A product recall is a request to return to the manufacturer, a batch or an entire

production run of a product, usually over safety concerns or design defects or labelling
errors. Generally speaking, companies recall products when defects seem to have
safety concerns for customers and affect large number of customers. For examples;
automotive industry with defective air bags, contaminated food packages, faulty
electronic gadgets etc.

Why are products recalled?

Returns happen for a variety of reasons, which include:

 The customer is unhappy with the product because it is not what they were
looking for or what they expected.
 The product is faulty or defective.
 The item is obsolete and has outlived its serviceability.
 Overstock that must be returned to the warehouse installation. This stock is vital
for the running of a business, although they are just used in specific occasions.
 Seasonal stock, in other words, products that are only sold during certain time
periods (like seasonal wear or toys during Christmas) and that must be stored
the rest of the year.

Impact of products recall

 Direct costs incurred include all expenditures of managing the recall process -
expenses for repair, refund, or replacement, including costs associated with
retrieving the defective product.
 Declining firm’s market performance. this decline can occur through firms
withdrawing a recalled product from the market completely or consumers may be
inclined to stay away from a product category entirely or switch to competitive
products.
 Brand reputation may be harmed by a recall because consumers and other
stakeholders may react strongly to the negative information thereby firms risk
damage to the reputation of the brand that is involved in a recall if consumers
update their beliefs about the brand.

Benefits of Reverse Logistics on the economy

While many companies consider the return process to be a necessary evil that shouldn’t
be noticed, companies that implement an effective reverse logistics workflow can reap
several benefits.
 Some of these benefits are:

 Reduced costs. By planning ahead for returns and making the return order
right, you can reduce related costs (administration, shipping, transportation, tech
support, QA, etc.)
 Faster service. This refers to the original shipping of goods and the return /
reimbursement of goods. Quickly refunding or replacing goods can help restore a
customer’s faith in a brand.
 Customer retention. Dealing with errors is just as important as making sales. If
a customer had a bad experience with your product, you have to make it right.
Fulfilment blunders can create educational opportunities. Learn how to keep your
customers happy and engaged with your company - even after you’ve made a mistake.
 Reduced losses and unplanned profits. Recover the loss of investment in your
failed product by fixing and restocking the unit, scrapping it for parts, or repurposing it in
a secondary market. With a good reverse logistics program in place, you don’t have to
leave money on the table. Take a product that would otherwise just cost your company
money and turn it into an unforeseen asset.
 Minimise the environmental impact. Reuse of materials in manufacturing
processes helps stave off the misuse of unprocessed raw materials and requires less
power. This practice will directly benefit society as a whole.
 Improve corporate image and customer satisfaction. There are significant
competitive benefits for businesses using reverse logistics. More and more customers
are interested in doing business with companies who are committed to environmental
issues.
 Discover new ways of reworking materials. Recouping the monetary value of
items that were rejected can open up new business opportunities. Outlets are a
prime example, specialising in selling last season’s products or those with small flaws at
a lower than usual prices.
 Stock control. Reverse logistics means better stock organisation, which stops
the housing of obsolete products and minimises possible errors.
 All these advantages have a positive effect, likewise, on cutting costs and
boosting revenue