An article published on May 14th,
2008 in Wall Street Journal reported that Wal-Mart Stores ordered its suppliers
to meet a new set of children's-product safety requirements by this fall that
goes far beyond existing government regulations. Wal-Mart Stores Inc. is the
world's largest toy seller.
The standards include strict limits for lead and a broad array of other
heavy metals and chemicals that have been linked to various medical and
developmental problems in children. In the case of lead, Wal-Mart said the
surface coating on most children's products can't contain more than 90 parts
per million; the current federal limit is 600. The Wal-Mart memo also sets
limits for mercury, antimony, arsenic, barium, cadmium, chromium and selenium.
Its limit for cadmium, a metal used in paint and plastics that has been linked to
kidney damage, is 75 parts per million. The federal government has no mandatory
cadmium limit. A new Washington state law limits cadmium to 40 parts per
million by July 2009.
The initiative also encourages suppliers to mark children's products with
"traceability information," including the factory in which the goods
were made. About 80% of the toys sold in the U.S., including those marketed by
U.S.-based toy makers, are manufactured in China.
This follows the discovery of high lead levels in children's products, the
recall of about 25 million toys last year and toy-related deaths that shook
consumers and prompted several states, including Washington and Illinois, to
adopt more stringent environmental standards than the federal government.
Melissa O'Brien, a Wal-Mart spokeswoman, said the new standards are part of
an effort to restore consumer confidence. Industrywide, toy sales fell 2% in
2007 to $22.1 billion, with toys for infants, toddlers and preschoolers —
which accounted for most of last year's recalls — down 5%, according to NPD
Group, which tracks the industry.
Lutz Muller, president of Klosters Trading Corp., a toy and videogame
consulting firm in Williston, Vt., added, "Retailers are getting sick and
tired of all the bureaucratic wrangling that's going on. They're just taking
things into their own hands."
Wal-Mart also is restricting a half-dozen phthalates in
"mouthable" products for young children under three to no more than
1,000 parts per million, which in effect makes their use impractical, experts
say.
The new mandates are prompting many toy makers to find new materials,
monitor overseas factories more closely and verify their products' metal and
chemical content through independent lab testing at more frequent intervals.
The cost of this additional testing will show up in price increases at the cash
register, said Jerry Storch, chairman and chief executive of Toys "R"
Us. But he added, "Our research shows that customers are willing to pay a
little more for safety."
Source: Pereira, Joseph. and Stecklow, Steve, “Wal-Mart Raises Bar on Toy-Safety Standards,” Wall Street Journal, May 14,
2008.
2 responses to “Relationship Between Supply Management & Safety”
The typical response to these issues lately has been to create tougher standards than what previously existed. However, little focus is given to the fact that in nearly all of the recall cases, the levels of dangerous materials were much higher than existing standards. The trouble seems to be in monitoring and enforcement of standards. I wonder if this responsibility will end up with manufacturers, governments, or retailers.(http://www.nytimes.com/2007/09/11/business/worldbusiness/11lead.html)
Hi John:
Thanks for your comments and for the link that sheds further light on this issue. Quality costs provide a perspective to evaluate the situation. Firms have, to their detriment, focused on instant cost reduction by reducing purchase price of key components/ingredients. In this decision process they have neglected the long term implications of these myopic decisions. The four fundamental quality costs – prevention, appraisal, internal failure and external failure – provide some insights into the core issue. In all instances relating to product safety (which ultimately is a quality issue) firms failed to consider the “real” cost of external failure. Unless the mindset of “maximizing” short term profits is replaced with a long-term view of business, the situation will remain unattended at its core. Hopefully, the recent events have been a learning experience for firms that continue to take decisions with a short term profit maximization view.