SOURCE: Stericycle ExpertSOLUTIONS

Stericycle ExpertSOLUTIONS

May 20, 2015 15:00 ET

Recall Multiplier Effect Plagues Manufacturers, Attacking Multiple Industries

Q1 Stericycle Recall Index Finds New Regulatory Pressures Adding to the Challenges

INDIANAPOLIS, IN--(Marketwired - May 20, 2015) -  Stericycle ExpertSOLUTIONS™ (NASDAQ: SRCL) today released the findings of its Q1 2015 Stericycle Recall Index, which found that many recalls in the first quarter drastically multiplied throughout the supply chain, heavily affecting manufacturers, retailers and consumers with implications expected to reach beyond Q1. Events exhibiting this multiplier effect, primarily in the food and automobile industries, spread quickly to other manufacturers, products, geographies and regulatory bodies. The multiplier effect demonstrates the staggering impact one recall can have on an interdependent supply chain.

Multiplier effect challenges dominated the FDA governed food industry, which experienced a 40 percent increase in recalled units from Q4 2014. One apple recall affected more than 15 million pounds of food, spreading to 19 states and Canada, due to the presence of listeria. The contaminated products resulted in over 30 hospitalizations, seven deaths, three pediatric illnesses, three premature births and one fetal loss -- and numerous lawsuits against the manufacturers and retailers involved. Q1 also saw the rippling effects of a high-profile frozen spinach recall, which ultimately spawned eight additional recalls of 30 products across the U.S. Perhaps the most significant indicator of the multiplier effect, however, occurred when a spice recall crossed from FDA to USDA regulated products. The event eventually affected 14 companies and over 150 products throughout the supply chain.

"The Q1 Stericycle Recall Index data illustrates that the multiplier effect is a reality impacting all industries," commented Todd Harris, Vice President, Stericycle. "In the food sector specifically, it's possible that the Food Safety Modernization Act may help to prevent multiplier effect issues in the future by adding more inspections, compliance checks and preventative controls throughout the food system. However, the FSMA brings varying recall execution expectations and challenges, which manufacturers must be prepared for by continually updating and testing their recall plans. With consumer safety on the line and financial and legal repercussions continuing for decades, companies can't afford to be caught off guard."

The automotive industry also faced major implications from the multiplier effect, as auto recalls continued their accelerated pace in the first three months of 2015, with an average of two events per day. The Q1 Index analysis revealed that supplier-related recalls were a primary driver of this activity, with 41 percent of NHTSA recalls due to airbag issues. The original recall quickly grew in scope and ultimately impacted several automakers, numerous brands and millions of consumers. The multiplier effect was also evident in an ignition switch recall, the implications of which reverberated throughout the supply chain, affecting multiple brands from one automaker and millions of vehicles. The recall included vehicles with a wide range of model years, some up to 18 years old, adding a new layer of complexity to customer notification and improving recall repair rates, something NHTSA regulators are increasingly expecting from automakers.

"When a supplier provides the same part to multiple automakers, who in turn use that part in dozens of models, the overall impact of a recall is drastically compounded," continued Harris. "Increased regulatory scrutiny is another variable that automotive stakeholders must navigate. Proposed legislation seeks to extend recall responsibility to car rental agencies and used dealers and halt the sale of vehicles with recalls that increase the likelihood of serious injury or death. As oversight increases, manufacturers will continually be subject to unforeseen impacts on their business and must be prepared to execute long-term, multi-touch point recall campaigns."

To learn more about the multiplier effect and access the additional findings from the Q1 2015 Stericycle Recall Index, please access the report in its entirety here.

About the Stericycle Recall Index
The Stericycle Recall Index is the only report that aggregates and tracks recall data to help manufacturers and other industry stakeholders navigate the regulatory environment and identify trends. Each quarter Stericycle analyzes data from the U.S. Consumer Product Safety Commission (CPSC), the National Highway Traffic Safety Administration (NHTSA), the FDA and the USDA. For more information, please visit http://www.stericycleexpertsolutions.com/thought-leadership/

About Stericycle ExpertSOLUTIONS™

Stericycle Inc. is a NASDAQ-listed global business-to-business services company which provides highly specialized solutions to healthcare and commercial businesses of all sizes. Founded in 1989, Stericycle Inc. has grown to become a leader across a range of complex and highly regulated market sectors and operates in 550 locations. Stericycle ExpertSOLUTIONS™ is the industry leader in managing automotive, consumer product, pharmaceutical, medical device, juvenile product, and food and beverage recalls. ExpertSOLUTIONS streamlines the entire product recall process and manages Notification & Response, Processing & Tracking, and Compliance & Reporting for leading global companies. For more information, visit http://www.stericycleexpertsolutions.com/

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