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Preventive Measures

Although many were shocked when Mattel was forced to recall millions of potentially toxic toys made in china, it wasn't exactly a surprise. So why are so few companies prepared for the risk?

By Beth Karlin | Updated on October 01, 2007

Mattel Inc.’s recent recall of 21 million Chinese-made toys because of lead paint or detached magnets may have shocked manufacturers and parents around the world, but it was hardly the first time Chinese products were found to be dangerous. In June, toymaker RC2 Corp. recalled 1.5 million Thomas & Friends wooden railway toys made in China over concern about surface paints. Also in the last year, there have been recalls of everything from contaminated pet food, to defective tires, to spoiled toothpaste and lead-tainted jewelry.

The catastrophic event that crushed Mattel’s reputation, disrupted its business continuity and resulted in a $30 million charge in the second quarter. For other companies, it was a wake-up call that globalization without uniform standards can lead to dangerous–and expensive–mistakes. “If I were a board member or a C-suite executive, I would be very conscious of risks associated with supply chains,” says John Johnston, practice director of governance and risk management at Parson Consulting.

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