We have all seen the news broadcasts announcing product recalls, and have witnessed the fallout companies experience when a product fails to meet expectations. According to the U.S. Consumer Product Safety Commission, approximately two-thirds of 2007’s product recalls were for imported products, primarily manufactured in China.
Over the last three years, U.S. companies’ dependence on foreign suppliers or manufacturers increased by 50%. When outsourcing without proper insurance coverage, a company faces numerous risks including: liability litigation, expensive product recalls, and serious damage to a company’s brand and reputation.
Without an indemnity protection agreement from a foreign supplier, your company would be considered the manufacturer in the event of a product recall. To shield your company from this liability, McSweeney & Ricci recommends the following risk prevention strategies:
- Execute a thorough analysis of foreign suppliers prior to outsourcing. This should include on-site visits and a review of references.
- Legal consultation with an attorney familiar with the laws, culture and regulations of the supplier’s country.
- Make certain the manufacturer understands all product expectations and quality assurance standards.
- Schedule unplanned visits to the site, and frequently test the products.
- Remain informed on any and all changes to materials, processes, or subcontracting of services.
- Create a system to monitor and track customer complaints.
- Design and implement an effective product recall and crisis communications plan.
We would be happy to address your concerns regarding import product liability. For more information please call your McSweeney & Ricci Account Manager today.