Managing Post COVID-19 Supply Chain and Recall Risks

The coronavirus pandemic caused manufacturing plants across the globe to close. As a result, companies rushing to obtain raw materials and components are experiencing short- and long-term challenges.

Manufacturers may:

  • be forced to obtain their goods from unknown suppliers, creating the potential for unreliable or flawed goods and shipments
  • experience irregularities in logistical routes, forcing companies to hire unfamiliar transportation sources
  • find themselves competing with other companies for materials, which could result in difficulty obtaining raw materials

The difficult truth is that a combination of unreliable suppliers, unfamiliar logistical partners and raw material shortages may lead to an increase in defective products and recalls.

Cincinnati Insurance has provided proven business solutions to help manufacturers reduce supply chain and recall risks. Please consider these tips as your business navigates post COVID-19 operations:

  • Complete a physical inventory of raw ingredients, component parts and materials.
  • Contact current suppliers to determine if raw ingredients, component parts and materials are available and the projected timeframe to obtain.
  • Find out if alternative domestic and foreign suppliers can help you obtain the raw ingredients, component parts and materials you need.
  • Perform your due diligence for potential alternative suppliers and subcontractors:
    • Complete internet research.
    • Obtain a list of references.
    • Contact trade associations.
    • Always use written contracts with indemnification language.
    • Consider a physical visit of the supplier locations.
    • Obtain and review credit reports for selected suppliers.
  • Evaluate feasibility, reliability, safety and effectiveness of potential alternative ingredients, component parts and materials in case original materials are unavailable.
  • Establish new material and component parts testing procedures.
  • Complete a hazard analysis for product design changes.
  • Evaluate existing controls, and modify if needed, to ensure products remain safe and reliable for production process changes.
  • Verify that any new product labels, warnings and instructions meet American National Standards Institute and industry standards.
  • Implement traceability controls – such as bar codes and serial numbers – for all new products.
  • Implement a product recall program.
  • Verify your product recall program includes all new products.
  • Complete a practice recall to ensure your recall program works.
  • Consider contacting your local independent insurance agent to discuss recall coverage.
  • Place product liability responsibilities with employees who have product liability expertise, and reassign responsibilities when personnel changes.

Please contact your local independent agent if you have questions or concerns you would like to discuss with your Cincinnati Insurance loss control representative about managing supply chain or product recall risks.

Our loss control service is advisory only. We assume no responsibility for management or control of customer loss control activities or for implementation of recommended corrective measures. These materials were gathered from trade services and public information. We have not tried to identify all exposures. We do not warrant that this information is consistent with Cincinnati underwriting guidelines or with any federal, state or local law, regulation or ordinance.