More on the Right Way to Do Business . . .

Another high profile product recall!  And from Mattel, the business I held up as a model in my last Blog entry! 
 
As my way of adding value to the discussion, I’d like to comment on the business ethics of Mattel as revealed by its decision to recall a million toys.  Namely, Mattel did the right thing.  Mattel demonstrates a company policy of transparency, honesty, and making the hard decisions to come clean for safety.  These decisions are hard to make, because they cost the company millions of dollars in the short run.  In the long run, however, they are cost effective business wise as well, because they confirm the company’s trustworthiness and reliablity for the consumer.  Another example of a painful recall decision was the case of the tainted Tylenol pills.  Remember that one?  Tylenol rebounded, and so will Mattel, because consumers know they can trust the company. 
 
The other thing this recall illustrates is the magnitude of difficulty of the task of policing product safety.  If Mattel can’t trust a supplier it’s been doing business with for fifteen years, then who can it trust? 
 
Here’s a quote from the article:  "Mattel requires the factories it contracts with to use paint and other materials provided by certified suppliers. Mattel executives said they did not know if the contract manufacturer substituted paint from a noncertified supplier or if a certified supplier caused the problem.  Mr. Eckert said Mattel was considering various ways to overcome the problem, including reducing the amount of toys it makes through contract factories. About 50 percent of Mattel’s revenue comes from toys made in 11 factories it owns and operates."    Switching suppliers can be painful and expensive.  There’s always a new learning curve, there’s the issue of qualifying new suppliers and time and resource issues related to that, and no guarantees that the next supplier will be any more reliable than the first.  I know this will be painful, and it may involve fundamental shifts in business models.  So, the whole operating model may have to be reexamined, with early signs that the answer may be to maintain even tighter reins over ownership and control. 
 
And in my simple mindedness, I wonder, "What kind of thought process / value system leads any supplier to put lead paint on a toy, in the first place?"  Is this such a stupid question?  Is the apple rotten in the very core? 
 
I remember in some graduate student beer topic ethics discussion, one of the grad students argued for the pure cultural relativism of ethical systems.  He was saying there is no way to prove that one ethical system was superior to another.  I disagree.  I think these things can be measured empirically.  How many kids in YOUR culture have lead poisoning?  Of course, we only see what we are looking at, and every culture has its own blinders.  But even a flawed system for making values based ethical — and economic — decisions is better than none at all. 
 
Here’s the article: 
 
Business
Lead Paint Prompts Mattel to Recall 967,000 Toys
By LOUISE STORY
Published: August 2, 2007
The maker of Barbie dolls and Hot Wheels cars is recalling the toys because of lead paint.
 
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