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Randall Goodden

Risk Management

Developing a Product Liability Program

Companies claim they hold design reviews, but few know what they really entail

Published: Thursday, July 30, 2015 - 16:01

E

very year in the United States, an estimated 80,000 product liability lawsuits are filed, and thousands of products recalled—and that’s happening to companies with certified quality programs in place.

In 2014 alone, some of the highest fines were imposed by government agencies because corporations mishandled product safety issues. Juries have handed out the largest awards to plaintiffs in more than a decade.

And yet, according to “Navigating the Product Mindset,” a recent study published by UL, 97 percent of manufacturing executives surveyed thought their companies and management teams were “ahead of the curve in delivering safe and reliable products,” even though all the data show just the opposite.

Why do manufacturers with stellar quality programs have such little effect on skyrocketing liability lawsuits? To answer this, we must look at the role quality plays in most organizations, as well as the common cause of recalls and product liability lawsuits.

Typically, the quality department focuses on preventing manufacturing defects. It takes the product specifications established by engineering and ensures that the product is built in compliance to those specs. However, the biggest cause of recalls and product liability lawsuits is defects in design. In most cases, the quality department has simply made sure all products are manufactured per that defective specification.

When design validation fails to meet product testing

Once the design review team, in conjunction with the product safety team, have come up with preliminary design specifications, they need to validate them. This includes fabricating and assembling the parts, ensuring the operational function (assuming there is one), and especially ensuring that the product, its components, and materials will withstand everything they will logically be subjected to once they are shipped to customers.

It’s hard to believe that such tests and validation were done on many of the products recently recalled, especially when the product has catastrophically failed, mechanically malfunctioned, or shorted out and started a fire. How could these things happen if the product was thoroughly tested?

All too often a product is designed with components and materials that “should” withstand the conditions and handling it might be subject to, but it’s never verified that such is the case. Then, at a later date, the manufacturer finds that the product is failing in the field. Although most companies say they hold regular design reviews, few in fact even know what that really entails. Once they do learn, they usually acknowledge that they don’t even come close.

Who’s best leader?

Trying to reduce the risk of a product liability lawsuit involves controlling the processes in a number of areas, including:
• Design reviews
• Product safety reviews
• Sales and marketing
• Product testing
• Records retention
• Document control
• Contracts and agreements
• Supplier control
• Manufacturing quality
• Recall readiness
• Customer service and incident investigation

Because these efforts involve so many different areas of the organization, the quality department seems best suited to lead the effort. It can be rewarding for quality managers to lead these programs, but it doesn’t always work out that way. Some quality managers aren’t looked up to by other members of the executive staff, or they aren’t properly aligned in the company’s organizational chart because they report to the wrong people. So the job is given to someone who comes across as a better program leader.

However, to me, a product that allegedly has caused serious injury or death, or caused a catastrophic incident or accident, is the ultimate quality failure. How could the head of quality not be involved in such an investigation, or want to drive the program to prevent future incidents? Quality managers are well-suited to head product liability programs because they’re familiar with procedures in all phases of a product’s life cycle, not just a specific area of the operation like product design.

But when I look at the job positions that attendees at my product liability seminars have held, probably fewer than 20 percent came from the quality function. In some unfortunate cases, when quality manager has requested approval to attend a product liability seminar, his boss has asked “What does this have to do with you? You’re not a lawyer.” The opportunity for the company to learn how to manage liability risk is lost.

Create a product liability team

Besides selecting someone to head the product liability program, manufacturers ahould also create a small team to develop and implement the program, and to discuss strategies for cases and claims that surface. None of these team members should be middle managers, but rather staff employees, preferably those who report directly to the president.

Quality departments help to minimize quality failures and costs. They also pursue continuous improvement, compliance with procedures, and lean activities—all useful and necessary to save money and increase profitability. But product liability prevention can save the company itself as well as greatly increase profitability. If quality managers took the time to learn more about this area, they would recognize the benefits it would bring to their organizations. 

Discuss

About The Author

Randall Goodden’s picture

Randall Goodden

Randall Goodden, educator, advisor, and author has been teaching product safety, and  recall and product liability prevention worldwide for more than 20 years. He is the author of Lawsuit! Reducing the Risk of Product Liability for Manufacturers (Wiley, 2009), Product Liability Prevention: A Strategic Guide (ASQ Quality Press, 2000), and  Preventing and Handling Product Liability (CRC Press, 1995). Goodden has served for decades in manufacturing as an interim president and corporate vice president of quality and reliability, litigation management, and new product development. Currently he is president of Randall Goodden International and Goodden Enterprises LLC.