METTEL ’S CHINESE SOURCING CRISIS OF 2007
Background:
Mattel,
the world’s largest toys company, has been facing some rough challenges in
recent years due to some safety scandals revolving toy design and manufacturing
in China. During June 2007 Mattel was forced to massively recall toys due to
lose magnets and excess lead found in some of the Mattel toys that posed
immediate danger to the children that played with them.
Problem:
The failure of their partner
of using over level lead paint is the starting point of series of recall. It
leads to the reputation crisis of Mattel product, thousands of parents are
concerning about the safety of the toy their children are playing, lawsuit are
made to against the failure of Mattel. Mattel
is the largest toy company in the world, and it has been practicing the
outsourcing policy from China for decades due to the cheap cost of labor and
intensive production there. Mattel and its Chinese suppliers had maintained a
partnership over decade. Due to the trust toward to the Chinese partner, Mattel
has lost its regulation to the Chinese supplier. However due to the increasing cost of the
labor and material of production, the manufacturer has no choice but to switch
to a lower cost material to replace to maintain their profit. Rather to blame
the evil mind of the manufacturer in China, the rising price is also one of the
key factor which drive them to lost their ethics after so many years of
cooperation with Mattel.
Theory: According
to Steve New, Dana Brown (September 2008), Said That “the public
discourse surrounding these events can become disconnected from the operational
reality, and lead to potentially dysfunctional regulatory responses.”
Conclusion:
•
Mattel should
Control its Supply Chain better, to cope with design problems, product misuse,
lead paint issues and usage of Unapproved Suppliers.
–
Mattel should
inspect its subcontractors well.
–
Direct Site
Visits to Suppliers to be able to make evaluations on their performances.
–
Integrated
Global Sourcing requires horizontal links with other functional groups (esp
engineering, operations, design, demand planning and marketing)
–
Increase
expenditures on quality controls and tests.
–
Strictly
follow up Tests to be held through the Supply Chain and Increase Check Points.
–
Total Cost of
Ownership
•
Awareness on
commitment, scope of operations, resources and capabilities that integrated
global sourcing requires
•
Transaction
Cost Analysis Theory Outdated
•
Accuracy and
Validity of the documentations should be ensured
–
Personnel
with knowledge, skills and abilities to recognize the falsified documents
•
Determine critical
raw materials or processess. Strictly follow up, all the operations related to
those parts, well
•
Improve
information flow through the chain
–
Geographical
Proximity of the Employess responsible for Training and Supervising Chinese
Contractors is an Issue
•
Understand
integrated global sourcing requirements and success factors
Reference:
Axelsson, B.
and Easton, G.
(eds.) (1992), Industrial
Networks: a New
View of Reality.
Blois, K.J.
(1972). “Vertical quasi-integration”, Journal
of Industrial Economics,
20/3:253-271.
CDCP (2005).
Preventing Lead Poisoning
in Young Children.
Atlanta, GA: Centers
for Disease Control and Prevention.
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