Distribution Business Articles

Its beginning to be almost as regular as a clock or the setting of the sun, but there is yet another recall of Chinese manufactured product that are poisoned with lead.

This time Toys-R-Us is recalling 27,000 sets of crayons and finger paints.  The wooden case that holds the units is painted with lead contaminated paint and some of the water colors also have lead in the paint. 

What's Next Baby Food?

1010 WINS - On-Air, Online, On Demand - Toys 'R' Us Recalls Wooden Coloring Cases

Regardless of the good times or bad times, many small businesses usually make poor money management decisions due to inadequate professional experience. After awhile the owners become overwhelmed with debts that they loses their direction in building the business.

Soon, these same owners realized that their debt problems and the prospect of bankruptcy are holding back the potential growth of their business. Especially when the current business cycle strategically favors their business.

One of those debt problems that affect most small businesses is the problem of "near-max out" credit cards with high interest rates. What does one do when the revenue is down and the credit card bills are high? Emotional pressure become prevalent especially when the collectors are calling everyday

To free your business of burdensome debt, without filing bankruptcy, I recommend the consummate Debt Relief solution: credit card consolidation.

What does one get when they get a "Credit Card Consolidation" solution?

(1) Debit payments are consolidated;

(2) Your Monthly payments are lowered;

(3) Interest rates are reduced;

(4) Late fees are waived

(5) Collection calls are eliminated

In August 2007, the U.S. Consumer Product Safety Commission and Mattel are recalling even more magnetic toys. The Barbie and Tanner Play sets contains powerful magnets that can detach and be swallowed by children. The danger comes if more than one magnet is swallowed, they can attract each other and cause serious intestinal issues, including perforation or blockage, which can be fatal.   Mattel recently received three reports of the magnets coming loose, but no injuries have occurred.

It has been estimated over 680,000 of these play sets were sold at toy stores nationwide from May 2006 to August 2007 for about $16 each.  

More information can be found by contacting Mattel at (888) 597-6597 anytime or visit the firm's Web site ( service.mattel.com) for instructions on receiving a replacement toy.

Wal-Mart pulled a number of dog treats from the shelves last month and subjected them to their own in house testing.

Those tests have come back and confirmed the presence of Melamine the agent thought to have killed or sickened possibly thousands of pets during the pet food recall earlier this year.

The treats were chicken jerky strips sold under the brand name Bestro's.

The products were sold under the name

• Chicken Jerky Strips - by Import-Pingyang Co
• Chicken Jerky - by Shanghai Bestro Trading

The pet foods caused liver failure in multiple types of cats and dogs (an official count was never reached).  This wasn't just a case of dog food gone bad causing pets to suffer colon cleanse symptoms, but actually caused organ failure.

In early August 2007, Mattel performed a nationwide recall on their Fisher-Price Toys and Pixar Car toy "Sarge".  They discovered both product lines contained Lead Paint. 

Fyi- Lead is toxic if ingested by young children and can cause adverse health effects.

While 1.5 million of the Fisher-Price product line representing various Nickelodeon and Sesame Street characters were sold, 253,000 of the Pixar's "Sarge" car were also sold. For many consumers returning from summer vacation, they might find that they are working to filter out recalled toys before they back up their Orlando rental home and head to the airport.  The speed and numbers of recalls lately have been fast and large and Mattel's is one of the largest next to the dog food recalls from this spring.

If you have any of the named products, please contact Mattel.

More information can be found at this link that leads to a specific Mattel's web site [http://service.mattel.com].

Sometimes it seems like you can't hardly get a product cut out of a master pack with box cutters before someone is issuing a recall these days.

Beside laptop batteries being recall, it was only a matter of time the batteries for the mobile phone would be recalled.

On the 14th of August 2007, Nokia issued a 'product advisory' (the company does not call it a recall) for the BL-5C battery manufactured by Matsushita Battery Industrial (BEI). The Matsushita Battery Industrial revealed faulty manufactured batteries that could explode after short circuit. 

It has been estimated that there are over 45 million BL-5C batteries in the hands of users.

What does one do when the batteries for the laptop and the mobile phone do not work? 

The question is your phone battery working ok?

Since 2006, laptop batteries have been recalled.  In August 2006: Dell recalled over 4 million notebook batteries, after a number of instances where the batteries, made by Sony, overheated or caught fire.  Most of the defective notebooks were sold in the US, however some 1 million faulty batteries could be found elsewhere in the world.

Following Dell's battery recall, Apple Computer also recalled 1.8 million Sony notebook computer batteries. Similar to Dell, most of the notebooks were sold in the United States. However some 700,000 units could be found overseas.

Between September and October 2006: Matsushita (Panasonic), Toshiba ,  IBM/Lenovo, Hitachi and Fujitsu recalled a minimum of 1,000,000 batteries.

In February 2007: Lenovo and Sanyo recall 200,000 batteries.

None of the recall announcements went very well in the last year.  Some of the recalls were triggered very publicly with YouTube videos of burning laptops at conventions and airports.  A recall does not trigger a joyous event like engagement announcements for your daughter's wedding.

They inspire fear and anger and reactionary behavior.  That doesn't mean that the message should be slowed down or that any portion of the truth should be held back.  Consumers need to know that they can trust your company again after a recall and that requires coming clean truthfully and completely right away.

A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability for corporate negligence (which can cause costly legal penalties) and to improve or avoid damage to publicity. Recalls are costly to a company because they often entail replacing the recalled product or paying for damages caused in use, albeit possibly less costly than indirect cost following damages to brand name and reduced trust in the manufacturer.

Lately, there has a rash of product recalls from many industries.  Products like batteries, food, toys, tires and so forth, are being recalled .   There are many areas that have not been impacted and that go under reported as well from landscape lighting to desk chairs to large portions of the food supply that didn't harm anyone yesterday, last month or last year. It only takes a few 'bad apples' however to cause a problem and quality initiatives have possibly never been more important for distributors to manage than they are now. You can't necessarily assume that the manufacturer is going to cover a product, build it right, or back it up during a recall. You can not assume that the brand on a product is being managed well by the company that licensed that brand to the manufacturer.

So, the questions are what actions are we planning to take to stop this onslaught of faulty products? 

Do you trust the government to do the right thing? By Your Company?  By Your Customers?  By Your Family?

We are going to dedicate a segment of our articles towards recall news.  Recalls and returns for that matter or a major expense in time and money for anyone that works in any form of distribution.  Recalls, especially those covering products sourced in China are getting a great deal of attention, and rightly so.

The industry needs to police itself and clean things up or face a consumer and multi-government backlash.  This will mean higher costs if businesses proceed with a business as usual mentality, but fortunately there are also many new technologies and tools that can enable companies to manage their products and product life cycles much more effectively and efficiently.

So whether you are selling Air Jordans retro shoes or dog food or tooth paste, automobile tires or DVDs, there are better ways to do business, help your customers and grow sales without destroying the market through slash and burn tactics that result in short term savings, but end up costing the entire industry millions and possibly putting your company out of business.

Dell Computer announced that it will restate earnings following recommendations by auditors that have investigated weaknesses in the company's internal control procedures.  Executives apparently had the flexibility to make accounting adjustments so as to achieve short term quarterly sales results.   

Dell said it expected to conclude that control deficiencies identified by auditors "constituted material weaknesses in the company's internal control over financial reporting."

The company added that executives, who it did not name, transferred excess accruals from one liability account to another and used excess balances "to offset unrelated expenses in later periods."

Dell restates earning by up to $150M

Many people were surprised to hear that the findings were not more severe.  Following other high profile financial scandals there was an expectation on the street that the problems at Dell would prove to be much worse than they appear to be.  There was a sense that the company would have to prepare for something akin to Mesothelioma treatments and instead only needed to take a few doses of cough syrup and antibiotics for a few days. In fact their shares on the Nasdaq rose 2.6 percent on Thursday while most of the financial markets around the world were still in a state of free fall as a result of problems in the mortgage industry.

Toshiba had to issue another recall this week on laptop batteries of Satellite models (A100, A105, and the Tecra A7).  The batteries are manufactured by Sony, which has been in an almost constant state of recall since this time last year when a laptop caught fire on video at a conference and another laptop later self incinerated at LAX.

Sony is not having a good year.  They have been plagued with recalls, they've had to cut the prices on the PS3, which came out late and was over shadowed first by the early release of the XBOX 360 and then the super popular Wii from Nintendo.  More recalls and price cuts will not bode well for Sony's bottom line.  Plus, the summer is almost over and the advertising plans for Christmas are almost cooked.  Sony has not been able to get its mix right all year and that will probably push retailers to go with what works - Wii and XBOX 360 unless Sony places heavy incentives on the PS3. 

If Sony doesn't get their act together, they are going to have to carry out an executive retreat somewhere secluded, where they can knock some heads around without any distractions.  I'd recommend a Pigeon Forge cabin rental package. Maybe the simple life will help the executive team pull it together and stop worrying about saving face and start worrying about doing better business. The Sony reputation has probably suffered more in the last 12 months than it has in its entire existence.

Note.  This article was written on a Satellite P105, which is not yet impacted by these recalls.

Toshiba Recalls More Laptop Batteries -- Battery Recall -- InformationWeek

Silicon Valley received a serious wake-up call yesterday. 

Gregory L. Reyes, former CEO of Brocade Communications Systems Inc. of San Jose, faces the possibility of 20 years in prison and a $5-million fine for rewarding key employees with options to buy company stock at artificially low prices.

Ex-CEO guilty in backdating of options - Los Angeles Times

The conviction, a conviction on 10 counts, is making all of the Silicon Valley companies that have pushed options inconceivably backdated those options rethink their safety zone.  Dozens of companies including Apple Computer have been caught up in snared in backdating trouble.

The conviction of the CEO of Brocade is the wake-up call to all of these companies and their CEOs and CFOs that juries could take away their freedom and send them to jail for what they look at as a simple way to strategically place funds within the budgets of their corporate accounts.

Backdating options is equivalent to cooking the books and it's a crime.  It was not a crime with teeth until the jury brought home a conviction.  Now it's a serious crime and CEOs will be much much more careful in their defense.  The problem is the damage is already done and they can take back what they've been doing for years or done in the past.

Corporations can hang their hats on their auditors and blame their auditors for failing to find wrongdoing in their backdating scenarios.  Anyone that wants the Enron case knows that auditors are fallible and when they fail it's the companies that pay the price not the auditors.  There is no scapegoating to an audit firm when you break the law.

If nothing else, prisons around the country might see a higher quality of coffee mugs showing up behind bars as CEO's emigrating to jail take some of those great personalized cups into that notorious big house with lots of bed rooms replete with built in bathrooms and no swimming pools anywhere.

It's likely that a number of people that are under investigation are going to look at this recent conviction and realize that the consequences are serious and they're going to start talking to prosecutors in trying to establish a deal.  That's good for the people at lower levels in the company and very bad for the CEOs of companies that are being targeted.

If there were any doubts about how plugged in China is into the United States economy, those doubts were likely to raise today.  The news is not full of talk about fallout from the shakeup in the mortgage and real estate industry in the United States for several days.  The news also been full of product recalls, bad products, defective products, and food that's not fit for consumption being distributed from China all around the world.

There's also a growing buzz about the lack of speech freedom and freedom of the press in China with hints of the pollution in the air and the water in China are also starting to bubble to the surface as we approach the 2008 Olympics.

Instead of rising to the occasion and promising to fix or work on the problems that are plaguing China, the government stepped up this week and threatened the United States with an economic attack of nuclear proportions that could potentially sabotage both countries economies.  China holds approximately a half $1 trillion in US debt in the form of T-bills.

China is essentially threatening to foreclose on that debt and send the United States economy into a hyperinflationary period, the likes of which the world hasn't seen since before the Great Depression.  Since the United States is a prime outlet for the goods to China produces and hence one of the primary contributors to providing employment for Chinese workers, such a move would be akin to cutting off their own head in order to create a mortal will own for the United States which they must perceive as an enemy as opposed to a customer and partner in the world.

China doesn't have a central government like many of the worlds great nations, and so any of the diatribes that come out of the country come in the form of a multi-headed factionalized government.  This makes all the statements that come from China less than credible and yet they are always very possible.  Any of the factions could trigger any of the actions that are threatened if the other heads of Government did not step in to thwart them.

 

This is the dangerous part of the Chinese government.  Most governments especially democracies are set up to maintain the status quo and not perform any actions in last the entire government gets together and makes those actions happen.  In China it works that way part of the time, the part of the time any segment of the government can take action if the other segments of Government did not stop them from taking action.

 

With that in mind countries around the world will have to take an extra careful and diligent approach to doing business in dealing with China in the future.  They have demonstrated their immaturity in the face of tough times in shown that they cannot be counted on to clean up their own house.  Anyone that relies on products or food or sustenance or supplies from that house needs to have a redundant backup plan or else they might suffer from a collapse of that house.

 

This immaturity will likely benefit several areas of the world and extreme fashion.  South Korea stands to benefit the most as they have attempted to keep up with Chinese manufacturing capabilities and growth.  As long as North Korea could be held at bay, South Korea has the ability to show their reliability to the rest of the world and step in where China is in capable of living up to its own potential.  If North Korea could reconcile with South Korea under a South Korean leadership, South Korea might even overtake China in the short term.

 

However it is India that contains the most potential to step in and become the world's new leader in manufacturing and supplies to the world.  Like China, India has vast resources of people ready to step in and do the work that Chinese workers in factories are unable or unwilling to do in a safe and reliable way.  India has the technology and the intellectual capital to pull this off.  They've been working for several years to grow their infrastructure and to build out their economic capital such that they could exercise their power in this way.  China's recent threats will start to drive the world towards investing in India to become initially a backup supplier to the world and potentially the primary supplier to the world.

 

In the meantime China will continue to rise, but their potential as just been capped by their own actions, their failure to respond, and their political immaturity.