Supply chain education the key to reducing product recalls

China’s product-quality problems due to lack of maturity in supply chain, Dartmouth professor says

By Paul E. Teague -- Purchasing, 9/13/2007 1:58:00 PM

Mattel’s toy-recall problem—and by implication similar problems at Sony’s battery division, pet food companies and toothpaste companies—stem from supply chain immaturity as well as deception on the part of some suppliers.

That’s the conclusion of M. Eric Johnson, professor of operations management at Dartmoutn College’s Tuck Business School, who is teaching classes in supply management.

The solution, he says, is investment by manufacturers in efforts to help their suppliers learn modern management practices.

“Everyone is screaming for audits, but that’s a short-term fix,” Johnson tells Purchasing. Long term, manufacturers have to build a better supply-management infrastructure, he says. “That means investing in suppliers to get them up to Western standards on management practices and to get them to work with their own suppliers.”

Fifteen to 20 years ago, manufacturers worked with a few big suppliers in China and procured materials from multi-national companies, Johnson says. “Sourcing in China then was really labor arbitrage, but now China provides more components and raw materials.” He says suppliers have to learn how to manage their tier-two suppliers. “That’s true in the U. S. and the rest of the West too,” he says.

Will the quality problems leading to recalls cause manufacturers to pull back from sourcing in China? It may tilt a decision toward Western suppliers for products that are not labor intensive, Johnson says. “But the low-price emphasis will continue, and for labor intensive products China is still a good deal.”

For more information, see our Special Report on Product recalls: .

And, read about a special conference on sourcing from and supplying to emerging markets, plus your own thoughts on the subject at http://supplychain.wetpaint.com/