Somewhat
lost in the hubbub over the recall of 1.5
million toys from Mattel over safety concerns
from use of lead-based paint by a Chinese
supplier is that it highlights the increasingly
obvious need for companies to take more
proactive control of their entire global
supply chains, and make additional investments
to ensure safety. (See Global
Supply Chain: What Will the Supply Chain
Fallout be from the Mattel Toy Recall?).
Mattel, for
example, relied on the offshore supplier
to do its own testing, based on a level
of trust built over a 15-year relationship.
But it now seems clear that the supplier’s
own testing of the paint, which came from
another supplier was inadequate, and it
also appears Mattel did not adhere to its
own auditing process of the suppliers QA
procedures.
A Wall Street
Journal story on the Mattel incident shows
the challenges – and costs. In 2003,
retailer Toys 'R' Us was also involved in
a recall related to lead paint, despite
a rigorous inspection process during product
development and launch. All was fine for
awhile, but later, spot checks found lead-based
paint, prompting a costly recall.
Since then,
the retailer has increased its QA budget
by 25%.
McDonald’s,
which used Chinese suppliers for its promotional
toys, tells the WSJ that the problem of
lead paint is so widespread in China that
the company has developed a system to monitor
paint all the way through the supply chain
back to the paint suppliers. The company
requires its Chinese toy makers to agree
to use only those suppliers.
All this
means added cost to the offshore equation
that must be considered when making global
sourcing decisions. With many companies
already not fully calculating the total
costs, the QA area must be added to the
spreadsheet to get an accurate picture of
total landed cost.
It is also
likely that new regulations will add additional
costs to the supply chain in the name of
protecting product safety. |