Big Toy Recall Underscores Business Danger of Outsourcing

As the New York Times and other outlets have reported, Mattel is recalling something like a million toys because a Chinese contract manufacturer had used lead-based paints. That follows other companies' recalls of products made in China: food, toothpaste, tires, and another set of toys. What is particularly disturbing for business, as well as for consumers, is that Mattel had a supposedly sophisticated set of safety checks and was dealing with a vendor it had used for 15 years.

For years experts have said to outsource non-core processes and functions because that way companies could focus on where they could make the most difference to their businesses. However, how do you define a core competency? If you can't ensure that suppliers will do what you need, perhaps manufacturing is something that should be core. If you can't operate without certain types of information technology, maybe keeping at least the capability of doing that work should be core. I can understand wanting to save money, but the savings aren't as astronomical as many think when the risk is something like this.