Press Release
“Product recalls will increase”
Georg Huber, a partner at KBC, explains why the number of recalls will continue to rise and how manufacturers can reverse this trend.
Munich– Excessive diesel emissions, faulty ignition switches, and airbag issues are increasingly coming under public scrutiny. But does this mean we’ve already reached the peak of recall campaigns? Based on our assessment as a management consulting firm specializing in technology and automotive companies, we must say no.
One reason for this is that past incidents, such as the diesel emissions scandal, have significantly heightened the sensitivity of regulatory authorities and consumers, thereby placing vehicle manufacturers and suppliers increasingly under the microscope of critical scrutiny. As a result, manufacturers are under even greater pressure to respond to even the slightest suspicion of safety or regulatory concerns, so as not to be accused of covering up known risks. In addition, anticipated legislative changes and the personal liability risk faced by management will further exacerbate the situation. That is why we are convinced that recalls will continue to increase in the coming years.
The controls for preventing callbacks
However, there are effective strategies for preventing product recalls. One key aspect is supplier management. Global supply chains, significant fluctuations in capacity utilization, and cost pressures are just a few of the factors that can lead to potential sources of error in the supply chain. From defining specifications to monitoring processes in mass production, we have significant levers for optimization in this area. Transparency and consistency play a key role here, as do practical safeguards to prevent fluctuations in product quality. However, suppliers are only one potential weak point. For manufacturers, it is primarily the development work and its consequences that often lead to subsequent recalls. Here, lessons must be consistently learned from past quality defects throughout the entire product development chain: Which processes fundamentally failed to function properly? Where should or could the error have been detected before it occurred at the customer’s end? Above all, this allows for the derivation of process changes or improvements, if necessary, involving interventions in structures and organizations, but also in the area of employee training.
Time as a critical factor in an emergency
The biggest cost driver in a recall is usually the number of vehicles affected. Immediate fault detection is a key factor here. Companies must make targeted investments in structures and mechanisms for the early detection and risk assessment of critical faults. Once faults have been identified, it is necessary to determine which production batches are actually affected. Pinpointing the exact scope of the issue presents a logistical and data-related challenge. Especially when multiple suppliers provide a single component, a vehicle-specific batch selection—and thus one accepted by the Federal Motor Transport Authority—is only possible if precise data-based mapping of installed parts to chassis numbers is available.
Ultimately, effective communication with regulatory authorities is key to minimizing damage. When authorities make inquiries, all relevant data must be provided promptly; it is essential to build trust. At the end of the day, transparency always pays off. After all, past experience has shown that violations discovered later can result in hefty fines.
Kemény Boehme & Company (KBC)
Kemény Boehme & Company (KBC), a medium-sized, internationally active management consulting firm founded in Munich in 2007, helps technology companies optimize and streamline their entire operations—from development and procurement to production. To achieve this, Kemény Boehme & Company develops innovative, cross-industry solutions through ongoing collaboration with network partners from technology centers and universities.
