Long Supply Chains and Customer Service: The China Syndrome
After several health-and-safety-related warnings and recalls this year over products from toothpaste to pet food and chicken feed to toys, U.S. consumers are more wary about labels announcing that a product has its source in China. But many companies in the United States now source 50% or more of their products in China. In this situation, how can U.S. multichannel companies protect and reassure their customers?
At the farther end of the supply chain from the United States, China has just announced measures to establish its first food safety recall program, and the Chinese government earlier this year shut down factories and businesses associated with various recalls. China is treating the situation as a serious matter. In its most draconian act, the Chinese government brought to trial Zheng Xiaoyu, who was director of China’s State Food and Drug Administration from 1998 to 2005, on charges of bribery linked to approvals for medicines that were blamed for several deaths world-wide. Zheng was convicted this past May, had his appeal refused, and was executed on July 10, 2007.
In the U.S., toy giant Mattel’s recent massive recalls have induced its media partner, The Walt Disney Company, to institute its own tests of Disney-related toys. Toys “R Us and Hasbro, as well as Mattel, have announced that they will be conducting their own tests of equipment and supplies, no longer relying solely on their contractors and subcontractors in China. Mattel has also issued an apology to the Chinese government, admitting that some of the oversight that might have prevented the need for recalls was Mattel’s responsibility.
That apology serves to underscore an important point: Even though a supply chain may begin abroad, it ends with the customer—who in fact may live anywhere in the world. A U.S.-based retailer that pays Chinese producers to provide goods to its U.S. customers is still responsible to its customers for helping to ensure the quality and safety of those goods.
We asked a random sample of companies in the direct-to-customer industry what effect recent recalls and reported safety issues have had on their businesses, and just how they are handling the situation. Here’s a selection of their responses:
- A home décor and accessories merchant: “We have gotten in touch with all of our vendors who make children’s merchandise and those who sell items that are used in food service. We have required that they have testing documentation showing compliance with US standards related to these items.
- A multichannel jewelry seller: “We have been trying to move up our ordering schedule to accommodate all of the potential delays with the Chinese imports.
- A healthcare products cataloger: “We are relying on rigorous testing programs that have been in place for quite a few years to assure the potency and purity of the products we sell. One of our trade organizations has put in place in China an independent and well-certified testing lab program to help assure that ingredients sourced from China are safe and high quality. We continue to source a few ingredients from China. We ask our customers to consider that not all suppliers from China are a concern.
- A gifts and books company: “At this point we are listening to our customers, assuring them of our product safety but allowing returns on a case by case basis, if necessary. We are certainly asking more questions of our vendors but not doing much more then the due diligence we’ve always done.
- A multichannel retailer of children’s clothing, toys, and accessories: “We have the following info on our Web site and the reps also have this scripting if a customer should call and inquire: Does the toy recall affect us? No! Worried about the recent toy recall? Don’t be! Please rest assured: none of our toys are on the recent safety recall lists. We don’t carry any brands or items involved in the recent lead paint and magnet toy recalls. As you may know, we pre-test all our products. In addition to hands-on performance testing, all of our toys are safety tested by an independent laboratory. We carefully review all test results and would never carry an item that doesn’t meet or exceed all safety requirements. In other words, we have a specific process in place to ensure toy safety, and we follow it to the letter.
- An automotive outfitter: “We’re sending production samples to testing labs for independent verification regarding the products’ critical specifications’. We also attempt to visit all the factories we do business with to check working conditions and environmental compliance.
- A jewelry wholesaler: “We have sent notices to all vendors telling them that they are responsible for providing us the assurances that the items are lead-free.
- A food and gift cataloger: “We are seeing an increase in consumer awareness and issues with products of China. Two of our suppliers recently moved their processing to China. With this change we were required to change our product labeling to ‘product of China.’ We are in the process of moving to a new supplier that is USA only.
- A multichannel food and gift retailer: “We are increasing our visits to China to meet with key suppliers and factories to assess their production quality.
- A home furnishings merchant: “Tighter quality control and liability waivers.
How does this situation affect you, and what steps are you taking to deal with it? We’d like to hear from you.
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Curt Barry is president of F. Curtis Barry & Co., a multichannel operations consulting firm with expertise in the selection and implementation of warehouse management systems. Learn more at: http://www.fcbco.com.
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