Just how much does a product recall typically cost a manufacturing organization? In short, a lot.
There’s much more to consider than just the potential lost revenue of the scrapped product, which itself can be in the range of several million dollars depending on industry and the extent of the recall. We also have to consider punitive costs from potential regulatory fines and legal actions brought by consumers who’ve experienced damages, the difficult-to-remedy tarnish to brand and product reputation, and also the considerable costs of finding and effectively dealing with the extent of the problem. After all, as supply chains have increased dramatically, they’ve also added layers of complexity in tracing the root causes of product recalls.
How the Internet of Things will Eliminate the Product Recall
While this might appear somewhat ominous, and suggest that product recalls will only intensify in nature and in harm done to organizations over time, there are many that predict that one day, the product recall will be relegated to the dustbin of manufacturing history, made possible in large part due to Internet of Things (IoT) technology. Below, we’ll discuss four ways IoT will work toward making product recalls a thing of the past.
1. Traceability: As mentioned above, with supplier networks growing across industries, and with any faulty component the potential cause of a disastrous recall, being able to track and trace the genealogy of a product is only becoming more critical. The automotive industry knows this all too well, as a number of large companies were involved in a recent airbag recall that touched nearly every aspect of the industry. Leading companies are understanding that increased data collection, process automation, and improved analytics are going a long way in creating full product traceability. In the future, as each component of a product is fitted with an IP-enabled sensor, it will be possible to proactive manage quality issues before they advance downstream in the supply chain.
2. Lowering the cost of quality: As any quality professional can attest, inspecting every single product is just not feasible in today’s fast-paced production environment; it’s simply too time consuming and expensive. But IoT capabilities will help to increase capacity through increased data capture, analytics, and high-speed imaging that will help quality professionals perform better inspections on a higher number of products with less time and money.
3. Smart connected products: As IoT standards and protocols coalesce, an increasing number of products, devices, and objects will be fitted with IP address-enabled sensors that will connect via the IoT network. As more products and devices gain “contextual self-awareness,” one key benefit of this wave of intelligence will be the ability to make changes and fixes on products remotely. Moreover, this will also provide intelligence back to the manufacturers of products directly, rather than through an intermedium like a call center, enabling companies to really improve products fundamentally, through improved design and reliability engineering.
4. Digitization of Processes: The manual/analog nature of many of today’s manufacturing processes leaves knowledge gaps that IoT can potentially fill. The future digitization of processes will lead to a scenario where everything from design to the user experience is instrumated. This allows manufacturers to understand not only how a physical product is being designed and manufactured, but also how the user is experiencing and interacting with it. While there are security and privacy hurdles to be overcome, ultimately presenting the end user with a value proposition on this data will allow manufacturers to gather unprecedented real-time information on how end users interact with products, leading to potential improvements across the spectrum of product design and creation.
How will These Capabilities Advance in the Market?
According to our research, 43% of manufacturers either don’t understand or don’t care about IoT. Even though still in its nascent stage, IoT has already developed real-world use cases and, given its transformative nature, it’s critical that companies are at least on the path to understanding the future opportunities if not currently investing.
For more on the current and future promises of IoT and its effect on product quality and recall issues, be sure to check out the free Cisco ‘Future of IT’ podcast on the Last Product Recall. LNS Research President and Principal Analyst Matthew Littlefield and Cisco Consulting Services Organization Vice President of the Internet of Everything practice, Joseph Bradley will discuss the current frontier of IoT, and what’s needed to make the capabilities listed above a reality, as well as the days of the product recall an antiquity.
