Thursday
13Sep
The Cost of Being a Price Buyer is too Steep II
Thursday, September 13, 2007 at 09:20PM In mid August I wrote a post titled The Cost of Being a Price Buyer is too Steep. This was the story about the Mattel toy supplier involved in the massive toy recall due to lead paint. Subsequently the owner of the toy factory took his life.
There is a fascinating follow-up in Industry Week titled How the Mattel Fiasco Really Happened. The article quotes a blog post in a Chinese magazine titled "The Death of a Toy Maker".
Here are some great insights and lessons learned:
- After a fifteen year relationship, quality testing "slackened off" by all parties involved.
- Rapid expansion by the Chinese manufacturer required the addition of new suppliers.
- Paint was purchased from an unapproved supplier - a friend of the owner.
- A paint shortage required yet the use of another new supplier - with inadequate time for a 5 to 10 day test.
- The change in paint products was noticed by line employees - but management didn't investigate.
An amazing story how failure to follow basic purchasing and quality control procedures ruined a company.
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Reader Comments (2)
This comes as no surprise to many of us that watched the foreign marketing campaigns with the 40% lower cost promises lure US buyers onto those bandwagons.
Industry insiders have heard the horror stories of shoddy products and late deliveries for years and listened as the buyers responded with "they're improving" or "there are good and bad sources" etc.
We have also watched as companies gambled with the lengthy lead times, only to get burned on quality, thereby sending their own deliveries to customers into a downward spiral and costing them business as these products had to be reworked or in many cases remanufactured altogether.
The smart companies are figuring out they can't afford not to buy from US sources and are discovering cost effective ways to buy right here at home.
Yes, good old American ingenuity is beginning to rear its head again and is showing up in the offices of buyers and planners, as well as the engineers that are no longer over engineering components.
As companies take a closer look at their own requirements and the core competencies of suppliers and potential suppliers, they are finding out they can save big dollars right here at home without the risks of global sourcing.