Supply chain disruption, such as a product recall, is the fastest-growing threat perceived by businesses, according to the annual Horizon Scan report. 49% of those polled identified increasing supply chain complexity as a trend, leaving their organization vulnerable to disruption from conflict or disaster. – Disruption from Your Supply Chain: Product Recalls (PLS Logistics Services)
Before reading the February 19th, 2024 article, “U.S. Product Recalls Surge 11% in 2023 to Hit Seven-Year High,” I had not written a post about product recalls since August 2007. In fact, I cannot remember the last time I read a LinkedIn post or Tweet from anyone in the industry about product recalls and their impact on the supply chain. As a point of interest, I did a search on product recalls, and the only LinkedIn post that popped up was dated August 10th, 2023. With only seven reactions and two comments, it obviously didn’t hit a nerve with the industry. Perhaps this explains why no one is writing about it.
Barbie and Hot Wheels Revisited
Before moving forward to 2024, let’s revisit the case study I cited in my 2007 article. Here is an excerpt from that post:
One example is the computer manufacturer who built the Hot Wheels and Barbie PCs for Mattel in the late 1990s. Operating on razor-thin margins, the pressure to use low-cost components from off-shore OEMs was great. Unfortunately, the power supply that was ultimately selected failed in 60% of the machines (adding insult to injury was the fact that the failures occurred on Christmas morning when excited children attempted to turn on their new PCs).
The company, whose sales grew from $27 million per year to $118 million in just 18 months, collapsed under the wave of return costs that eroded the aforementioned paper-thin margins. The manufacturer went into bankruptcy in early 2000, while Mattel was left to deal with a public relations nightmare.
What role did the PC manufacturer’s purchasing department have in the power supply selection? Did upper management’s pressure to meet an unrealistic selling price unduly influence their decision? Finally, could the purchasing department’s management have done anything to avert the disastrous outcome?
Here is the question I asked then – and yes, I am reasking today: Do organizations view their procurement departments as a narrowly defined functional role versus being a strategic contributor? What impact does this have on the growing recall trend?
“I moved to Nestle from a company where procurement was heavily involved in any new capital expenditure project right from the start. Now I find myself in a situation where we have very limited involvement to actually influence the buying decision.” – Nestle Purchasing Exec (2007)
Here are a number of recent articles regarding various recalls:
EU food and beverage recalls rise in early 2023 – Joe Whitworth (June 8, 2023)
U.S. product recalls surge 11% in 2023 to hit seven-year high – Sedgwick Claims Management Services, Inc. (February 15th, 2024)
Food Recalls Are on the Rise. Here’s Why — And How to Find Them – MADELINE GARFINKLE (September 11th, 2023)
Most Common Causes of 2023 Food Safety Recalls (and How to Avoid Them in 2024) – AIB International on (January 23rd, 2024)
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Procurement Insights
When it comes to product recalls, how important is the supply chain?
Posted on February 25, 2024
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Supply chain disruption, such as a product recall, is the fastest-growing threat perceived by businesses, according to the annual Horizon Scan report. 49% of those polled identified increasing supply chain complexity as a trend, leaving their organization vulnerable to disruption from conflict or disaster. – Disruption from Your Supply Chain: Product Recalls (PLS Logistics Services)
Before reading the February 19th, 2024 article, “U.S. Product Recalls Surge 11% in 2023 to Hit Seven-Year High,” I had not written a post about product recalls since August 2007. In fact, I cannot remember the last time I read a LinkedIn post or Tweet from anyone in the industry about product recalls and their impact on the supply chain. As a point of interest, I did a search on product recalls, and the only LinkedIn post that popped up was dated August 10th, 2023. With only seven reactions and two comments, it obviously didn’t hit a nerve with the industry. Perhaps this explains why no one is writing about it.
Barbie and Hot Wheels Revisited
Before moving forward to 2024, let’s revisit the case study I cited in my 2007 article. Here is an excerpt from that post:
One example is the computer manufacturer who built the Hot Wheels and Barbie PCs for Mattel in the late 1990s. Operating on razor-thin margins, the pressure to use low-cost components from off-shore OEMs was great. Unfortunately, the power supply that was ultimately selected failed in 60% of the machines (adding insult to injury was the fact that the failures occurred on Christmas morning when excited children attempted to turn on their new PCs).
The company, whose sales grew from $27 million per year to $118 million in just 18 months, collapsed under the wave of return costs that eroded the aforementioned paper-thin margins. The manufacturer went into bankruptcy in early 2000, while Mattel was left to deal with a public relations nightmare.
What role did the PC manufacturer’s purchasing department have in the power supply selection? Did upper management’s pressure to meet an unrealistic selling price unduly influence their decision? Finally, could the purchasing department’s management have done anything to avert the disastrous outcome?
Here is the question I asked then – and yes, I am reasking today: Do organizations view their procurement departments as a narrowly defined functional role versus being a strategic contributor? What impact does this have on the growing recall trend?
“I moved to Nestle from a company where procurement was heavily involved in any new capital expenditure project right from the start. Now I find myself in a situation where we have very limited involvement to actually influence the buying decision.” – Nestle Purchasing Exec (2007)
Here are a number of recent articles regarding various recalls:
EU food and beverage recalls rise in early 2023 – Joe Whitworth (June 8, 2023)
U.S. product recalls surge 11% in 2023 to hit seven-year high – Sedgwick Claims Management Services, Inc. (February 15th, 2024)
Food Recalls Are on the Rise. Here’s Why — And How to Find Them – MADELINE GARFINKLE (September 11th, 2023)
Most Common Causes of 2023 Food Safety Recalls (and How to Avoid Them in 2024) – AIB International on (January 23rd, 2024)
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