Supply Chain Pressure

The New York Times has an article about the lack of safety monitoring for some heart-related health care products. But this isn't an isolated problem. From the New Jersey importer that had to recall 450,000 light truck tires to some of the recent toy recalls, companies are starting to learn the difficulties of managing an extended supply chain or design chain. The concept says that companies have an interconnecting chain of suppliers and distributors and sellers that all affect product manufacturing, inventory, and distribution.

As companies have taken the standard business advice and focused on their "core competencies," they've extended these chains, having more come from outside sources. But rarely to the companies have any control over their partners. For them it's like going to a big mall and getting this from here, that from there. However, such a hands-off approach isn't going to continue to work. Particularly in an industry that directly affects people's well-being and safety, someone has to be able to guarantee the integrity of what the purchaser gets. That generally comes down to the name on the label.

It may be that many companies are going to have to take a leaf out of Wal-Mart's playbook and get more involved with their partners. As most businesses don't have the big box retailer's resources, it seems that there is a market opportunity here: consultancies that can take the specifications of clients and travel to their business partners, checking on the components they produce. It would probably have to be an organization with global scope, because manufacturing is geographically diverse. But a large management or technology consulting firm might consider this as a useful type of service offering, and one that is bound to get more popular as the number of recalls because of bad ingredients or components rise.