Product recalls won't slow global sourcing
Survey finds buyers in a wide range of industries expecting to perform more stringent supplier evaluations and product quality testing in the wake of Mattel’s voluntary recall of toys tainted with lead paint and magnets small enough for children to swallow, but don’t expect to slow their low-cost country sourcing programs.
by Dave Hannon -- Purchasing, 8/17/2007 1:53:00 PM
Buyers in a recent Purchasing.com survey said that the recent rash of product recalls out of China will result in a closer focus on supplier quality and management throughout the various tiers of the supply chain. But survey respondents did not indicate that the rash of product recalls would decrease the amount of global sourcing.
For many purchasing professionals, the recalls will mean even more frequent flier miles, taking trips to visit supplier plants around the world in person. While very few buyers say their supply chains have been directly impacted by a product recall, 45% said they expect more stringent supplier evaluation in overseas markets as a result of the recent recalls due to lead paint on toys, tainted pet food and toothpaste and faulty cell-phone batteries. Thirty-two percent of buyers polled said they expect stricter product quality evaluations to result as well, but few have made any immediate changes to their supply chains as a result.
But are the recalls enough to make buyers abandon their low-cost country sourcing strategies? The majority of buyers say their companies will make no immediate changes in the wake of the rash of recalls.
“The lead paint on toys is a serious issue, but let’s not throw the baby out with the bath water,” says Phil Meeker, a senior buyer at NSS Enterprises in Toledo, Ohio. “Low cost country sourcing is a heated topic and any negative news is quickly reinforced. But this should serve as warning that results in increased scrutiny in supplier evaluations, increased supplier visits and more regimented product testing and inspections.”
“The pressure to make extra margin by shaving corners is prevalent in the Far East,” said another buyer in the Purchasing.com survey. “But the burden really lies with the purchaser to make sure they inspect and control the suppliers.”
And for many companies that means sending buyers and quality inspectors overseas to Chinese plants more frequently. One buyer in the survey said his company is sending product quality teams overseas more frequently as a result of the recalls. “We now require third-party audits as well,” he said.
“We have taken an aggressive ‘boots on the ground’ approach to quality testing now with our Asian suppliers as a result of these issues,” said another survey respondent.
William Ford, director of purchasing at distributor Coburn Supply Co. in Beaumont, Texas, says his company, a distributor of plumbing supplies, has been impacted by product recalls in the past. He suggests that “suppliers that may be problematic should be visited more frequently by purchasing and quality managers. Any supplier evaluation should contain objective review of performance and quality and should be shared with the supplier.”
More than three quarters (76%) of buyers expect further recalls to take place as manufacturers begin to look deeper into their supply tiers in the wake of the recent issues. Two-third of the buyers polled said they ask their
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first-tier suppliers to certify that their suppliers have quality assurance programs in place. When it comes to evaluating supplier quality in the lower tiers, Richard Wallace, director of purchasing at Safer Textiles in Newark, N.J., says he “tries to go as far back as I can.”
“I use any means at my disposal to get information about suppliers’ suppliers,” Wallace says. “I cannot say I have ever discovered a lower tier problem but I have been informed of same by suppliers further up the ladder.”
Another survey respondent said his firm has had to recall product twice because of quality issues with fully assembled chairs from China. He recently had a supplier in China prepare an engineering change notice to demonstrate “how they have modified their quality control process when they receive bar stock. You have to check every inbound shipment from China. There’s just too much bait and switch going on.”
Bill Lovell, director of global sourcing at Inovonics Wireless Corp. in Louisville, Colo. says his company had to recall a product after a supplier in China “degraded all the material used to make housings for transformers and the finished product fell apart at the customer sites.” Not surprisingly, he suggests buyers visit all tier 1 and tier 2 suppliers in China “to assure sound manufacturing practices are in place and functioning.”
George Freeman, a commodity manager at Atlas Copco Drilling Solutions in Garland, Texas, says all of his suppliers are required to sign a business code of practice and new suppliers are encouraged to work towards ISO certification.
There are some buyers in the survey that felt the increasing product recalls and quality concerns from Chinese suppliers would create a “buy domestically” trend in the near-term. “We stay away from China as they will give you great products up front, then produce inferior items later and outright lie about it,” says one respondent.
And a buyer at New Jersey Resources Corp. said his company has ceased the use of all China-made products and will only source from domestic suppliers. He says a supplier’s QA process should address how recalls will be handled so buyers are not caught off guard in the event a recall is issued.
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