Managing Risk Throughout the Product Life Cycle Patrick Donovan Leeton Lee
Managing Risk Throughout the Product Life Cycle
Patrick Donovan Leeton Lee
Overview
• Managing Risks: Basic Principles
• 7 Product Life Cycle Stages
• Case Study: Fidget Spinners
• Questions & Comments
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Managing Risks: Basic PrinciplesDevelop Risk Management Best Practices
• Do a risk assessment at each stage of the Life Cycle;
• Identify potential product hazards and sourcing risks;
• Take steps to eliminate hazards & risks;
• Protect your reputation and business;
• Reduce injuries, recalls, lawsuits and lost profits.
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1. Product Concept
2. Supplier Selection
3. Pre-Production
4. Production
5. Post-Production
6. Transportation/Distribution
7. Merchandising/Post Shipment
Stages of the Product Life Cycle
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• Fast ramp-up due to popularity and industry’s desire to catch the wave;
• Assessing product hazards;
• General use product or children’s product?
• Testing, audits and inspections;
• Other supply chain risks;
• Customer complaints and CPSC reporting.
A Case Study: Fidget Spinners
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1. Product Concept Stage
Define Product Specs (If Custom Item)
• Basic product and functional specs;
• Size and dimensions;
• Functionality, usability, durability, etc.;
• Materials - Develop BOM and specs;
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1. Product Concept Stage
Conduct Design Evaluation & Risk Assessment:
• Intent is to identify hazards & potential issues;
• Consider intended users, ages, distribution, and regulations;
• Evaluate materials and components, production methods, packaging and labeling;
• Review hazardous substances and chemicals in materials; and
• Look for physical & mechanical hazards.
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1. Product Concept Stage
Review & Apply Your Compliance Policies
• Ensure your company has policies addressing 5 Pillars of Responsible Sourcing
• Product quality;
• Product safety and compliance;
• Social accountability;
• Environmental stewardship; and
• Import/export compliance.
• Hazards and risks are present in all 5 Pillars.
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1. Product Concept StageEstablish Compliance Protocols Ask client if any special testing, audit, or inspection requirements;
• Consult 3rd party partners to establish protocols for:
• Product test plans (chemical, physical, and labeling & warnings);
• Social & environmental factory audit (protocols, standards, & key risks );
• QC inspection (product specs, AQL, & sample size); and
• Do internal & external review of compliance procedures & expectations.
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2. Factory Selection StageCommunicate Your Expectations
• Give factory all vendor compliance policies & procedures now;
• Have vendor packet documents issued & signed;
• Establish quality levels, defect ranges and regulatory limits for testing;
Internal controls and documents
• Product safety, quality, social compliance, environmental and import/export manuals;
• Share with factory; sign and return;
• Inform, coach and implement, and enforce.
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2. Factory Selection StageEvaluate Factory’s Compliance Processes
• Verify your factory can meet compliance requirements;
• Factory to fill-out a 5-pillar compliance and capabilities questionnaire;
• Review factory’s compliance program documentation Tab 1
✓ QC & product safety procedures✓ Manufacturing processes✓ Testing procedures✓ Social responsibility policies✓ Code of conduct✓ Audit history & supporting documents✓ Operational permits & certifications
✓ Environmental policy✓ Chemical & waste management procedures✓ Employee hiring and firing practices✓ Plant security measures✓ Shipping practices and partners ✓ Procedures for container & trailer security
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2. Factory Selection StageVerify Self-Assessment through 3rd Party Audits
• Do a pre-audit visit or a full facilities audit?
• Social accountability;
• Technical capabilities & capacity;
• Good manufacturing practices;
• Structural, fire & electrical safety;
• Environmental;
• Issue CAP for nonconformities & assist factory;
• Do post-audit review; see if factory is able to reduce risk in the five pillars and in all stages.
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3. Pre-Production Stage
Pre-Production (PP) Sample Approval
• Last chance to “design out” potential hazards and defects;
• Sign-off on samples only if product’s design, fit, feel and function meet your specifications;
• Have test lab verify packaging, labeling, materials, and components comply.
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3. Pre-Production StagePre-Production Approval of Factory
• Hold pre-production call or meeting w/ Factory;
• Review samples w/ factory;
• Get client’s approval of factory or samples, if needed, now;
• Confirm completion of all corrective action plans (CAPs);
• Get written and photographed proof of corrections.
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3. Pre-Production Stage
Factory Scorecard
• Use it to assess key performance and compliance strengths and weaknesses;
• Coach factory to reach performance and compliance objectives before production.
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3. Production StageQuality Process Audit and Du-Pro Inspections
• Conduct a process audit just as production begins;
• Conduct a during production (“Du-Pro”) quality Inspection, using specs and approved samples;
• Review audit and inspection results with factory’s management;
• Prepare a CAP and partner with the factory.
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4. Production StageSafety and Compliance Testing
• Test production units for chemical and mechanical safety and compliance;
• Verify compliance of labeling, and warnings–
✓ Age grading; small parts/choking hazards;
✓ CPSIA children’s product tracking labels;
✓ Use instructions; battery single-use; single-use;
✓ Producer’s markings, and country of origin;
• Do “drop tests” at the DuPro inspection to reduce transit damage or environmental harm.
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5. Post-Production StagePre-Shipment Inspection & Testing
• Do a pre-shipment inspection (“PSI”);
• QC is critical before order leaves factory;
• Use ANSI/ASQ sampling plans, AQL, and protocols;
• Conduct random “audit testing” of production units;
• Issue a CAP for any failed inspection or tests;
• Confirm CAP items were completed;
• Do re-inspection or retest, if needed.
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6. Transportation/Distribution StagePackaging, Packing, & Labeling Compliance
• Ensure packaging and packing will safeguard product;
• Suggest factory follows ISTA Guidelines;
• Certain products may have unique packaging, label and transportation requirements (specific transit or environmental damage; other shipping hazards)
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6. Transportation/Distribution StageCargo Security
• Do pre-shipment packaging, packing and labeling inspection;
• Do 7-point container and 17-point trailer inspections for security and fitness;
• Inspect container seals, log numbers;
• Approve shipping documents such as BOL, HTS classifications, duties, FDA codes, and invoices;
• At arrival, do container and seal inspections.
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6. Transportation/Distribution StageIncoming Quality Control
• Do an incoming quality control (“IQC”) inspection on products, and provide factory with results;
• Formalize a CAP with all needed steps; make corrections before releasing product for distribution;
• Reject, return or destroy non-conforming products.
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7. Merchandising/Post-Shipment StageProduct & Market Surveillance
• Establish customer reporting procedures, data-collection methods, and management oversight;
• Monitor and collect all consumer safety and injury complaints;
• Report returns data and serious complaints to management and outside experts;
• Quickly and thoroughly investigate all complaints and reports of defects or harm;
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7. Merchandising/Post-Shipment Stage
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CPSC Reporting and Recall• Consider CPSA Sec. 15(b) report;
• A recall may be needed if complaints indicate safety defect, substantial product hazard or nonconformity;
• Do testing to verify;
• Consult with compliance and legal experts; and
• Partner with CPSC for guidance.
Key Takeaways
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Risk Management is Critical for Your Success 1. Whether you are a supplier, distributor, end buyer,
licensor or consumer, you have risk exposure;
2. Risk is present in all 7 stages of the product life cycle, and can affect all 5 Pillars of Responsible Sourcing;
3. Risk reduction is most important in the early stages: product concept, factory selection, and pre-production;
4. Continue risk assessments, audits, testing and inspections in later stages; and
5. Monitor and handle all product returns and complaints.
Leeton LeeConsultant
(818) [email protected]
Patrick DonovanDirector of Import & Compliance
(425) [email protected]
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