Mattel and the Toy Recalls

Mattel and the Toy Recalls

The CEO received reports that the surface paint on the Sarge Cars made in China contained lead in excess of U.S. federal regulations. hich was about to recall 967,000 Chinese-made children’s character toys, such as Dora, Elmo, and Big Bird, because of excess lead in the paint.

According to CPSC (Consumer Product Safety Commission), 22 toy-related deaths and an estimated 220,500 toy-related injuries occurred in 2006. These hazards were listed on the CPSC website to make consumers aware of the hazards and avoid injuries due to them. In 2007, CPSC listed the following as the top hazards: magnets, recalled products, tip-overs, windows and covering, pool and spa drains.

Under the Consumer Safety Product Act 1972, lead in products accessible to children should not be greater than 600 parts per million.

In 2006, Mattel spent US$174 million on in-house product design and development. In contrast, the company spent US$261 million on royalties and US$651 million on advertising.

Mattel’s principal manufacturing facilities were located in China, Indonesia, Thailand, Malaysia, and Mexico. It used third-party manufacturers in a number of countries, including the United States, Mexico, Brazil, India, New Zealand, and Australia.

On June 27, 2007, Mattel’s call center in the United States received a report from a consumer, who informed them that a home test kit found excessive lead in Mattel’s toys.

Recalls are a nightmare to companies for several reasons.

1. The recalls pose major logistics challenges as the company needs to establish a set-up to handle the recalls.

2. The company has to deal with regulators who tend to push the company to ensure that not only a recall is issued, but the products in consumers’ hands are actually returned to the company.

3. Recalls are often viewed as an admission of guilt and open the company to consumer litigations.

4. Recalls damage the reputation of the company and result in increased costs, lost sales, and stock price erosion.

As importantly, how could the company minimize the negative consequences that were germane to any product recall?

1. Determine the lot and destination of all the toys for their total elimination from the market.

2. Be responsible for the consumer and make the list of toys known in a communication to the mass media and social networks.

3. Internal campaign in the company so that all those responsible for the consumer have a single version of the action and correction plan.

4. Notice in which the quality of the products and the confirmation of the withdrawal of all the defective product is guaranteed.

Finally, how could the company ensure such recalls did not recur?

1. Increase and strengthen quality control throughout the supply chain, especially with third parties.

2. Perform contract policies for the use of raw material suppliers in order to minimize purchases outside the pre-established.

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