Manufacturers Must be Prepared for Consequences of Defective Products

Without the proper quality-control mechanisms put in place, manufacturers can end up building defective products.

Despite the hundreds of hours of research and development, and the precision with which they construct their production line, manufacturers can sometimes end up building a defective product. More often than not, companies have internal auditing systems in place to check for these kinds of faulty products to ensure they never reach the market. This reduces the chances of a customer not only receiving an inferior item, but also to protect them from any harm a product may cause.

However, not every auditing system is 100 percent effective, and flawed merchandise will unfortunately slip quality checks and into a customer’s hand. More often than not, though, a defective product will merely upset a customer who had high expectations about whatever he or she purchased. This can usually be remedied with a refund, a discount on a future product or some other type of promotional outreach. In a worst case scenario, the company would perhaps lose a few customers in the long run.

Sometimes, though, a defective product will do more than simply disappoint a customer. In some instances, the final piece of merchandise will ultimately do more harm than good in that it either injures or harms the customer. This can be due to any number of reasons, from sharp edges that may cut, poor wiring that can lead to electric shock or even something potentially fatal.

Companies of all shapes and sizes are susceptible to producing and distributing faulty products, certain sectors are more prone to it than others. For instance, toy manufacturers distribute products aimed at children. Since kids are generally less cautious when they play, toys need to be as safe as possible. Unfortunately, in 2014 alone, U.S. hospital emergency departments treated an estimated 251,800 toy-related injuries, according to the Consumer Product Safety Commission.

Malfunctioning equipment

Since manufacturing companies are extremely reliant upon the tools, machinery and equipment necessary to build their products, any problems with these objects can be devastating. Engineers and builders painstakingly create production lines with many intricate processes and if any one of these goes wrong in even the slightest way, it can lead to defective products. Worse, malfunctioning equipment that isn’t immediately caught can potentially continue for days on end.

By implementing a series of internal audits and quality control mechanisms, manufacturers can reduce the number of potentially defective products that roll off the production line. No matter how staunch of a commitment a company makes for quality control, the possibility exists that a faulty or defective product will make it out into the market, but with the right system in place, manufacturers can keep this number as low as possible.

Don’t be afraid to recall

Sometimes the defect is so small or unrecognizable that a company can operate for an extended time manufacturing faulty products that are then distributed throughout the market. In a scenario like this, where a defective product has saturated the customer base, it can be wise for the company to consider implementing a product recall.

“Companies across the country recall more than 2,500 products on average every year.”

While some owners or managers might consider going this route to be an admission of defeat, the practice is a lot more common than many might realize. According to the online magazine Inc., companies across the countryrecall more than 2,500 products on average every year. With so many businesses dealing with this problem on a regular basis, it can be wise for managers or owners to put a plan in place for dealing with a product recall before disaster strikes.

How McGowan can help

No matter how many quality control mechanisms are in place, and despite careful planning, companies can still manufacture and distribute defective products that can potentially injure or harm a customer. When a situation like this arises, these companies need to know they have someone looking out for their best interests.

Brokers who partner with McGowan Excess & Casualty gain access to our unique industry experience and our wealth of knowledge about what insurance products work best. McGowan Excess & Casualty is a program manager that creates unique manufacturers umbrella insurance and excess liability products for manufacturers, with eligible classes covering:

  • Abrasive Wheel
  • Auto Non-Operating Parts
  • Water Softening Equipment
  • Concrete
  • Electrical Equipment
  • Food Products
  • Metal Goods
  • Tool/Equipment
  • Wire Goods
  • and hundreds more

With our access to “The Power of the Pen,” McGowan offers brokers unparalleled service, competitive premiums and broad coverage. Available nationwide, McGowan Excess and Casualty underwrites on behalf of “A” rated carriers.

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