Toy Recalls in Mattel

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Category: Business and Industry

Date Submitted: 09/27/2011 12:02 PM

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THEME: reducing toy recalls in Mattel due to unsafe products

BACKGROUND:

• Annual sales of toys in North America were growing at a slower pace – about 1%

• There were a large number of players, about 880 companies in US

• 70% of the toy companies employed less than 20 persons

• About 60% of the toys sold in the world were made in China

• Chinese toy imports accounted for a full 86% of toy imports to the US

• Toy sales are seasonal

• A lot of uncertainty around new product success

• Mattel is the No.1 toy maker in the world

• Mattel has large number of third-party manufacturers

• Using off-shoring strategy

• Mattel produced its core brands in company-owned facilities, but used third-party manufacturers to produce its non-core brands

• Mattel had direct contact only with the principal vendors

CURRENT SITUATION:

There are two parts which make recalls become necessary: a fault in design or manufacturing. A design problem will result in an unsafe toy, no matter where it is manufactured. However, a manufacturing defect arises because of manufacturer errors.

According to this draft of product development process, Mattel develop a design in its corporate headquarters in their home country, and then send it to a manufacturer in overseas (more than half are in China) along with specifications. If a toy’s design is good and safe, it does not mean that the toys produced will be good or safe as well. By contrast, if the design is poor, the toys manufactured will absolutely be faulty. Therefore, even though more than half recalls are made in China, it could not conclude that Chinese production is a problem. However, it does not mean that all products manufactured in China are safe.

ROOT CAUSE ANALYSIS:

Problem: Toy recalls exists

Why? Products are unsafe

Why? Chinese manufacturing contractors use cheap lead-based paints

Why? They want to keep the costs as low as possible

Why? They...