Mattel’s Toys Recall and Supply Chain Management Assignment-4

Name: - Lakshmikant Peri Date: - 10/12/2013

1. What were the primary causes of Mattel’s recall problems? Were these the result of

outsourcing?

Primary causes of Mattel’s recall problems are

i. The paint of the toys produced between May 2007 and August 2007 has content of

lead which would cause brain related deaths and growth issue in young children as

children are prone to have these toys in their mouth a lot and this creates a direct

contact to the lead substances.

ii. These was a also a flaw in the design of their toys using small magnets which would

become loose and be indigested by children and later on creating intestine related

deaths or injuries.

Cause of these recall problem is not because of outsourcing as Mattel has always

outsourced their production to Japan and China since 1959. It rose to become

market leaders in toy manufacturing for almost 48 years before this recall incident

happened in 2007. If outsourcing was the issue then it would not have been on the

top for so long. Below are the few reasons for the cause of this recall issue

i) Negligence in supply chain management all throughout the chain.

ii) Not being able to set standards among all its suppliers.

iii) Failing to follow their own set of rules and regulations and manufacturing

standards.

iv) Lack of proper testing facilities and process in place for raw materials within

its manufacturing units.

v) Lack of proper agreements between suppliers and Mattel and also supplier

and its vendors or other contractors.

vi) Failed to review their supplier’s capacity and its supply chain resources.

Lack of proper approval process for every batch is one of the primary reasons. The

toys were initially created in small batches for approval by Mattel and once

approved there were only random checks but there was no formal approval process

for the shipment or even the raw materials as Lee Der did not test its paint for Lead

for unclear reasons and its supplier Dongxing did not test it as it did not have enough

time after it got the paint for its suppliers when they were out of pigments which

shows how negligent and poorly management were these suppliers. The structure of

having vendors and they instead used to contract out part of their contracts and so

on was a cause of concern as there were no standards followed by these contractors

or vendors like some of them not being on the list of certified vendors like Dongxing

who was not on the certified suppliers list.

2. What actions were taken by the principals in the case to address the recall problems?

Were these the right actions? Why, or why not?

Mattel recalled its toys and also issued an apology was the action taken for end customers

and introduced a 3 point check system for its manufacturers and suppliers which included

i) Paint needs to be bought from certified suppliers and every single batch of paint

needs to be tested from every single vendor.

This is the right action as this would create more control on the raw materials being

supplied and used to reduce any risks and would also make vendors and suppliers to

adhere with Mattel’s norms if they have to be in business with Mattel.

ii) Tightening control at the production facilities and doing unannounced random

inspections.

This action would create more control for Mattel on its end products from its

manufactures and make sure that their standards are met beforehand rather than at

the point of taking over the shipment which might cause a loss to both parties.

iii) Test every production run of finished toys to ensure compliance before they reach out

to customers.

This would make sure for Mattel to release the right products to its end customers

and regain its confidence in them also they can keep up the promise to make safer

toys to children. This would also reduce recall costs in the future and ensure good

quality products.

iv) Reaching out to its vendors to make sure they understand tightened procedure and

strict requirement adherence.

This step is to make sure that all of Mattel’s vendors understand Mattel’s

procedures, policies and requirements and adhere by them to make sure that there

is no negligence or any compliance issues before hand make their suppliers more

trustworthy. This would also force vendors to enforce these rules on to their

suppliers and there by maintaining a proper supply chain management all

throughout.

v) China chamber of commerce urged toy manufactures to sign a public pledge to

improve product safety

This is a good rule set up by the Chinese government to ensure that manufactures

don’t agree to orders which cannot be fulfill with minimum requirements and safety

concerns.

vi) China enforced a product quality licensing system, requiring official inspection of

toys being exported.

This is a second layer of inspection which would endure that the brand name “Made

in China” is not tampered as it not only would affect the toys segment but would

affect the overall Chinese manufacturing segment as most of the products

manufactured in China were exported and Chinese reputation was at stake.

3. What should Mattel do now? What should China do?

Damage has been done and both Mattel’s and the Chinese products reputation were at

stake. Here are few things that I think Mattel should do now

Short term

i) Inspect all its products at are sitting at warehouses and if possible ask for return

of shipments from its retail stores like Wal-Mart and Target for further testing.

To reduce shipping costs it should go to the warehouse for its retailers and test

samples sitting there to ensure product quality before they reach the end

customers.

ii) It should immediately with effect start testing for all its product shipments and

production facilities for product quality.

Long Term

i) It should improve its process of finding suppliers and enforce their safety

procedure and rules and regulation on them if they are planning to have tied up

with them.

ii) They should have some of their personal checking the raw materials at all their

production facilities to avoid any lapse in quality checks.

iii) Perform constant background checks or audits on its supplies or manufactures if

possible to figure out if there are any lapses or breach of contract or

manufacturing agreement.

iv) Should only deal with bigger manufactures that have a sustainable supply chain

system to avoid multiple layers of suppliers.

China on the other end has taken a beating for its reputation in the manufacturing

industry. To ensure the sustainability of the manufacturing industry Chines government

should take follow measures

Short Term

i) Suspend licenses for those companies who have avoided the regulations.

ii) Conduct raids in these manufacturing units to test the materials for products

which are being exported and verify the agreement and make sure these

standards are met.

Long Term

i) Have policies to make sure that industries follow world standards to make sure

that there would be no general issues if exports happen as this would any

damage to the reputation to “Made in China” products.

ii) Enforce business to have certain standards to be able to export their goods

outside China.

iii) Enforce companies having ties with manufacturing companies to meet certain

demand standards like price and quality and make sure that companies don’t try

to lobby for manufacturing of products at a cheaper price.