Global supply chain offers unlimited opportunities for achieving economies of scale. However, recent problems related to the global supply chain highlight some important issues regarding the limitations of the global supply chain.
The US Consumer Product Safety Commission in 2008, stated that recalls have increased drastically in the 2000s. Also, a vast majority of the recalled products were made in China. However, the product quality had fallen due to several reasons.
- Trade policies of the U.S.A
- Poor regulatory regimes in China
- Squeezing of suppliers by big box retailers
- Poor supply chain management
- Focus on branding at the expense of quality by companies
Beamish and Bapuji(2008) studied the US toy industry. This industry in 2006 has an estimated annual sales of 22.3 billion US dollars. Over the years, these toy companies shifted their production overseas. They focused on product design, marketing, research and development and other high value activities in the domestic range.
Studying the industry, it was found that toy recalls that took place due to design flaws have not only been higher, but increased at a faster rate. There were also recalls due to manufacturing flaws.
For example, several industry experts agreed with the findings that the single largest cause of recalls, deaths and injuries involving toys was small parts. This clearly means it is a design flaw, not a manufacturing error. Despite this, some toy company executives and the public blamed China for virtually all the flaws in toy recalls.
This has increased calls for evidence based management and research which could make an impact on practice by providing evidence.
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