General Motors Co. may be facing a fine as high as $35 million dollars if the National Highway Traffic Safety Administration determines its recall of faulty ignition switches was not carried out properly, according to Reuters. The recall involved more than 1.6 million cars and the defect has been linked to 13 deaths where the switch may have prevented the airbags from deploying.
All of the cars were manufactured between 2003 and 2007, and none of the models are still in production. The problem with the ignition switch is believed to be the result of a substandard part that was made in Mexico, according to documents the auto maker filed with the NHSTA. The majority of the vehicles recalled are in the U.S., with around 235,000 in Canada and smaller numbers in Mexico or outside of North America.
Companies Must Meet New Recall Regulations
Regardless of the industry, recalling a product must be done swiftly to avoid considerable financial damages from fines and loss of revenue. Recalls can be particularly costly when the defect has lead to sickness or death, such as the case with GM. Recalls in the food supply chain are also highly regulated, and the repercussions of an unsuccessful response can burden an organization with heavy fines from government agencies.
However, even if a recall does not have life-threatening results, it must be carried out in a timely manner to protect brand reputation. The longer defective products stay on the shelves, the more of the consumer base that will ultimately be impacted. As soon as a defect is detected, a distributor or manufacturer must be able to begin locating the affected merchandise.
Data collection to Hasten a Recall
Automated and mobile data collection are the most effective ways to track down merchandise that has already hit the market. Companies will know what stores the product went to, if it has already been sold and how much is still left in stock. Companies that use paper-based systems would find it nearly impossible to respond to a recall in the manner expected by both government agencies and consumers.
Given the hefty fines of an untimely recall and the impact on brand reputation and customer loyalty, automated data collection is a cost-effective way to mitigate the potential financial loss resulting from a defective product.