14 August 2007

What does a product recall cost?

At the beginning of July, I noted that finding a low cost supplier in a far off country wasn't guaranteed to keep input costs low. Maintaining quality over long supply chains is difficult.

Mattel is a business that is learning the lesson the hard way. Here the problem is not simply the cost of the recalls themselves, but also the damage to Mattel's brand - reputational risk is often talked about, but the real costs are very difficult to estimate, particularly since it can take a long period for the full impact to emerge.

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