Product Loss Control Policy and Procedure Manual

June 13, 2013
Entrance Gate of Sejong University, Seoul, Korea

Entrance Gate of Sejong University, Seoul, Korea

As indicated in my last blog, product loss control is a very important risk mitigation process.  If properly used, loss control can reduce losses and decrease exposure associated with losses. In order to properly implement product loss control a company or organization needs to establish a product loss control committee ( PLCC) that can review and implement proper loss control processes. But how is that done?  What should  a PLCC do to establish loss control processes and procedures?  The answer is the creation of a Loss Control Policy and Procedure Manual.

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A Product Loss Control Policy and Procedure Manual ( PLCPM)  sets forth the organization  and implementation of product loss control in an organization as well as the processes for loss control in various key areas of R&D, QC, Insurance, Manuals, Warnings, Shipping , Claims and Claims Handling.  It in essence, institutionalizes  product loss control throughout the organization and sets forth not only the procedures for the establishment of the PLCC but the implementation of the product loss control processes throughout the organization as well.  A necessary aspect of a Legal Risk Management ( LRM) Program.

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An example of this would be the organization section of the PLCPM which sets forth the organization of the PLCC.  The PLCPM or "the Manual" basically describes the organization / responsibility of product loss control by describing who is responsible in the organization for product loss control as well as who is responsible for the application and maintenance of product loss control guidelines, processes and claims defense programs.  By setting forth the organization/responsibility of product loss control in the PLCPM and having it signed off by Upper Management, a culture of product loss control can be implemented throughout the organization.

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In order for Product Loss Control to be successfully established and implemented in a company, it is essential that Upper Management sign off on the PLCPM and the PLCC.  In fact, I recommend to include at the end of the Manual a Policy Statement executed by the CEO or COO which acknowledges establishment of the PLCC and the importance of product loss control in the company.  The Manual is just that- a manual covering the implementation of product loss control.  Its processes are only as important as Upper Management dictates.  If implemented properly,blessed and  followed by Upper Management, the Manual will help provide the institutional framework needed to make product loss control a vital and long lasting tool of the overall risk management process.

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