When sourcing in a low-cost country, company needs to take the risk that the products would be made by some operators with very limited education level. The lack of education would prevent the quality sense from entering those operators' mind, unless the company provide sufficient training and quality management. So, at the very beginning of cooperation, please make sure that you have a good-enough local leader who would be capable of doing that.

Thanks for viewing it as the supply chain management mistake, instead of firing at the China subcontractors. Mattel is an excellent company, a trustable company on quality, and there would be great market for you in China for sure!

Obviously the most important issue for a business that sells children's products is to ensure the safety of those products first. This will be the issue that is focused on in the media and those upwardly mobile buyers. Mattel and other industry participants must decide how they can best compete in this industry. The only real way to ensure quality control is oversight, and as we know that has been lax to date.

As a father I will not be buying Chinese made toys. The cost is too great for the savings that is presented.

Friends have asked me what would I do if the Chinese made toy is given to my children?

Return it for a known safe product. When it comes to ensuring the health and safety of our children parents must make the commitment to follow through for the long term.

its always interesting to see how a crisis is handled by a large corporation .. I believe it reflects the character of the organization. However, I would be interested to know how they are handling the communication and the reverse sales so to speak at the ordinary retailer.. The kind where it is most likely that a customer in a developing market like India would go back to on reading about this in the newspaper.

My comment relates to the issue of 'recovery'. I agree that just offering replacement simply is not good enough. SWe live in an era where success relies in creating relationships with customers and consumer requires reconized presence of Trust and Respect. It is thus clearly a given that explicitly a provider of goods and services recognizes the value and cost/time involved in creating 'a hassle' such as this one. In the old days of Total Quality Management we referred to this as C.O.Q. (Cost Of Quality). I recently experienced this issue in my personal life and it actually made me raise the question and write a blog entry about: Who pays for the C.O.Q.?

Public apology and product recall are no favors to the consumer and at best attempt to salvage the lost reputation of the brand or the company. Gravity of the situation increases if the product is for children and yet more, if it is hazardous to health. Like Mattel many companies fall prey to outsourcing manufacturing of their brand to meet increasing demand. Focus on sales without proper quality checks gets substandard products into the market. Mattel must understand that in situations like this, it should be the company reaching consumer rather than the consumer reaching Mattel. Advertising defect, educating safety, exhibiting speed and convenience in compensating consumers are crucial in recall strategy. Compensation must take into account a) Product cost b) inconvenience to the consumer c) Retrieval of brand trust. Compensation through equivalent value coupons alone would dent Mattels image for good. Compensation has to be far above the actual product cost. Exchange should be facilitated through convenient touch points across geography. Special counters can be arranged at public places and exchange process has to be easiest. Ït should be "Dump and Pick " counter everywhere. Pick ups and deliveries at consumer's door steps should be organized. All this if done , is only to clear the past. Mattel would have to strategize a sequence of advertising and promotion campaigns in future to rebuild it's brand equity. Consumer must be convinced to feel that Mattel has learnt it's lifetime lesson and that it has reset highest standards in product quality and design. There still is no guarantee if consumer would buy Mattel's toys anymore.

I found the article very interesting but I do not agree that the success of the recall "marketing" should be measured by the recall rate alone. I am trying to put myself in the shoes of the parent who had spent $15-20 on a Mattel toy that turns out to be defect/dangerous. Would I go through the trouble of returning it or simply get rid of it? Perhaps the latter, depending on my budget. I believe that Mattel did a great job in communication and they should be measured on the direct outcome: customer awareness.

This is critical for Mattel, specially ahead of the holiday season, perhaps a combination of "in-store" drop off with the coupons would ensure that the products get sent back; the company might incur into higher cost by implementing this strategy but making it easier for the consumer will pay off when it comes to the holiday season with their brand awareness and goodwill.

Seems to me you're being entirely too forgiving of Mattel's leaders for their poor supply chain management. Their systemic failure was in failing to recognize the vulnerabilities embedded in their manufacturing system. If interested, see my blog post about the personal effects of this recall here:

http://www.truetalkblog.com/truetalk/2007/08/lead-balloon.html

The Mattel recall is another corporate example of the close association between product safety and brand equity especially so when products are marketed to children. Will increased quality control, end product testing, deliver improved product safety in the future or rather does the organisation need to address quality assurance and the development of supplier protocols and pre-requisite good manufacturing practice programmes with associated auditing programmes?

Just this morning, I heard on NPR that Mattel had announced yet another recall, and even though the size of the recall was relatively small, I think they deserve a lot of credit for their proactive and upfront approach to this problem. Of course, in the public eye, their actions are likely to hurt them in the short term (especially with the holiday season around the corner). Nevertheless, I think the competition is sitting on a time bomb by not matching Mattel's vigor in hunting down poor quality control. Time will tell whether Mattel's brand will come out on top. I can't help but remember the Tylenol/J&J case, and how aggressive the CEO was in handling that scare. That brand survived the immediate hit and still lives on as a trusted, even revered, brand. I suspect Mattel's actions during this crisis will, eventually, result in the same net effect on their brand.

Dear All,

Any organisation that has the very least ISO 9001 & 14000 would not have product liability problems when come to appointing distribution channels.

It is further devastating if the product liability insurance claims summed to billions for a purpose the event to take place, insurance drawdown. A scapegoat been sacrificed along the road of capitalism.

Perhaps a corrupted system was inherited.

Due diligence by world renowned audit firm is required by shareholders to pressure the managment to appoint independant assessors for damage assessment and inherent system risks.

Best Regards,

Alan

What I think is important is finding product-based marketing solutions that insure that this can't happen again. What shape may they take? I don't know. Visible lead detection sensors built into the package? The blister pack "frosts" if it senses dangerous materials? A while back someone put cyanide in Tylenol capsules. Several people died. Tylenol did everything Mattel is doing, and it still lost the 92% of capsule segment sales driving the business.

I was a pioneer in qualitative research focused on the packaged goods business back then. At that time advertisers used to stimulate their minds with thought processes of which they were unaware (my processes included) to investigate their products in-depth and find out what made them tick. The opportunities - nuances leading to new product and product positioning breakthroughs were seldom labeled otherwise. You had to do your homework.

Does Bob Eckert believe everything that can be done, is being done? He knows he's not seeking "product-based" solutions detectable by consumers providing assurity on the shelf.

We created Tylenol Gelcaps, the inherently tamper-proof capsule to insure that it couldn't happen again to McNeil. All Bob has to realize is that in marketing and crisis management speed is expensive. How fast does he want to go? I worked for a lot of Bob's colleagues back in his day's at Kraft. He hadn't been a product-based guy, so this perspective might escape him.

Recalls seemt to be becoming a way of time today as the pace of business today does allow ample room for things to go wrong.

Possible contributors
- The need to save costs (and more of it each day)
- The need to get a product on the shelves faster than anyone else would.

While the question around 'How to run a recall' has been answered well in this post - I am sure there is a lot to be learnt on how to avoid getting into it.
Products being manufactured in a particular country is hardly a reason for poor quality since primitive technology and poor quality controls are to be seen in a lot of facilities in every country. While I personally have never been to the country in qiestion, I am sure I could point out having seen poor standards in a lot of facilities and poor quality of products being churned out as a result.

Companies know whats to be done when it comes to Quality Assurance and Control - its just that a product release cannot be held up just because not all QC procedures can be automated.

At the end of the day ...
It is imperative for a company to own its products.
It is essential for a customer to be assured of a bare minimum standard irrespective of the 'Made in XXXX' label on the product
Mattel would defintely come out of this ... and would come out of it stronger since its been able to articulate its prevention strategy.

Thanks for all your comments

Many of you are correctly focussed on how to prevent these problems arising. The organizational integration of product design, manufacturing operations and marketing is essential...and not just during the new product development process but after the launch as well, to insure that cost-cutting tweaks to the manufacturing specifications do not result in unintended safety hazards.

A key question - still receiving little attention in media reports - is the criteria that Mattel (and we as consumers) should use to assess the efficacy of this recall. Some of you would be satisfied with an awareness measure. Others argue that Mattel should offer incentives to get as much of the defective product returned and accounted for as possible.

There is a pricing component to reverse marketing. Mattel initially offered coupons for the replacement value of any returned product and, through its website, provided coverage of postal charges. This approach has resulted in a certain percentage being recovered, but probably not enough to satisfy Mattel executives or public opinion. The company will then have to offer progressively higher incentives to attract additional product returns. The question remains as to what percentage of defective product needs to be retrieved to keep Mattel brand's reputation intact?

John Quelch

However judicious the actions by Mattel may have been subsequent to the discovery of supply chain incompetency, the incident evidenced the company's preference for quantitative over qualitative margin.

For the past few months we have been actively engaged in a turnaround exercise at Plastwood of Italy, the original producer of the Geomag and Supermag line of magnetic construction toys, subsequently copied by new entrants, notably Mega Brands which is currently a defendant in various personal injury claims related directly to the recall issue.

Interestingly, Mattel made no recourse to Plastwood, whose product line complied at the time with all safety standard requirements and was not once cited as a risky product. What does this tell us about Mattel's purchasing policy and purchase agreements? Had Mattel immediately replaced (or offered as an alternative) the defective toy sets with, for example, Supermag and explained the product differences they could have potentially partially reversed negative publicity, possibly recovered sales and further done justice to a "Made in Italy" brand. I additionally observe that by focusing on "reverse marketing" Mattel simply admitted flat out to a flawed "generic" product which evidently had a subsequent impact on distributor/consumer perception and economically deleterious effect on a genuine quality import.

Given our current involvement I thought it worthwhile to share these thoughts with you, without bias and yet somewhat skewed to the notion that in similar such cases a product-specific problem should be "reverse-marketed" as a product- and company-specific problem WITH an alternative product solution (where applicable), thus at least mitigating the risk of negatively "labeling" an entire product sector.