Learning from the faults of others can be a useful training tool. However, when it’s your company’s name being tossed around in discussions of what not to do, you need to do something…fast. In 2007, toy company Mattel embarked on four major product recalls. The recalls were the result of large quantities of lead found in the paint used in a number of their products. Mattel, like many other companies, uses contractors in China to manufacture products. This case raises supply chain concerns, bringing to light the importance of quality control and keeping an eye on the actions of your overseas operations and partners.
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Here are 5 key lessons learned from the crisis at Mattel:
1. Always Act Fast
2. Keep an Eye on Your Supply Chain
To save on costs, Mattel has shipped manufacturing overseas to China. Having multiple offices and operation sites makes it difficult to keep an eye on day-to-day operations. According to the Financial Times Press article “Trouble in Toyland: New Challenges for Mattel–and ‘Made in China’,” one of the main issues in the lead paint crisis at Mattel was that the Chinese contractors had subcontracted the painting of the toys to another company that used inferior and unauthorized products. A lot of companies get caught in similar traps.
3. Take Responsibility
Take the blame. Public finger pointing isn’t going to get you anywhere. In the Reuters article “Mattel Sued Over Toy Recall,” it was reported that Mattel’s CEO said that the company was increasing the aggressiveness of toy testing methods, which would likely result in additional recalls as a precautionary measure.
4. Tighter Regulations and Inspections
In the Wall Street Journal article, “Mattel Settles Suit Over Lead in China-Made Toys,” author John Kell writes:
“Toy makers were hurt by a number of product recalls in 2007, leading to millions of dollars in costs for testing, legal expenses, advertising and product returns. Mattel recalled millions of toys that year, including those produced under licenses for characters including Elmo, Big Bird, Barbie and Polly Pocket. The issue later led to mandatory federal toy-safety standards, which included testing and tough new regulations for lead and chemicals in products intended for children under 12.”
5. Take Action and Communicate
During a crisis, such as the one experienced by Mattel, business leaders may say that changes are going to be made and policies will be followed more consistently, but do they actually follow up on their word once the storm has passed? Give weekly updates and use the power of social media to communicate to consumers about the progress your company makes as it works toward a solution. If 100 products have been tested, let the public know. Control the media and communicate your commitment to your consumers. It’s never more important than in a time of crisis to communicate and reassure the public.