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updated 4/27/2013 11:17:45 AM ET 2013-04-27T15:17:45

There are a lot of elements to consider when running a business, and staying on top of quality control for all of your products and supplies can sometime slip from the list. But a product recall can damage both your bottom line and your reputation.

Consider Lululemon, the popular Vancouver, British Columbia-based athletic apparel retailer. It came under fire last month when customers complained about the sheerness of the brand's popular black luon yoga pants. The company cited incomplete testing protocols which led to an "unacceptable level of sheerness" in 17 percent of the nylon/Lycra pants.

Lululemon said the problem was caused by incomplete testing protocols and fabric that was on the lower end of their tolerance scale, though how the flawed pants made it to store shelves is still under investigation. The company recalled the pants and offered customers a refund, but it's too early to tell how much damage the incident will cause Lululemon.

So what can you do to minimize problems with your products and ensure your company doesn't face a similar embarrassment? We spoke with Ed Creedle, senior risk control specialist with Hartford, Conn.-based Travelers Insurance, to find out what businesses need to know.

Related: How to Find Suppliers for a New Business

1. Determine product specifications and requirements for production.
When creating a new product, pay attention to design aspects such as color, texture and size. Make sure to ensure the product conforms to industry code standards. The American National Standards Institute provides information about standards for a number of industries.

2. Establish relationships with your suppliers.
Most products have parts and materials coming from various suppliers, Creedle says. It's important to ensure that a supplier can provide the exact materials that you need. "Companies need formal agreements with legal review and specific language setting forth [their] expectations from the supplier and the consequences for not meeting those requirements," Creedle says.

If your products are coming from overseas, Creedle suggests visiting the plant at least once a year, or hiring a third-party to conduct quality audits on your behalf.

3. Implement quality control standards.
Once component parts start coming in from your suppliers, you need to be able to track where the materials are coming from, Creedle says. Businesses need to have a quality control system in place to address any non-conforming goods. "It's not uncommon to get materials that don't meet the [product] specifications," Creedle says.

It's important to inspect materials to ensure they meet your specifications. If you're dealing with high volume, Creedle suggests implementing a sampling plan, to determine from a sample of the products, whether the goods conform with product specifications. Sampling plans for various industries are available online, and organizations like the American Society for Quality (ASQ) provide resources for developing a quality control plan.

4. Test your system.
Creedle recommends conducting a mock recall once or twice a year to make sure your quality control system works as it should. Such tests can be done in-house or with the help of trusted customers by selecting a product and tracking it from materials to store shelves. You should also trace a lot of products and verify that communications channels are working properly.

Related: 10 Questions Every Entrepreneur Needs to Ask Suppliers

Copyright © 2013 Entrepreneur.com, Inc.

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