IKEA Product Recall - WAREHOUSING PDF

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Name: Murphy Smith Student ID: 000800000 IKEA CANADA PRODUCT RECALL STRATEGY

October 26, 2016 - IKEA Canada, in cooperation with Health Canada, has recalled the SNIGLAR crib with date stamp 15342. IKEA has received information from Health Canada that the SNIGLAR crib with date stamp 15342 has failed to meet a testing requirement. The requirement tests the strength of the slats when a specified force, unique to Canada, is applied to it. IKEA has received no reports of any related injuries or incidents. IKEA products are designed and tested to comply with all applicable requirements in the countries where they are sold. Extensive process control is maintained during the production of the cribs and continuous tests by IKEA and third-party institutes ensure compliance to its demanding quality and safety requirements. IKEA reached out all Canadian customers that have a SNIGLAR crib with date stamp 15342 to stop using it and to bring it back to any IKEA store for exchange or a full refund. Proof of purchase (receipt) is not required. IKEA apologized to all its customers for any inconvenience this might have caused.

Due to a recent ASTM standard update, IKEA has decided to recall the KULLEN 3-drawer chest in Canada and the United States (including Puerto Rico) and China. Safety and product compliance are top priorities at IKEA. Both are integrated into our ways of working, from product development to products sold in the stores. We want our customers to feel secure that the IKEA product range complies with all relevant laws and standards. The KULLEN 3-drawer chest has been sold in IKEA markets for more than 14 years and in Canada since 2016. IKEA has not identified any reports of serious injuries involving the KULLEN 3-drawer chest anywhere in the world. KULLEN 3-drawer chest is safe to use if attached to the wall, per the assembly instructions. The KULLEN 3-drawer chest is sold with a permanent tip-over warning label and has always been sold with tip-over restraints. Consumers in Canada who have not properly anchored their KULLEN 3-drawer chest should stop, using it due to tip-over hazards, and are advised to bring it back to Returns & Exchanges at any IKEA location for a refund. Customer who want to keep their IKEA KULLEN 3-drawer chest, but who did not keep their tip-over restraint, can pick up a free wall anchoring kit at any IKEA location or contact the Customer Support Centre or visit www.ikea.ca/saferhomestogether to have one delivered to their home. IKEA will also provide a one-time, free in-home wallanchoring service for consumers upon request.

IKEA continues to encourage consumers to anchor all chest of drawers to the wall. Here are some further examples of how IKEA approaches the industry-wide issue of furniture stability: 

Safety from the very beginning: IKEA develops its products using a rigorous risk assessment and testing program. Clothing storage units are evaluated for tip-over risk by an independent third-party laboratory before going on the market. IKEA complies with local requirements in all markets and makes updates as changes to those requirements are adopted.

Industry standards: IKEA plays an active role in the development of standards around the globe. Tip-over restraints and assembly instructions: For decades and in all markets, IKEA has included tip-over restraints and assembly instructions with chests of drawers over a certain height. Customers can also order wall anchoring kits at IKEA.com or pick up at any IKEA store. Communication: “Secure It!” is the IKEA global campaign, initiated in 2015, to ensure home safety by sharing knowledge with all consumers about the importance of anchoring chests of drawers to the wall. Innovation: IKEA is heavily investing in innovation, product development and testing, leading to innovative safety solutions. Last year, IKEA announced the development of its GLESVÄR family of chests and dressers with safety features designed to decrease tip-over risk. GLESVÄR will be launched on selected markets including Canada in April 2020. Education: IKEA has developed the Safer Home mobile app, an innovative way to raise awareness about common hazards in the home, through tips and solutions on how to create a safer life at home for families with children between 0-7 years. The app provides knowledge on children’s development and provides room by room safety tips tailored to the age of the children in the user’s home. Safer Home has so far been launched in Iceland, Australia, Canada and United States, and more countries will follow.

Supply Chain in Reverse: When a Product Recall Hits, Transparency is Critical

When a recall happens, the stakes are high. And the need for a transparent supply chain where all participants can communicate directly with one another, identify where the defective products are at any point in the process, and receive up-to-date information instantly is critically important. Suppliers and retailers cannot afford to wait for paper communications, or risk errors from manually re-entering data into a system. During a recall, speed and efficiency are paramount, and can make the difference in restoring the company’s profits, brand, and reputation, and mitigating its legal liability. Manual supply chain processes just cannot keep up with the speed product recalls demand. Companies turn to technology such as enterprise resource planning, electronic data interchange, RFID, and transport technologies that provide the speed, flexibility, accuracy, and clear resolutions that can help keep a smaller recall from turning into a larger crisis. Look for Early Warning Signs to Prepare for the Unknown In the early stages of a recall, there may be warning signs, but no clear path to fixing the issue. There might be customer complaints, or larger-than-normal returns. There might be acknowledged problems from the manufacturer that appear to be manageable at the start. But often the potential size of the problem and ultimate impact is not known. So, the ability to be flexible and to scale processes is critical. The supply chain must be able to accommodate the unknown unknowns , those variables, and issues that you do not even know exist at the start. For example, suppliers need to quickly remove recalled products throughout the entire supply chain, which places additional strain on warehouse management systems to provide correct information on current inventory levels. Also removing products from stores can put stress on the company’s managed transportation if the trucks are unable to accommodate additional loads.

Standard Electronic Formats to React in Real-time

Using a standard electronic format between business partners, such as EDI, can help create supply chain transparency. For example, using such standards for business-to-business integration (B2Bi) enables partners to share important information such as production and transportation plans, orders, inventory, and allocations allowing for complete visibility in the supply chain. This allows companies to be agile enough to handle a recall, even if the size and scope are unknown. EDI enables all parties in the supply chain to have a full view of the products throughout the distribution process. By enabling information to be shared electronically, EDI permits suppliers, manufacturers, and retailers to receive and react to new information in real time. And it creates a data trail, making it easy to find information about orders, shipments, inventories, and status of operations at other hubs along the supply chain.

Adhering to Recall Regulations in a Complex Environment When a recall strikes, manufacturers not only have to worry about efficiently removing products from shelves but complying with regulators. Recalls in many industries are regulated—such as the Drug Supply Chain Security Act for the pharmaceutical industry, and the Consumer Product Safety Improvement Act for consumer goods. The government provides strict guidelines about how recalls should be handled, including supplying adequate documentation. Manufacturers must meet product tracing requirements and ensure that all defective goods are removed from the distribution chain. Companies are often required to show the chain of custody for affected products and must provide proof that integrity was maintained to conduct additional testing and analysis. The complexity of today’s supply chains means that this can be a momentous task, especially if the manufacturer’s standard processes require manual tracking and documentation. Utilizing lot tracking systems and warehouse management functionality, including radio frequency identification (RFID), bar coding, labels that can be scanned, and EDI, creates a smooth tracking process where all key personnel can access real time data on different

products. This enables suppliers to track the defective goods, to know if they are in a warehouse, in transit to a retailer, or sitting on a store shelf. It also creates a data trail which makes documenting the removal process and chain of custody easy for regulatory reporting. Implement Checks and Balances to Trigger Alerts In fact, we used these tools to help one of our clients prepare for a possible recall. We worked with McKesson, a medical supply, pharmaceutical and health services company, to implement technology that automated the process of assigning data base lot numbers to different items. With this system, in the event of a problem, McKesson could locate in real time exactly where each affected item was and remove it. Previously, the company was doing this process manually and managing it with spreadsheets, an inefficient method that could possibly lead to errors. The EDI system we installed stored the data to make it available to all players along the supply chain. It also implemented checks and balances to guarantee the products were tracked correctly. And it had built-in checks and balances. If a supplier did not put a lot number on a shipment, the goods would not be accepted at the distribution center. Instead, the system would trigger an alert, and a lot number would be issued in real time. Recalls can put the supply chain into a tailspin. Running it in reverse for a product recall can be costly and has the potential to significantly damage the supplier’s reputation, create significant costs, violate regulations. Speed and transparency are critical. Incorporating technologies, such as EDI, that automate the process and make it fully transparent can make a huge difference, ensure the company meets all regulatory requirements.

5 Strategies on How Your Brand Should Handle A Product Recall 1. Offer Full Refunds Whenever Possible

A serious mistake some companies make when they discover a product defect is to stay focused on profit as the bottom line. Sometimes you must take a revenue hit to keep customers loyal to your brand. Take, for example, the recall of Ford Transmissions in early 2016. The company owned up to a mistake in the manufacturing of these vehicles, recalled them, and invited those who had already taken their transmissions into auto body shops and paid for repairs to come to the manufacturer and receive the amount that repairs cost as a rebate. This is a way to make sure your customers do not become permanently disenchanted by your brand, especially if your brand is as recognizable as Ford Automotive.

2. Keep Open Lines of Communication with Customers In the event of a product recall, your customers will likely be confused, and generally inconvenienced by the sudden shift. Hiring a few more customer service professionals, instating a live chat help feature on your website, or holding an informative press conference about the change will go a long way in easing the minds of the most frustrated customers. Remember, customers that do not receive the answers they desire about your brand will walk away with a negative opinion long after the dust from the recall settles. 3. Educate Customers About the Potential Hazards of The Product's Defects We typically see this with pharmaceutical recalls, as customers may be worried about their health after consuming a drug that turned out to be less safe than it appeared. One example is with PharmaTech LLC, and their Diocto Liquid, meant to be an effective stool softener. Unfortunately, the manufacturer had a large batch of the product become tainted with a bacterium that could cause dangerous infections in people with weakened immune systems. PharmaTech was forthcoming with their customers and educated them about the risks of their recalled product, and released information through the proper channels, avoiding major legal action in the process. Another potentially bad effect or defect if you will be addiction or the possibility thereof. "Pharma brands need be completely transparent as to the possible effects a given drug can have on anyone taking it," says Leslie Glass, founder of Reach Out Recovery. "The question they need to ask themselves is are they advertising addiction?" 4. Be Prepared and Assume Every Product Will Be Recalled It may sound a bit strange to hear that you should assume that a recall will occur on every new product your brand puts on the market, but effective PR is based on messaging, framing the

situation and managing the reaction of consumers in the face of uncertainty and this can only be done with the highest possible degree of readiness. When a product gets recalled, react quickly with an announcement, control the message, and take responsibility before the press and the public can paint your brand in a negative manner. 5. Cooperate with Third Party Regulators and Arbitrators You will notice that in the PharmaTech example, the source was an FDA release. This is because when a recall involves potential dangers to the health of your costumers, government agencies usually get involved to make sure the situation is made right by the company responsible. If your brand must deal with a government agency or a third-party mediator that steps in to make sure the proper steps are taken, make sure you realize that your company is in the wrong here. Cooperate with them, and everything will go as smoothly as possible throughout the process.

Reference https://www.ikea.com/ca/en/customer-service/product-support/recalls/

https://www.ikea.com/ca/en/customer-service/product-support/recalls/ikea-canada-recallssniglar-crib-70x132-cm-with-date-stamp-15342-pubb6148361 https://edi3.dicentral.com/supply-chain-in-reverse-when-a-product-recall-hits-transparency-iscritical https://www.forbes.com/sites/steveolenski/2016/10/28/5-strategies-on-how-your-brandshould-handle-a-product-recall/#115e98741755...