of the amount and variety of recalls that are handled on an on-going basis. In a twelve month period, CLS has handled more than forty recalls of various sizes, product types and risk levels. That type of knowledge benefits a company that has very little experience in dealing with recalls.

Flexibility is also a component of our business model. The key is that the model’s flexibility is in reverse. This translates into processes and procedures experienced in dealing with the rapid implementation and notification, product retrieval, and individual item returns as well as full cases. These are all steps that are reverse-oriented and different than the flow of a forward operation. 

Successfully handling a recall plays a vital role in the brand’s survival. Don’t be complacent. Plan accordingly for the low probability, severe consequences scenario. You’re right. It may never happen to you. But if it does, wouldn’t you rather be prepared?