Insurance Recall

MEMORANDUM

TO: Dan Jenson

FROM: Huseyin Demircioglu

DATE: September 24, 2015

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RE: Product Recall Insurance

Problem

Earlier today, we discussed the potential risks the corporation may face if your insurance company decides to terminate the relationship contingent to its expiration. The corporation records do indicate that there are 7 product recall claims totaling $325,000. If the insurance company denies a renewal of the policy, the T-shirt Manufacturing Corporation can suffer from monetary damages and even bankruptcy. Changes need to be made immediately to prevent the termination of the insurance policy so we can move on with improvements and sales.

Solutions

OPTION 1: Raise our employment standards and create an evaluation sheet for employees who fulfill the orders. New applicants must have at least 4 years of experience in manufacturing clothing and have some college degree. This will to prevent defects, incorrect spelling and sloppy work. The evaluation sheet will be managed by HR to detect employee performances and mistakes will be transparent. A higher compensation rate would be necessary to fulfill the higher standards of employees.

OPTION 2: The epicenter of the problem seems to be the lack of operation and tactical management. We must create subsystems within the operation for effective and efficient results. Another option is to create a quality control team within our operation procedures to ensure every product meets our customer’s standards. Hiring and creating such team may cost you, but will benefit you in the long-run and establish a strong relationship with our current insurer since we minimized the risk of defects substantially.

Action Request

The most effective option that will meet the corporation’s objective is OPTION 2. Our main concern is to maintain an insurance policy with our current insurer and demonstrate our strategic adjustments to avoid product recall...