In this article, learn about:
What to do in the event of a product recall
The costs of a product recall
Common causes of recalls
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Product recalls can be a daunting endeavor for retailers, suppliers, and consumers alike. However, recalls are unfortunately inevitable and occur every year. Suppliers need to understand how to mitigate the consequences of recalls, in case they affect one of their products.
Here is a quick guide to the most common causes of product recalls, as well as best practices for alleviating the financial and reputational damage they can create.
What can cause a product recall?
With product recalls, the most consequential thing that a supplier can do to save money is to prevent recalls from occurring in the first place. To prevent recalls, it’s important that suppliers gain an understanding of general recall causes, and how recalls might affect their specific product lines.
So what are the most common causes for product recalls, and how might these issues be avoided?
Safety Concerns
One of the primary causes of a product recall is safety concerns. Once regulators learn that there are risks associated with using a particular product, they might issue a recall to protect the general public.
An example of this is food products. Occasionally, a food product will contain an ingredient that is harmful or poisonous. In those cases, a recall is sure to follow. In 2024, for instance, there were recalls issued for cucumbers, deli meat, and eggs, along with an increase in the number of hospitalizations associated with foodborne illnesses.
Product defects
Another common reason that a product recall can occur is if the product is defective. Defects can happen to nearly any product that is otherwise problem-free.
These defects often occur due to an error in the manufacturing process or an oversight in product design. Either way, a defective product is not useful to consumers and is likely to cause a recall. For example, in April 2025, bicycle manufacturer Huffy recalled over 23,000 units of its line of children’s ride-on Tonka dump trucks due to potential overheating in the controller, which can cause burn hazards.
Government regulation
The United States federal government has created organizations to ensure that all products are safe for consumers to use, of which the Consumer Product Safety Commission (CPSC) is one of the most prominent. The CPSC is responsible for issuing recalls for the sake of public safety.
Occasionally, new legislation will ban certain products that are harmful to human health or the environment. Those laws will often cause a recall of products that don’t comply with new safety regulations. For example, Fiat Chrysler Automobiles agreed to a voluntary recall of over 860,000 vehicles in the United States in January 2025, due to emissions investigations conducted by the Environmental Protection Agency.
How to deal with a product recall
Facing a product recall is never an attractive option for any company, as recalls can severely impact revenues and customer loyalty.
Any vendor facing a recall needs to act fast to minimize its ill effects. The five steps below are the first actions these companies should take.
1. Immediately pull the product from shelves
After a product recall, the first course of action is to reach out to retailers to remove the product from all stores. This step is important because recalled products may be dangerous to consumers.
Retailers are among the first groups that should be aware that there is a product recall. More broadly, all involved parties should maintain an open dialogue surrounding the withdrawn goods.
When retailers learn about a recall, they can remove the products as soon as possible. This early knowledge of the situation will also help retailers deal with any customer complaints related to the problem.
Once the public is aware of the recall, they will most likely be hesitant to purchase the product in question. The longer consumers see a recalled item on store shelves, the more likely they will lose confidence in the company that sells it.
By collaborating in this way, a vendor stands a better chance of maintaining a healthy relationship with its retailers even after a product has been recalled.
2. Contact distributors
Vendors should also immediately notify their distributors about a product recall, allowing them to cease all product distribution until the supplier can resolve the issue that caused the recall.
During the recall, the distributor will often have the recalled product in stock in their warehouse. Correctly handling a recall means alerting distributors early enough to stop them from sending out more faulty products.
3. Address customer complaints
There will be some complaints from customers any time there is a recall of popular Consumer Packaged Goods (CPG). Being ready for widespread displeasure will help restore customer confidence. Anticipating customer complaints is a way to control the narrative surrounding the recall and maintain a positive public image.
4. Anticipate future issues
When dealing with a recall, the final essential step is to determine what caused a product or class of products to become defective. Often, recalls result from an error in the manufacturing process, such as quality defects, contamination, mislabeled or incorrect packaging, or reports of adverse effects resulting from using the product. Other times, recalls could result from regulatory non-compliance or could even be initiated by the vendor itself to ensure customer satisfaction and safety.
Regardless of the cause, it’s vital to understand why the recall occurred in the first place, to verify that the same problem does not arise more than once.
Related Reading: Understanding Product Testing: Safety, Quality, and Usage
Product recall costs
Unfortunately, product recalls often come at a high cost. Catching the issue early can aid in keeping that cost lower than anticipated. However, the chances are that a recall will affect multiple companies in the supply chain.
In some cases, policy agreements dictate that the supplier is responsible for those associated costs. For those vendors, these are the most relevant costs they can expect to cover:
Product delivery cost
Administrative cost
Store handling cost
Warehouse handling cost
Shipping cost to stores
Freight costs for product returns
Disposal cost
Special handling cost
Customer refunds
In the case of a recall, vendors need to prepare their accounting departments to receive a bill related to any of those costs. These costs are another reason why dealing with a recall right away is so critical.
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