The following article is the second installment in our monthlong Promo Marketing Headlines series titled, “From Reactive to Proactive: Redefining Safety Standards in the Promotional Industry.” Throughout the next four weeks, we will discuss product testing, quality assurance and how both suppliers and distributors can work in tandem to ensure the items they sell are safe for children and adults alike.
Part 2: Suppliers and Distributors Sound Off on Recalls, Suggest Solutions
The dust of the recent California recalls has more or less settled—the industry’s publications have all done their stories, news of the lunch boxes disseminated to affected parties, and although no mea culpa was issued, the story, most likely, will be put out to pasture à la the Tylenol and GM truck public-relations nightmares.
Yet recalls still are flooding the news. The stories might not be front-page headlines, but tales of lead and design flaws in products for both children and adults have been cropping up with alarming consistency. A sampling of what occurred just in the days following the first edition of this series:
• October 12, 2007: More than 90,000 children’s toys, mostly imported by J.C. Penney Co. Inc., were recalled due to unacceptable levels of lead.
• October 11, 2007: In recent tests done on 33 brand-name red lipsticks, The Campaign for Safe Cosmetics found one-third had enough lead to exceed the FDA’s 0.1 parts-per-million limit for lead in candy.
• October 9, 2007: Starbucks recalls 250,000 of its kids’ cups, due to reports of the items breaking and becoming choking hazards.
Though all of the above are retail products from nationally recognized brands, with a large percentage of promotional products being imported, and a lack of checks and balances within the sector, the only thing that’s truly safe is the bet we, too, haven’t seen the last of the product-safety issue.
Dollars and Sense
On the whole, the retail industry’s struggles haven’t been lost on suppliers and distributors of promotional products. Many report thinking critically about potential repercussions since even before the news hit home with the California lunch box recall. “In light of what has been happening with manufacturers at retail recently, we were really not that surprised,” said Anne McKeough, vice president of sales and marketing at St. Louis, Missouri-based distributor Corporate Express. Likewise, Josh Arkin, director of marketing at Funco Promotions in Lynbrook, N.Y., reported being conscious of impending controversy since early summer. “I’ve had an awareness of the situation since the first Mattel recall,” he added.
However, even despite the increased level of attention, the overwhelming feeling that money—both spent and made—is what will dictate which resolutions, if any, will be universally adopted. Testing is expensive, and many suppliers struggle with the thought of examining every piece that comes off the assembly line. “When you safety test [items] and you’re paying hundreds of dollars, up to thousands of dollars for various tests, it just adds up quickly,” noted Willie Tafil, director of premium sales at Play Visions, based in Woodinville, Wash. Maria LaFichi, executive vice president of Lawrence, New York-based Zenith Promotions, agreed, saying it was “virtually impossible.”
While Tafil was quick to add that child-safety is a number-one priority for his company, in our industry, as with most, price is what rules the day. He has lost business from distributors searching for the lowest price point. Yet, if the recalls indicate anything, it’s that this strategy can no longer be the guidepost for our business practices. “The reality is, in many instances, that China is offering low-priced goods, not superior goods,” said Mel Ellis, president of Humphrey Line, a supplier in Milwaukie, Ore. which manufactures all its products in domestic factories. Buying higher-priced items certainly is not a foolproof safeguard for distributors, but it could go a long way in helping raise the bar for quality expectations.
Trust Issues
According to Ellis, running to China for ultra-competitive pricing, and subsequently basing sales solely on the lowest numbers, “dumbs down” the integrity of the industry. “This is a service business, it’s not a widgets business,” he noted. And trust is tantamount to service. With the impossibly high volume of products being exchanged every day, open channels of communication should not be a luxury, but a necessity.
“Out of the 300 some odd items that we sell, maybe ten are domestic-made,” said Arkin. Tafil puts his company’s number of imported products at almost 95 percent, while Zenith Promotions brings in 80 percent of its inventory from China, LaFichi reported. Each relies on its manufacturer to provide testing results, however, there’s not much in place to ensure manufacturers do not misplace that trust.
In a perfect world, there would be penalties and restrictions for manufacturers who are not open and honest, LaFichi said. “If they knowingly export ‘tainted’ products, the U.S. government should punish them by banning their products from entering the United States.” Though that’s unfortunately not the case today, efforts are being made to bring offshore manufacturing under tighter controls. The Consumer Product Safety Commission Reform Act of 2007, for one, currently is being introduced in Congress. If passed, it would mean more testing dollars and staffing increases as well as bans on lead and stricter product-labeling rules.
Right now, though, the obligation falls on suppliers to know who they’re doing business with. “You need to be aware of and informed regarding your manufacturer’s quality-control process, and their compliance ratings with those processes,” added Brian Smith, chief operating officer at Cleveland distributor Proforma. In turn, each distributor must be cognizant of what its suppliers are doing to uphold the virtues of quality and safety. And it’s not as simple as including it in purchase orders. Marla Kaye, president of You-Name-It Promotions—the distributor involved in the recent California recall—gave a disturbing caveat on that front. She maintained she included the stipulation that products must meet California’s Proposition 65 guidelines in her purchase order, yet somehow that did not occur. Clearly, words and contracts are not enough.
For more on Proposition 65 and the CPSC Reform Act, read Promo Marketing Headlines next week for our series’ third installment on testing practices and regulations.
Right Ideas
In light of its recent bad press, many expect China, as a consequence of doing business with the United States, will impart stronger regulations on its offshore manufacturing enterprises. Ellis asserted, “My hope is that the market pressures now being brought to bear on China from firms like Mattel, Raytheon, Nike and others, will make China wake up to its shortcomings as a global player and force them to move toward a more equal footing with Western suppliers.”
Until then, however, suppliers and distributors would do well to remember, “The effects of the distribution of an item that has potential to be hazardous could be far more costly to the brand and reputation of a company than that added time to inquire about the production and manufacturing of an item,” Smith maintained.
In the spirit of sharing the task of improvement, here are a few things both suppliers and distributors can do to begin taking steps in the right direction:
For the supplier:
• Use stateside, independent labs. LaFichi reported, “We have become more proactive and … ordering our own testing domestically by independent labs.”
• Test statistically significant samples. As opposed to following the industry norm of testing the prototype, or on the other hand, blowing your budget examining every single item, let testing experts help you determine an adequate sample size in proportion to the volume of the order.
• Stall importing for further examination. “Since this has happened with Mattel … we’ve delayed all new, incoming shipments from China to have the products tested to make sure the lead is at an approved level,” said Arkin.
• Ask end-buyers to split testing costs. Shouldering the burden of testing can be something that can be shared by all parties. Tafil reported that suggesting this option to end-buyers is “definitely an option.”
• Collect materials domestically. “One of my manufacturers, he basically gets all his materials that are made in the U.S. and just ships them to China. It costs a little more but the stuff’s made here so … everything’s made up to a higher code,” Tafil said.
For the distributor:
• Develop a network of preferred vendors. The standard equation for the promotional products industry is there are 35 to 50 suppliers for 80 percent of a distributors’ business. Doing homework on a new supplier for every deal isn’t practical, but Smith says, being aware and informed regarding your manufacturer’s compliance ratings is easier to do when you work exclusively with a select few.
• Take charge of testing. Request results, or better yet, conduct your own tests. A supplier should be more than willing to provide the paperwork and results you need to feel comfortable with the sale.
• Do your research. “When in doubt, ask for the name of the manufacturer … of the products you’re sourcing and take the initiative to understand if there is or has been an issue with [them],” Smith said.
For everyone:
• Get smart. “Education is the most important thing all of us can do,” McKeough asserted. “We must continue to improve our knowledge of import sourcing and the complexities involved with that necessary step in our business model.”
• Admit when something goes wrong. In the event that a recall is necessary, supplier and distributor must stand together in solidarity and guide the recall. This will reassure both end-user and consumers, while helping maintain brand equity in the long run, Smith said.
—by Christen Gruebel
Questions? Comments? Post your thoughts in the space provided below or contact the author directly at [email protected]. We welcome your feedback.
