Toy Recall Crises Could Have Been Mitigated With Comprehensive QMS

Basic adherence to minimal regulatory requirements does not always constitute the wisest quality assurance philosophy

Published: Thursday, April 1, 2010 - 11:00

Courtesy of another controversy surrounding hazardous substances in children’s toys, China’s massive manufacturing sector is reliving a public relations disaster.

Four years ago, a nationwide recall on children’s toys containing lead paint—and manufactured in China—cast a pall on the integrity of the country’s quality standards. It also forced U.S. toy giant Mattel to recall more than 18 million products and face significant brand damage.

Now, in the wake of yet another recall on toy trinkets and jewelry containing significant amounts of cadmium, a substance as dangerous to children as lead, if not more, China is once again under the microscope.

For quality managers at companies that rely on contract manufacturers and suppliers overseas, the situation is a call to action: A proactive corporate ethos on quality management—and supply chain traceability in particular—will not only save time and costs long term, it will ensure products exceed minimal regulatory requirements and avert potential public relations and brand image crises. A comprehensive quality management system (QMS) that enables enhanced supply chain traceability is the hallmark of such an approach and will inevitably save costs in the long run.

“When it is evident to all but legislators that a product containing significant quantities of a substance as hazardous as cadmium is dangerous to young children, forward-thinking businesses need to implement quality management systems with comprehensive supply train traceability capabilities,” says Bevin Lyon of Intelex Technologies Inc., a EHSQ software developer that supplies electronic QMS solutions to scores of Fortune 500 companies around the world. “It can save time, money, stress and lives.”

Toxic toys

In early January 2010, an Associated Press (AP) investigation revealed a number of children’s trinkets and jewelry promoting Disney’s children’s franchise The Princess and the Frog and sold exclusively at the world’s largest retailer, Wal-Mart, contained significant amounts of the highly toxic heavy metal cadmium. A known carcinogen, cadmium can inhibit brain development in young children.

Wal-Mart and Sulyn Industries, the Florida-based company that supplied the toys to Wal-Mart, have since stopped selling the product. But for parents and toy companies alike, the situation is a reminder of a similar, and perhaps larger-scale crisis in 2006 and 2007, when Mattel faced massive product recalls of many popular children’s toys—Barbies, die-cast cars, and Sesame Street figures, for example—were contaminated with significant quantities of lead. Some products contained cadmium volumes on the order of 180 times the federal limits. Other products featured small, loose magnets that, if swallowed by children, could result in severe perforation of the intestine and potential learning and behavioral problems.

Damaged brand

In addition to the massive recall and the substantial costs, downtime, lawsuits, and federal fines associated with the crisis, Mattel suffered a significant blow to the trusted brand image it cultivated over the previous half-century. It didn’t help matters that, in the aftermath of the crisis, Zhang Shuhong, co-owner of the Lee Der Toy company—the China-based manufacturer that supplied Mattel with the toys—committed suicide in his South China factory. Mattel has since implemented more stringent auditing and testing of all products.

The Consumer Product Safety Commission (CPSC) took only a few weeks to confirm the results of the AP investigation before issuing a recall, one at the end of January for the Princess trinkets and one in March for other holiday-themed bracelets found to contain unsafe levels of cadmium. However, legislators and regulators have yet to respond with clear-cut regulations on cadmium—though it is only a matter of time before strict regulations are put into place. Lead, for example, is now regulated and only 0.0003 per cent of the toxic metal is permitted in any toy.

Also, though the CPSC has acted quickly by issuing recalls on a handful of products known to contain cadmium, the organization has indicated it is by no means finished, and that more recalls may be coming down the pipeline. Another AP report in March 2010 noted that the SPCS has been acting “aggressively” in recent months after years of downplaying scattered test results showing high levels of cadmium in children’s jewelry.

The cost of poor preparedness

For the unprepared business, a product recall can be a logistical nightmare, costing significant capital, and precious hours of downtime as well as—and perhaps most significant—irreparable damage to delicately nurtured brand image.

Since consumer activist agencies and public awareness at large—fueled, in the case of the lead and cadmium controversies, by clear test results and common sense—tend to be a few steps ahead of legislators and regulatory bodies on public safety concerns, it is imperative businesses stay a few steps ahead of the game. For companies that rely on contract manufacturers, this can be easily achieved with a comprehensive QMS.

Some essential questions—often rendered complex by the size and scope of large corporations—can be resolved with straightforward answers if an electronic QMS has been put into place.

For example, an electronic QMS is capable of providing quality managers the answers to what are known as the “five Ws” of product recalls:

• What: In the event of a product recall, the fundamental reason for the recall will narrow down investigative work and help quality managers build a list of questions and criteria to determine who in the supply chain is responsible for the defect or issue in question.
• Who: A company that relies on contract manufacturers around the world must determine which supplier within its supply chain is associated with the defective or unsafe part or product.
• Where: The “who” and “where” questions are intrinsically related, for once it is established who is responsible for the issue, it can be broadly determined where the issue arose. But it is also essential to isolate where exactly—specifically within the manufacturing line of the contract supplier, for example—the defect was caused.
• When: Supply chains can be complex systems, but it is important to have the capacity to determine when a defect or issue arose within the system.
• Why: The other “Ws” of product recalls will help a quality manager determine why a defect or issue arose. Answering this question quickly and effectively will help a business develop an action plan to respond to the product recall.

Quality managers strive for the often elusive goal of perfection but must come to grips that even in the most highly monitored systems and well-oiled machines, somewhere, somehow—by the laws of probability and human fallibility—an issue will likely arise.

Planning for unforeseeable issues

Having the flexibility to identify, contain, and adapt to foreseeable and unforeseeable issues is critical to a comprehensive response plan. Proactive, responsible companies that implement a comprehensive vendor/supplier/contract manufacturer-evaluation program and performance tracking system as components of their overall QMS will give companies the preparedness they need to ensure smooth responses to otherwise devastating product recall scenarios.

“Any business—large companies especially—must select contract manufacturers in the same way they select suppliers and other vendors: with thorough research, hand-on inspection and rigorous screening,” says Lyon. “Treat your suppliers, vendors, and contract manufacturers as if they are your own facilities. Even if they are not providing you with an end-user product, if your company name is going to be on the final product, your customers will view you as responsible and you will be ultimately accountable for the defect.”

Basic adherence to minimal regulatory requirements does not always constitute the wisest public relations and quality assurance philosophy. One need look no further than Mattel’s lead imbroglio to realize even entrenched brand images can be dealt significant blows by product recalls, especially when those recalls affect the lives and health of children.

A proactive paradigm also calls for going above and beyond the call of duty. In Sulyn Industries’ case, the trinkets passed federal regulatory tests and those imposed by Wal-Mart, but neither organization had regulatory provisions in place to monitor the cadmium content of children’s toys. By establishing internal standards that exceed federal regulatory requirements and make sense in terms of the health and safety of children and other consumers, corporations can save millions of dollars in the long term.

About The Author

Paul Leavoy

Paul Leavoy, a research analyst at LNS Research, is responsible for creating thought leadership and benchmark research to help industrial executives address operational, environmental, and quality management related challenges. Leavoy has more than 10 years experience in writing, reporting, editing, and research with expertise in environmental health and safety (EHS), sustainability, and technology. Before joining LNS Research, Paul had an extensive career in journalism, having edited, published, and written for newspapers throughout Ontario, Canada. He has fostered a love for the role technology plays in ensuring continuous improvement across sustainability performance, EHS management, and operational excellence.