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Chapter 10
Managing Recalls: Before and After
T
oy recalls have certainly increased in recent years, and not surprisingly, nearly all of them have applied to toys made in China. This
situation is a direct result of the Chinese economy opening to trade
with the rest of the world, particularly Western nations. Like any
fledgling economy, China faces a number of issues, such as lax industry regulations, poor working conditions in factories, burgeoning
demand for skills to meet the demands of Western markets, and corruption, to mention only a few. Therefore, discussion of toy recalls
(and of product recalls in general) has centered on problems that are
endemic to China. However, focusing on issues in China or emerging economies alone can lead to incomplete answers and inadequate
solutions.
In order to understand product recalls, it is important to dig below
the surface-level issues that are related to problems in China and other
emerging economies. A critical examination of the toy recalls data in
this book has revealed a number of issues that go beyond Chinese
manufacturing problems:
●
●
●
Toy recalls are increasing, but that scenario in itself should not be
a cause for concern because the number of units recalled has not
increased.
Recalls of toys made in China are dramatically increasing, but the
driving force behind this increase has been the even more dramatic
increase in imports from China.
The source of the problem may not be cost pressures because recalls
are not limited to low-priced products; they cut across the price
spectrum. In fact, in recent years, recalls occurred more frequently
for high-priced toys than for low-priced ones.
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NOT JUST CHINA
A vast majority of toys were recalled due to inadequate designs the
brand-owning companies provided to Chinese contract manufacturers, not to poor manufacturing by the latter. However, recalls
due to manufacturing issues have increased in the last few years,
largely driven by recalls of products containing excess lead. The
recalls for lead shot up dramatically in 2007 and continued in
2008, but a number of the recalled products were on the market
for years before they were recalled, pointing to the likely failure of
organizations to deal with the institutional differences between the
West and Asia, particularly China.
Although recalls by manufacturers are at a historic high and are
increasing, this increase is not so dramatic compared to the increase
in recalls by retailers, who have begun to import directly from factories in China, but lack the necessary experience, skills, or organizational systems to prevent recalls.
The time it takes to recall hazardous toys has been increasing in the
last few years, perhaps due to a lack of organizational systems to
identify the problems or a reluctance of companies to issue recalls.
Toy recalls in the recent past have become more reactive than preventive, perhaps due to slower recalls and a lack of organizational
systems. The CPSC has substantially increased the number of fines
levied on companies that fail to report the problems with their
products in a timely manner.
While toy recalls are increasing, the time to recall is lengthening,
and defective products are proving more hazardous to consumers,
the remedy offered to consumers has been decreasing. As a result,
there are fewer incentives for consumers to return the defective
products.
In short, the analysis in this book reveals that while China may
be a factor in increased recalls, lack of organizational systems exacerbate the problem. As a result, recalls have not only increased but also
have become less effective at protecting consumers. So the question
to be asked is not whether China or companies are at fault. Rather,
the question should be how we can improve the safety of toys and
consumer products in general by decreasing the need for recalls and
increasing the effectiveness of those recalls that do occur. The first
step in improving toy safety is the responsibility of the manufacturing
or importing companies, while the second must be shared between
companies and other stakeholders. This chapter primarily focuses on
the first step, suggesting that in order to reduce the kinds of situations that necessitate a recall, companies can do a number of things
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before the toy-production phase, during the manufacturing process,
and even after the products are sold. Together, these actions will not
only help prevent recalls, but will also make them more effective when
they are issued.
The analysis in this book reveals that design flaws are the primary
cause of many toy recalls. Further, problems during manufacturing
also can lead to a number of product hazards, with certain safety
issues emerging because of incorrect assembly by users or inadequate
product instructions. In short, problems can occur at any stage of
the toymaking process. Therefore, it is important to ensure that, at
each stage of toy value chain, no slippages occur. Figure 10.1 presents
some examples of potential missteps in the toy value chain, which are
elaborated in the following sections.
Preventing Recalls—Before Products Are Made
Pre-production activities in the toy value chain must ensure that the
design handed down to the manufacturing stage is safe, sound, and
error-free. Such activities include selecting a toy design, developing a
prototype, and testing the prototype. These three processes should
focus on developing an exciting product but with a safe design.
Thomas Watson, former CEO and Chairman of IBM, is known
for saying that “good design is good business,” yet many companies still seem to be giving short shrift to design. Industry insiders
indicate that only about 1 percent of American companies pay serious attention to design, and very few companies promote executives
with design backgrounds to the upper echelons of the organization.1
Not surprisingly, product designs made by generalist manufacturing corporations won only 7 IDEA awards in 2007, whereas those
made by specialist design firms won 14. In the previous four years
(2003–2006), manufacturing corporations won 100 awards, while
design firms won 128. We can see that, in the past, companies that
specialize in design won about the same number of awards as those
companies that design products as only one part of their operations.
That the number of awards won by manufacturing companies appears
to be decreasing perhaps indicates that these companies are paying
less attention to design excellence.2
As the vast majority of recalls arise due to inadequate design,
it is important that companies focus on designing safe toys.
Unfortunately, in their haste to be first-to-market, many companies might fail to conduct due diligence on a product, thereby missing the chance to identify any design-related safety issues. Further,
• Tension Between
User Appeal and
User Safety
• Meeting Voluntary
and Mandatory
Standards
Toy Design
• Propensity to Rush
to Market
• Test Reports vs.
Economic Prudence
• Propensity to fail
with different
material
• Actual Flaws vs.
Reported Flaws
• Test in Use
• Design – Manufacturing • Domestic Standards
vs. Export Market
Coordination
Standards
• Unintended
Presence of
Dangerous Material
• Consumer
Expectations
• Safety in Use
• Understanding of
instructions by users
• Consumer Complaints
Prototype
Development
Testing
Manufacturing
Quality Control
Distribution
& Sales
Questions to Identify Potential Slippages
• Would this toy be safe? • Have enough trials
– does it have small
been made to test
parts, sharp edges,
and improve the
long strings, holes/gaps,
prototype?
or contains chemicals
• Is this product
that may be harmful?
likely to fail or turn
• Is the need to make
dangerous with
the toy fancy interfering
somewhat different
with the toy’s safety?
material and
workmanship?
• Can the safety of this toy
be increased with
some modifications?
• Would the toy hold
up in use, abuse,
and misuse situations?
• Has this toy been
made to the design
specifications or not?
• What are the most
unexpected ways a
child can play with this?
• Has this toy used only
prescribed material
or has any material
been changed?
• Does the product
meet mandatory and
voluntary standards?
• Does the fact that
testers’ colleagues
made the design and
prototype influencing
the error reporting?
Figure 10.1
• Has this toy been
tested in actual use
or just in simulated-use
situations?
• Are the test reports
taken seriously?
Potential slippages in toymaking and addressing them
• Does the toy
contain any dangerous
material such as lead
paint, chemicals, or
needles?
• Does this toy break easily?
If so, does it generate
small parts, sharp edges,
long strings, etc.?
• Does the toy meet the
• Is the material
quality and safety
used the same as that
expectations of the
prescribed
in
the
design
consumers?
• If the toy was not
specifications
and/or
• Do the users understand
made per specifications,
product prototype?
the instructions of
would it be caught in
• Does the toy meet
assembly and play?
quality control?
the health and safety
• Are the users likely to
standards of the
assemble/use the toy
export markets?
differently? If so, does
that pose a hazard?
• Are users complaining
about the product? Are
there any incidents,
injuries,deaths?
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products are often reviewed and tested for safety within a simulated
situation only, and this technique may not be sufficient to identify
hazards that could arise during actual use. In order to satisfy the
safety expectations of consumers and regulators, product designers
must carefully consider every possible way that consumers might use
the product.3 They must specifically focus on whether the product is
likely to create hazards during its use. Hence, there are two critical
factors for companies to consider when selecting a design: the safety
of intended users and the standards and regulations that govern the
toy. Inattention to either one can compromise the safety of the toy
and lead to recalls.
A consumer-focused design needs to take into account how consumers actually use the final product. This can be accomplished
through ethnographic studies of consumers, that is, simply observing
consumers as they use the products in their daily lives. Without such
understanding, companies might make an otherwise very good product, but with certain problematic features. For example, LeapFrog
recalled 186,000 units of playground activity centers because children’s arms were getting caught in the plastic tube at center of the
toy, resulting in bruises and scratches. LeapFrog announced a recall
of these products and provided a repair kit that closed the gaps and
prevented children from putting their hands into the tube.4 Similarly,
Regent Sports sold about 190,000 soccer goal nets in which the
squares measured five inches on each side. It was found that children were placing their heads into these gaps, either accidentally or
intentionally, which posed a risk of head and neck entrapment or even
strangulation. Following two such incidents, including the death of a
20-month-old child who was found with his arm and neck tangled in
the soccer goal net, the nets were recalled.5 As part of the recall program, Regent supplied nets in which the distance between knots was
reduced to four inches. In these and other similar cases, the design
features likely could have been modified and recalls averted if consumer use had been adequately studied and taken into account before
the product was manufactured.
In designing products, managers face a major challenge as they
must make the product appealing to the user and, at the same time,
make it safe to use. At times, it is not possible to strike a good balance
between these two goals. Products with sharp features and frills tend
to be attractive to consumers, particularly young children; however,
they can also be dangerous because the sharp parts pose a laceration hazard and the frills might become detached and pose a choking
hazard.
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In addition to striking a balance between making a toy fancy and
making it safe, toy designers must also ensure that their product
meets all the mandatory and voluntary safety standards that govern
the product. While this may sound easy to do, it can actually be quite
complicated, since there are a number of regulations and standards
to be taken into account. Adhering to such safety standards can be
particularly challenging for retailers and distributors that do not actually design the product, but rather source the completed item from
offshore locations where manufacturers may not have knowledge of
the standards that govern the product within the export markets.
Even for the most experienced toy companies, it is difficult to
forecast which toy is likely to be successful. Therefore, companies
increasingly rely on designs from inventors and entertainment companies. When a company purchases a design from an inventor, the
development cycle gets shortened, and the company managers get
much less time to reflect on the design than with an in-house design,
for which many deliberations may occur before a design is finalized.
Also, in the case of characters bought from entertainment companies,
it may become challenging to ensure their safe construction while still
retaining their original features. For example, Mattel’s Batman cars
were designed with pointed wings to look like the actual Batmobile.
But they had to be recalled as their sharp wings posed a laceration
hazard.
Although it is difficult to design a safe product, it is easiest and
most efficient to consider safety issues at the design stage. Companies
can reduce the possibilities of injury to children and the prospect of
a recall by asking explicit questions aimed at ensuring that the toy
meets the required standards and its safety has not been compromised in exchange for fancy features. Such questions could include
whether the toy meets mandatory and voluntary standards; whether
the toy has small parts, sharp edges, long strings, holes/gaps, or contains harmful chemicals; whether specific features that make the toy
look authentic interfere with its safety; and whether simple modifications could increase the safety of the toy.
Following the designing phase, the company must develop and
test a prototype. In the prototype development stage, the factors that
might contribute to missteps relate to the time available for prototype
development and the propensity of the toy to fail or become dangerous if alternate materials are used. The toy industry is very competitive and other companies can introduce similar products. In such an
environment, there is often a rush to bring ideas to market, especially
in the case of toys that are based on movie characters, whose launch
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must coincide with the movie’s release. The rush to get the toy to
market may preclude proper testing.
When a prototype is made, developers take a great deal of care and
use high-quality materials. In addition, those developing the prototype are very highly skilled technicians. These factors may be absent,
however, when the toy is eventually mass produced; for that reason,
it is important to consider whether the toy is likely to fail if it is built
with somewhat different raw materials or less-expert care. For example, the time between processes in a mass-production system may
be forcibly reduced in favor of economic expediency. Consequently,
parts of a toy may not be glued adequately or stitched properly. Such
eventualities need to be considered at the prototype development
stage.
It is not always possible for companies to speculate on the possibility of a toy failing with different materials. For example, faced
with several cases of chemical poisoning in children who chewed or
swallowed their Bindeez/Aqua Dots toys, Moose Enterprises and its
distributors around the world had to issue an immediate recall in
November 2007. At that time, Moose Enterprises had no idea why
its toys had turned deadly, but investigations eventually revealed
that the manufacturer in Shenzhen, China, who made the toys for
Moose Enterprises on a regular basis, had substituted one chemical
(1,5-pentanediol) with another (1,4-butanediol). Apparently, both
these chemicals were widely used in Shenzhen factories, given the
large-scale manufacturing that occurs there. The latter chemical (1,4butanediol ) was cheaper but when ingested turned into a compound
similar to gamma hydroxy butyrate (GHB). Commonly known as the
fantasy or date-rape drug, GHB causes sedation and, in severe cases,
coma or death.
Following the development of a prototype, managers should take
care to adequately test that item, and such tests should ideally be
done in actual-use situations, performed by target users. Too many
companies rely on actual people to test product appeal but then use
dummies to test the safety features of products such as cribs. The
use of dummies is unavoidable in certain cases, such as crash tests
for car seats, for example, but in many instances, companies can spot
potential dangers by using representative consumers to test the product usage in a more realistic setting.6 Even if companies are unable
to change the product to address such flaws following the tests, they
could at least provide clearer usage instructions and warnings.
Testing the toy in actual-use conditions might also help companies to understand whether it could withstand normal use, abuse,
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and misuse by children. Identifying some of the unusual ways in
which children may use the toy or its parts can be very useful for
a company. In one example, children who had access to the magnets used in toys did unexpected things, such as putting them in
their ears. As a result, medical attention—including surgical intervention—was needed in several cases. These incidents, which were
unearthed after the production of the subject toys, could have at
least been visualized if the products had been tested in actual-use
conditions. This would have helped companies to encase the magnets so that they could not become accessible to children, a design
feature which toy companies adopted following the large-scale
recalls of toys with magnets.
Even more important than testing, however, is the responsibility of
senior managers to listen to the concerns of the designers and the testing engineers. Reports from testing engineers are often downplayed
or overlooked in favor of economic priorities or in the excitement
of taking a new product to market. Graco, for example, produced a
cradle in 1989 that did not have a restraint belt to prevent babies from
sliding into a corner and suffocating, despite engineers’ recommendations to the contrary.7 As a result, when the product was bought and
used by consumers, a number of injuries and several infant deaths
occurred. Eventually, Graco recalled all 169,000 units sold.
When designs are created in-house, companies may face another
kind of challenge in identifying problems. Testing engineers may not
report design problems if doing so could negatively affect their colleagues in the design department. While the testing engineers may not
deliberately avoid reporting, they might be somewhat influenced by
their relationships or they might downplay potential issues. Therefore,
companies need to make sure that testing engineers completely and
correctly report all observed flaws to the senior managers.
In short, managers need to pay close attention to the safety features of a toy, particularly ensuring that fancy features do not impinge
on the toy’s safety. In addition, companies should provide adequate
time and resources for prototype development and testing. More
importantly, reports from testing engineers should be heeded and
incorporated into the final product. These steps will ensure that the
manufacturers receive a sound design. In spite of these measures,
there may still be evidence of toys that have not been produced as
intended or as designed. Given that the manufacturing of toys often
takes place halfway around the world, it is equally important to monitor the value chain activities after the toy design is handed over for
manufacturing.
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Preventing Recalls—As Products Are Made
The steps discussed in the previous section were aimed at creating
a sound design, but in order to ensure maximum product safety, it
is equally important that the manufacturing is done according to
that design. This requires close supervision and quality control during the manufacturing process. As designs are turned into finished
toys, companies face three major challenges: first, they must ensure
good coordination between design and manufacturing; second, they
must ensure that the toys produced meet the standards of the export
market; and third, they must eliminate the possibility of unintended
materials being used in the final product. Each of these issues is worthy of some discussion here.
In the old days, a firm designed, developed, and manufactured
its own products, perhaps all under one roof, which resulted in close
coordination between design and manufacturing. However, in the
present environment, in which manufacturing takes place in a country halfway around the world by a different company, it is not easy to
ensure that the product is manufactured according to design specifications and in the exact manner the designers envisaged. Although
designers may develop a product, those who are engaged in its manufacturing actually spend more time with it and are more likely to
notice potential problems with the final version. If there is no coordination between the design and manufacturing activities, those
involved in manufacturing may simply ignore any problems they spot
and let production roll. This scenario is especially likely if the manufacturers have no stake in the overall product or in the brand of the
product.
In order to achieve close coordination between the design and
manufacturing parts of the value chain, companies must have specific
systems and processes in place to ensure that the production process
adheres strictly to the design specifications.These systems should provide a feedback loop between manufacturing and quality control and
the corporate headquarters that are responsible for the design and
overall safety of products. The spate of recalls due to paint with excess
lead and other dangerous chemicals highlights these difficulties and
points to the complexity of managing such lengthy supply chains.
Not only geographic distance, but also the differences in management practices, regulatory standards, inputs used, and cultural norms
make it difficult to ensure a strong link between design and manufacturing. As a result, many companies have resorted to the practice
of engaging agents who possess specific knowledge of working in
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the outsourcing country. The job of these agents is to “get the job
done” for the brand companies according to the specifications given
to them. But this can also result in serious slippages, as in the following example of the Aqua Dots recall.
A company called Moose Enterprises developed Aqua Dots and
then outsourced their production to a Chinese manufacturing company. When that company changed the toy’s ingredients, Moose
Enterprises was unaware of the change. The source of this misstep
was likely the company’s agent in Hong Kong, Duo Yuan Plastic
Production Company, who in turn outsourced the production to
Wangqi Product Factory. Apparently, Wangqi had submitted the production formulas and samples to Moose Enterprises’ agent, Duo Yuan,
before mass production and had received no objection. It is possible
that Duo Yuan did not notice the changes because their expertise
was in arranging manufacturing and dealing with Chinese manufacturers, rather than in assessing the impact of formula changes. Or
perhaps Duo Yuan simply did not bother to inform Moose about the
change because the original material (1,5-pentanediol) was three or
four times more expensive than the one used (1,4-butanediol), and
so, from a cost standpoint, it was favourable to Duo Yuan. If Duo
Yuan had informed Moose, the company would have asked Duo Yuan
to use the material per design specifications, which would have cut
into the profits of Duo Yuan. Notwithstanding the reasons for this
failure of communication, it was Moose Enterprises that bore the
brunt of the outrage that followed the recall of the Aqua Dots toys.
Companies can avoid crisis situations like the Aqua Dots recall by
coordinating closely with their manufacturers, vetting the suppliers
of manufacturers, and monitoring the inputs. While this seems quite
achievable, industry insiders suggest that very few brand-owning
companies actually work closely with manufacturers and suppliers. In
fact, a number of companies have outsourced both production and
quality testing to the same manufacturers, a practice that can lead to
large-scale systemic failures, as the lead recalls have already shown.
For years, various suppliers were using paint with excessive lead
in a number of products. This practice went largely undetected, perhaps because Western companies were unaware of how available and
frequently used lead is in China and other developing countries. Not
surprisingly, before the lead-related issues in toys began to surface,
many companies, like Mattel, asked their contract manufacturers to
test the final products to ensure that the paint used on toys was leadfree. Obviously, this system is flawed because contract manufacturers
may not have the necessary incentives to meet the standards. This
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system worked “smoothly” for years, but was eventually found to be
flawed, as millions of completely untested products made by thousands of suppliers flooded the market.
Considering the great potential for quality breakdowns between
the design and manufacturing phases, it is important for firms to set
up their own systems of inspection and conduct them more vigorously. Such inspections would likely identify cases such as missing
screws, which resulted in a recall of bunk beds made in Brazil by The
Land of Nod8 and toy pans made in China by Fisher-Price.9 Working
closely with the manufacturers and their suppliers can help to avoid
systemic problems such as those related to lead paint as well as other
recalls that become necessary because the products have not been
made according to their design specifications. However, it is very
difficult for retailers and importers, who are less likely to have the
required infrastructure or knowledge, to put such practices into play.
Despite the financial and human resources required to monitor manufacturing overseas, there is no substitute for knowing the
people, the material, and the norms of the place where the products
are being made. Such knowledge can often be used to redesign the
products and thus avoid future problems. For example, Indian artisans made toys with soft wood; as a result, finer parts, such as beaks
of birds or ears of animals, would easily break off and pose a choking hazard for children. When the importers of these toys interacted
with the artisans, the artisans nonchalantly mentioned that soft wood
breaks easily and that the users should recognize that fact. For their
part, the artisans had taken the nature of wood for granted, since
their skill was in carving it, not in predicting its uses. The importers
redesigned the toys to eliminate the small parts that were prone to
breakage.10 Even the Aqua Dots toys were reintroduced to the market
after they had been redesigned to be covered with Bitrex, which is a
safe solution with an extremely bitter taste that dissuades children
from placing the product in their mouths. The latter example reinforces the importance of taking manufacturing and user habits into
account during the designing process.11
Between the design and manufacturing stages of a global supply
chain, there are numerous opportunities for slippages. Firms can
reduce the scope for these mistakes by creating third-party or selfowned monitoring systems and through increased inspections. These
systems would help to ensure the integrity of the final product, making it as safe as possible for use. In addition, companies need to know
the manufacturing context of their suppliers, which could help them
to redesign products in ways that eliminate any existing hazards.
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Preventing Recalls—After Products are Made and Sold
The preceding discussion has pinpointed the need to develop a good
design and ensure that production is completed according to that
design’s specifications. An equally important step in consumer product safety is to communicate the instructions related to product assembly and usage. Managers face a number of challenges at this stage of
the value chain, including meeting consumer expectations, ensuring
safety by providing instructions that users can easily understand,
and—more importantly—monitoring post-sale consumer complaints
and taking quick preventive action in response. Managers experienced in marketing are most likely to have the appropriate knowledge
to handle these activities.
When it comes to preventing recalls, marketer might not be the
first word that comes to mind. However, if companies want to be
proactive about recalls, they need to make optimum use of the customer knowledge held by their marketing personnel. Undoubtedly,
a company’s marketing staff has the closest contact with and richest
knowledge about product users, and about the market itself, and this
knowledge can be parlayed into the redesign of products in order to
avoid misuse and danger. Also, companies can use marketing as a way
to identify product defects before they turn into full-blown crises.
Certainly, a recall made before any harm has occurred to consumers
is less damaging to the reputation and the bottom line of the recalling company.
Marketers are knowledgeable about the customers who use a given
product, and they can tap into that knowledge to evaluate how the
products might be used or abused. Also, marketers can assess whether
local consumers will use the product in the intended manner. For
example, TTK India is a leading manufacturer of pressure cookers and has sold millions of them in India. When TTK’s subsidiary,
Manttra, imported these Indian-made pressure cookers for sale in
the United States, the parent company soon learned of two incidents
where hot contents had spilled out and caused minor burn injuries to
the users. Manttra discovered that the incident had occurred because
the cooker lids were not closed properly. It is common knowledge
among Indian consumers, who regularly use pressure cookers, that
the contents of the container will spill out if the pressure cooker’s
lid is not closed properly. However, consumers in the United States
were not as familiar with pressure cookers and did not have a similar degree of knowledge. Therefore, Manttra recalled 38,250 cookers
and provided the consumers with a new replacement pressure valve
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that would prevent opening of the lid until the temperature inside
the cooker had dropped to a safe level.12 This feature has since been
incorporated into the more recent designs of the cookers in order to
make them safer.
It is very common for younger children to use products that are
designed for older children. On the face of it, if an injury to a young
child occurs during the use of such products, the consumer is at
fault. However, if a product is accessible to children and can pose
danger to them, the CPSC and consumers would like the company
making the product to eliminate that danger. For example, as discussed in chapter 8, Hasbro recalled nearly 255,000 tool bench toys
because the two, 3-inch plastic nails supplied with the tool bench
resulted in deaths of two small children, both aged less than two
years. These children suffocated when the nails became lodged in
their throats. The nails were not small parts and the toy tool bench
was intended for use by children three years and older. Nevertheless,
the toys were recalled because they were accessible to younger children and posed serious danger.13 As experts on consumer behavior,
it is the marketers who have the knowledge to either foresee such
usage or to know about such usage because of their close contact
with customers.
The importance of close consumer contact is underscored by the
research finding that retailers identify problems and recall the products more quickly than those further removed from the customers,
such as manufacturers and suppliers.14 In 2007, Sears issued a warning to consumers, asking them to remove the label on its Craftsman
circular saws. The label on the upper blade guard of the saw became
partially detached and interfered with the operation of the lower
blade guard, exposing the saw’s blade and posing a laceration hazard.15 There were only two reported incidents, but Sears was able
to act swiftly to announce a recall because it was close to the end
customers.
As discussed in chapter 5, Toys“R”Us recalled four thousand
children’s craft sets after just two incidents because the instructions
accompanying the set asked children to microwave the soap disks for
ten minutes, instead of ten seconds.16 This simple typographical error,
which resulted in a fire hazard, points to the importance of clear and
accurate instructions for use of a given product. Instructions need to
be both accurate and easy to understand.
Product recalls that occur due to incorrect installation or assembly
by consumers are quite common. By paying attention to instances
of incorrect assembly, instead of ignoring them or blaming the
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consumers, companies gain an opportunity to design a preventive
mechanism, as in the aforementioned example of Aqua-Leisure, who
improved the clarity of its assembly instructions by color-coding the
snap-on clips for its pool ladder steps.
When consumers are injured while using a product, it is always
possible to at least partially attribute the incident to them. Such situations could take the form of incorrect assembly, improper use, use by
unintended users, inadequate skill to use the product, or—in the case
of children—lack of adequate parental supervision. However, even if
the consumer was at fault or likely contributed to the incident, companies still need to carefully study all such incidents. Attention to
consumer complaints and reports may reveal a pattern of errors that
can in turn be used to design a safer product.
Ultimately, ensuring that consumers correctly assemble and use
a given product is just as important as designing a safe product and
manufacturing it according to the design. Managers, particularly
those involved with marketing, need to pay attention to actual usage
of the product in order to visualize potential problems. Further, managers should also track consumer complaints to examine whether
there is a pattern of problems that future designs could address and
eliminate.
Preventing Recalls through Better
Knowledge Management
Companies can prevent product recalls by ensuring that activities
across the value chain are performed carefully. These activities primarily include designing a safe product, manufacturing the product
according to its design specifications, and communicating the appropriate methods of product usage to consumers. In order to achieve
these three goals, managers must mobilize the vast amount of knowledge available within and outside their organization, leveraging it to
ensure safe products.
Product quality can be enhanced by integrative knowledge management, which deals with not only the tacit and explicit dimensions
of knowledge, but also with its internal-external dimensions.17 Explicit
knowledge can be articulated and recorded in documents, drawings,
and databases. In contrast, tacit knowledge cannot be fully articulated,
but rather is revealed in actions by individuals in the course of organizational life. The knowledge that resides within a firm’s boundaries
is internal knowledge, while the opposite—external knowledge—is
held by suppliers, customers, competitors, and others.
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127
A vast amount of knowledge is available to managers, and it can
be mobilized to ensure product safety and prevent recalls. As presented in figure 10.2, this knowledge ranges from reports of design
engineers within the company to shared understandings between the
company and its suppliers.
Explicit knowledge available within the company includes reports
of design and testing engineers, as well as complaints received from
consumers. The case of Graco, who made and sold cribs without a
restraining belt—contrary to recommendations by design and testing
engineers—serves as an excellent illustration of how failure to leverage internal knowledge can prove disastrous.
Tacit Knowledge
Explicit Knowledge
Internal Knowledge
External Knowledge
• Reports of design
engineers
• Reports of testing
engineers
• Complaints received
from customers
• CPSC—Database on recalls to check
patterns of problems, investigative reports
of CPSC, top dangers outlined by CPSC
• Reports published by consumer advocacy
groups
• Research studies published in medical
and other healthcare related journals
• Research studies by health and safety
experts
• Standards related to materials used in
toys—legislations around the world
• Reports and opinions of consumers on
blogs (www.consumerist.com)
• The concept of safety
and acceptable risk—
whether it is shared
commonly across the
organization in various
functional areas and
across geographical
boundaries
• Intuitive observations
by design and testing
engineers about product
safety
• Handling of unforeseen
problems, reporting of
issues
• Whether the suppliers share the same
concept of safety and acceptable risk as
the organization
• Whether the suppliers use the same
material consistently during the product’s
life cycle; if they change, how does the
change affect the product?
• Industry norms, culture, and
relationships with suppliers—whether
suppliers communicate openly and
equally with the company
• Supply chain practices in China
• Guanxi and relationships, how they
override documents and stated
requirements
• Value of spoken word and relationship
over written words and contracts
Figure 10.2
Product Safety and Knowledge Types in Toy Industry
128
NOT JUST CHINA
In contrast, explicit knowledge that is available from outside the
firm ranges from recall notices of the CPSC to standards governing the product and studies published in medical journals. To name
one source, the CPSC database of nearly five thousand recalls is a
useful source of information that can help companies to understand
what kinds of problems result in recalls. Similarly, studies published in
medical journals can often provide insights on how the products may
be used in unexpected ways, thus injuring consumers. For example,
nearly a decade before small powerful magnets were used in toys,
cases of children ingesting magnets and requiring surgical attention were reported in Korea.18 This was soon followed by another
case in the United States, as reported in The New England Journal
of Medicine, wherein a 10-year-old girl had placed a pair of magnetic
rings in her nose. These magnets stuck together in her nose and had to
be removed through medical intervention.19 Another paper reported
24 such cases seen at one hospital in the United Kingdom, ranging
from instances of children placing magnets in their ears to ingesting them.20 In earlier chapters, similar examples of children ingesting
magnets and in turn requiring surgical intervention were discussed.
If companies had used this knowledge, which was already available
from the medical community, then the number of injuries and fatalities that preceded the magnetic toy recalls could certainly have been
reduced, if not prevented altogether.
Unlike the explicit knowledge that is available in documents and
hence, searchable, tacit knowledge is not codifiable. In order to access
tacit knowledge, companies must create a culture of openness in
which employees can freely share their observations, even if those
observations compromise the immediate financial interests of the
organization. While it is difficult to access tacit knowledge within an
organization, it is even harder to access it outside the organization.
When the suppliers are not treated as equal partners or where cultural
differences exist, tacit knowledge is extremely difficult to obtain. An
example of this problem can be seen in the challenges that companies face in offshoring their manufacturing to Asian countries. It is
highly uncommon for Asian partners and employees to express their
thoughts openly, due largely to their culture and upbringing that
emphasizes respect to authority and low self-concept due to historical
reasons, such as colonization. Further, companies in emerging economies operate within a more informal regulatory culture, in which
written contracts receive little weight. For example, if a manufacturing
company in China is given a contract instructing that only lead-free
paint should be used, that company is less likely than its U.S.-based
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129
counterpart to pay attention to it. Instead, the Chinese manufacturer
would be more likely to expect that if such requirement was supposed
to be met, the brand-owning company would closely monitor the
situation, since, in Asian countries, more emphasis is placed on interaction and less on the written words in contracts. If companies do not
have tacit knowledge that allows them to understand such cultural
nuances, they are likely to operate in the same way they do in the
Western world, simply relying on a well-drafted contract.
In sum, managers can reduce product recalls by leveraging the
vast amount of knowledge available to them, both within and outside their companies. Any knowledge so leveraged can then be used
to create better designs, to manufacture goods according to those
designs, and to communicate the appropriate use of products to consumers. However, in order to enhance product safety and decrease
product recalls, it is important that other stakeholders play their part
as well. These stakeholders include regulators, researchers, and, more
importantly, consumers themselves. In the next chapter, we discuss
the steps that these stakeholders can take to increase product safety
and reduce recalls.
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Chapter 11
Managing Recalls: Everybody’s
Business
Since products are typically recalled because they present harm to
consumers, the recent increase in product recalls should be a matter
of concern for everyone, especially because the injuries and deaths
defective products cause are bound to result in untold societal costs.
In addition to physical injury, product defects lead to property damage, which can cause severe financial and psychological distress to
consumers. Also, administering recalls and managing recall consequences can be very costly to companies, both financially and in
terms of reputation. Certainly, company managers play a major role in
the crusade to decrease recalls and increase consumer product safety,
but there are other stakeholders as well who should be expected to
take part in increasing consumer product safety.
The stakeholders in product safety include researchers, consumers,
regulators, consumer advocates, lawyers, politicians, and the media.
While each has some influence on consumer product safety, researchers,
regulators, and consumers in particular have direct opportunities to prevent recalls. In the following sections, we discuss these opportunities.
Recalls and Researchers
Researchers can play a major role in decreasing recalls and increasing
consumer safety by studying recalls in order to generate knowledge
that other stakeholders can use. Although recalls are not new, very
limited research attention has been paid to this important phenomenon. The research that does exist is disparate and spread across multiple functional areas, which limits the ability of research findings to
generate an integrated picture of recalls.1
PRODUCT RETURNS PROCESSING: AN EXAMINATION OF PRACTICES OF ...
Stock, James R;Mulki, Jay P
Journal of Business Logistics; 2009; 30, 1; ProQuest Central
pg. 33
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