June 25, 2009

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(Part 1, Part 2)

Wednesday and Thursday, we looked at the Product Safety Letter archives to review the advice that CPSC received a few years ago on recall effectiveness. The impetus was a recent commission vote to move forward with implementing the recall registration cards mandated by CPSIA section 104 for durable nursery products. Here is Part 3. (Affiliations have changed in some cases.)

September 9, 2003 Measuring Recall Effectiveness (click to see CPSC’s synopsis)

Creating a system or formula to gauge the effectiveness of recalls would be difficult, agreed panelists at the third of three CPSC public meetings on recall effectiveness, this one titled Measuring Recall Effectiveness. That is because it is nearly impossible to count how much consumers take actions like discarding recalled products. Indeed, suggested Harriet Mouchly-Weiss, managing partner of Strategy XXI Group, CPSC and industry likely do better on recalls than they give themselves credit for using the current rough measure of success, which is a simple comparison of the number of units returned or retrofitted versus the number of units a company initially put into commerce.

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But ultimately, the goal of a recall is not to get returns, but to stop interaction between consumers and the product, said Douglas Adams, assistant professor in mechanical engineering at Perdue University. For instance, he said, faulty tires removed from a car and left in a garage satisfy that need even if the consumer did not participate in such corrective actions as replacement, retrofit or refund. However, Alan Schoem, CPSC Compliance Office director, pointed out that CPSC has concern that consumers might later sell the products or donate them to charity, perhaps forgetting the reason they stopped using them.

Price: John Goodman, president of TARP, said his company found that with defective photography equipment in the $300 range, about 30 percent of consumers simply dealt with the problem by throwing out the products. That number rises as products drop below $100. However, he cautioned, those numbers involve consumers who know of the problem – anyone applying them to recalls would have to consider the “filtering effect” of consumers not learning of the recall. However, Jeanne Finegan, vice president and director of Huntington Legal Services, noted that the ideas of inexpensive and expensive need to be defined in the context of the population buying the product. Another factor, raised by Adams, is whether to base expensiveness on the price of the whole product or, for example, on the component needing replacement.

Lifestyle: The number of hidden corrections could be exacerbated by modern, hectic lifestyle noted Mouchly-Weiss. In recent years, post-Christmas gift returns have fallen because people just don’t have the time to take them to stores. Likewise, she noted, rebates increasingly are at the point of purchase to lessen the need for consumer action later. Citing similar pressures, Finegan said her company helped with a non-safety recall of a sports product typically bought by high-end busy people. It got minimal response.

Consumer Type: Another factor might be the type of consumer. Edward Heiden, president of Heiden Associates, pointed to the buyers of power tools, who he suggested might be more likely to think they can handle a problem product. Similarly, products that have different buyers and users also can affect rates. Finegan noted that parents typically bought the recalled sports product for their children, which also might have been a factor in the low response.

Product Lifetime: Heiden said product life can be very important. The longer it is out there, the likelihood grows that it will be around long after a recall, will be disbursed to secondhand owners who are harder to reach or otherwise will be hard to track.

Alternate Techniques: Should total numbers distributed be the basis against which effectives gets measured, or should it be the number sold? The total distributed include units at stores or otherwise in the distribution chain, noted Heiden, and getting those back involves different steps than getting products back from consumers.

Anomalous spikes in sales of similar products at the time of the recall might be an indicator that consumers are reacting to the recall, but not participating in the actual corrective action program, suggested Finegan. Perhaps they are discarding the products and buying new ones, but on their own.

Reduction of incidents after the recall can be a sign of effectiveness, said Mouchly-Weiss. Adams agreed. However, they clarified that they saw this as an ultimate measure not as a primary measure in response to concern by George Person, Recall Management Division head at the National Highway Traffic Safety Administration.

Finegan also suggested that companies train their sales forces to ask consumers why they buy products in the first place. This could help in understanding how they will react to a recall -- though Alan Schoem voiced concern about the ability of minimum wage sales staff effectively getting such information up the sales chain. In any event, knowing why consumers bought a product in the first place will help in understanding how they’ll act, agreed Mouchly-Weiss.

Research and Benchmarking: Goodman suggested that a series of about 10 benchmark studies of consumer behavior in recalls is needed to get a handle on the likely numbers of hidden corrections in a recall. He suggested, for each, speaking to about 1,000 consumers who bought recalled products and asking what they did. Such research is unlikely to come out of CPSC in the near future, explained Schoem, due to budget constraints, but he suggested that manufacturers or industry groups have the money to act, and he asked why they have not. Adams suggested that until recently there might have been technological barriers, noting that it has been for only about five years that software companies have offered complex product lifecycle management. Mouchly-Weiss suggested that evolution of corporate cultures also might lend itself to such work. Until relatively recently, the various departments that have parts of the answers often were fiefdoms that did not speak much to each other. Adams suggested that similar walls are coming down in academic settings.

Similarly, mining CPSC’s files on past recalls might be difficult. While CPSC does handle about 350 recalls a year and does have case files containing numbers of corrected products, Schoem said that the agency’s database for handling that work was not set up for such broad research, but rather to track individual recalls.

The panel also discussed possible pre-tests of recall strategies and recall “fire drills” as ways to gauge likely consumer behavior, though Kenneth Gabriel, partner in KPMG’s Risk & Advisory Practice, warned that pre-tests should not be expected of companies that have an actual need to recall -- they’ll likely see tests as barriers to getting the recalls done. On the other hand, Adams pointed to bioterrorism simulations as a loose model. Those, done on a nearly daily basis by the federal government, involve players from many levels from the Pentagon to local responders. Those people come together in war game rooms and provide their likely reactions to various situations and decisions by participants. While the bioterrorism simulations involve very expensive computers and complicated programs, simpler versions are possible, he said. Indeed, even inexpensive computer games now can offer relatively good simulation of complex social behavior, he noted.

(Part 1, Part 2)

Portions of this article appeared in the September 15, 2003 edition of our premium sister service, Product Safety Letter. It is just one of the hundreds of similar stories that subscribers read over the course of an annual subscription. Subscription information is here