Mattel

UNSAFE FOR CHILDREN: MATTEL’S TOY RECALLS AND SUPPLY CHAIN MANAGEMENT

This series of recalls attracted widespread publicity, as well as political and consumer concerns that sometimes bordered on hysteria. Newspapers and television networks jumped on the story, interviewing concerned shoppers and showing toys being removed from shelves and parents bringing toys to stores for lead testing.Mattel‟s brand image took a serious beating.

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Mattel press release, “Company Recalls Products with Possible Lead Paint Content,” August 2, 2007. Tracy Quek, “Mattel Recalls 1.5 M Made-in-China Toys,” The Straits Times, August 3, 2007; see also: Mattel Product Recall website, http://service.mattel.com/us/recall.asp (accessed June 26, 2008). 3 Mattel Product Recall website, loc. cit. DavidHoyt prepared this case under the supervision of Professor Hau Lee of the Stanford Graduate School of Business and Professor Mitchell M. Tseng of the Hong Kong University of Science and Technology as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2008 by the Board of Trustees of the Leland StanfordJunior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: cwo@gsb.stanford.edu or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, ortransmitted in any form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate School of Business.
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The toy recalls reinforced public concerns raisedby several high-profile problems with other Chinese-made products earlier in 2007, including tires, toys, pet food, cough syrup and

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On August 2, 2007, Mattel announced a voluntary worldwide recall of 83 products in its FisherPrice toy lines, including characters such as Dora the Explorer, and the Big Bird and Elmo characters from Sesame Street. The recall, which applied to approximately1.5 million toys sold worldwide after May 1, 2007, was due to the use of excessive lead paint.2 Over the next month, Mattel announced six more recalls that covered toys with lead paint, as well as small magnets that could become loose and be ingested by children. In October, Mattel made yet another recall for lead paint contamination.3 All of the toys recalled had been manufactured in China. Twoweeks after the August 2nd recall, the owner of the Chinese factory that had used the lead paint committed suicide.

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We apologize to everyone affected by this recall, especially those who bought the toys in question. We realize that parents trust us with what is most precious to them—their children. And we also recognize that trust is earned. 1 —Robert Eckert, CEO of Mattel, Inc.

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CASE: GS-63 DATE: 09/15/08

Unsafe for Children: Mattel’s Toy Recalls and Supply Chain Management: GS-63

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Yet, it was inaccurate and overly simplistic to blame the problem solely on irresponsible Chinese manufacturers. In fact, less than 15 percent of the toys recalled by Mattel were due to manufacturing errors (specifically, the use of lead paint). Most of Mattel‟s recalled toyswere due to defective designs, such as those that allowed small magnets to become dislodged. Most of design have been carried out outside of China. Understanding the true nature of the problems, and how they could be resolved, required urgent, yet thoughtful efforts on many fronts; by Mattel, by the manufacturers, and by the government agencies of China and toy importing countries.

Mattel...