In early 2024, ETQ surveyed 750 senior-level quality professionals across the U.S., U.K. and Germany who were asked about their views on quality in the workplace. The goal was to collect real-world feedback on the trends, issues and challenges that affect quality professionals in those markets. Responses provided valuable insights into the current state of quality management and came from several industries, including heavy industry, electronics, medical devices, pharmaceuticals, food and beverage, chemicals, logistics, automotive and aerospace.
In the world of heavy industry, the cost of poor quality can be monumental. From manufacturing and construction to mining and oil production, companies that operate in these fields face unique challenges in managing quality. One of the most significant of these challenges is product recalls, which can result in substantial financial losses, brand damage and safety risks. According to the 2024 ETQ Pulse of Quality in Manufacturing survey, 76% of heavy industry organizations experienced a product recall in the past five years, emphasizing the need for effective quality management strategies.
The Prevalence of Recalls in Heavy Industry
The fact that more than three-quarters of heavy industry organizations have dealt with a product recall points to the risks of producing complex, large-scale products in environments where precision and safety are paramount. Whether it’s a fault in the manufacturing process, an issue with raw materials, or a failure in the supply chain, product recalls are not only disruptive but also costly.
Heavy industry organizations report a range of costs associated with their most recent recalls, with 37% estimating the financial impact at between $10 million and $49.99 million. 17% report higher costs, between $50 million and $99.99 million. The financial impact, however, goes beyond the direct costs of resolving the issue. Recalls damage a company’s reputation, delay product launches and can lead to plant shutdowns and layoffs.
The Root Causes of Recalls: Supplier vs. Internal Issues
One of the most pressing questions for companies facing a recall is: where did things go wrong? According to the data, heavy industry companies attribute a significant portion of their recalls to supplier-related issues. In fact, 70% of respondents indicated that supplier issues were responsible for between 25% and 50% of their recalls, while 17% reported that supplier problems accounted for up to 75% of their issues. These figures highlight the critical importance of having robust supplier quality management systems in place.
Internal factors are also a major contributor to product recalls. For 56% of organizations, internal actions were responsible for up to half of recalls, while 36% attributed between 51% and 75% of their recalls to internal issues. These figures highlight the need for continuous improvement in internal quality processes, as well as the importance of employee training and effective communication between departments.
The Business Impact of Recalls
Beyond the immediate financial costs, product recalls can have a range of other negative impacts on heavy industry organizations. The data reveals that 38% of organizations surveyed reported plant shutdowns because of their most recent recall, a consequence that can halt production for days or longer. Delayed product introductions were cited by 38% of companies, 36% reported brand reputation damage and 28% experienced declines in customer satisfaction.
The effects of a recall can ripple throughout an organization, affecting everything from sales to workforce morale. Plant shutdowns can lead to layoffs, as indicated by 20% of respondents, while increased remediation costs are another common consequence, affecting 26% of organizations.
How AI and Automation Are Reducing Recalls
Given the significant costs and disruptions caused by product recalls, many heavy industry organizations are turning to advanced technologies such as Artificial Intelligence (AI) to help mitigate these risks. According to the data, 38% of heavy industry organizations are already using AI in their operations, while 46% plan to implement it within the next two years. AI can play a critical role in identifying potential issues before they lead to recalls, by automating document processing, spotting defects on the manufacturing floor and predicting future trends.
Automation of core processes is another key strategy being employed by heavy industry companies to reduce the likelihood of recalls. More than half of respondents identified process automation as one of the most important benefits they hope to achieve with AI. By reducing human error and ensuring greater consistency in production, automation can help companies maintain higher quality standards and catch potential problems early.
The Role of Suppliers and Standardization
One of the key challenges in managing quality and preventing recalls in heavy industry is the complex web of suppliers that many companies rely on. Ensuring that these suppliers meet strict quality standards is critical, but not always easy. While 56% of respondents “somewhat agree” that they have control over their suppliers, only 23% “strongly agree.” This shows that many companies still have work to do in terms of improving supplier management and ensuring consistent quality throughout the supply chain.
Standardization of quality management processes is another area where improvements can be made. While 61% of respondents report that their processes are “somewhat standardized,” only 32% describe them as “fully standardized.” A lack of standardization can lead to inconsistencies in quality and increase the risk of recalls, especially when dealing with multiple suppliers and complex production processes.
Conclusion
Product recalls are a significant challenge for heavy industry organizations, with the potential to cause major financial losses, operational disruptions and damage to a company’s reputation. By investing in AI and automation, improving supplier management and standardizing quality processes, companies can reduce the risk of recalls and protect their bottom line.
Read the full report now and learn how an automated quality management system can help.
