Mattel Outsourcing Essay

1041 words - 4 pages

Mattel outsources manufacturing to Indonesia, Malaysia, Thailand, Mexico, Ireland, and China. Most outsourcing is done through China accounting for 65% of Mattel’s total production. Mattel owns one plant in the USA, and Ireland with the reaming in Mexico and Asian countries. Mattel uses these in-house manufacturing plants for about half of their production which is relatively high in comparison to Hasbro which uses nearly no in-house production. The half that is produced by non-Mattel owned plants are required to operate under the Vendors Operation Asia (VOA) in order to keep Mattel’s standards in production and relationships that they offer in the Asian government. This is to keep up with the ever-changing toy market that has a life cycle of about one to two-year or less. Mattel carries functional and innovative products that they offer mainly to the USA at 36%, Europe at 29%, and then Asia at 24% of the toy market with Asia and Latin America on an incline. Mattel has the highest percentage of the global toy market at 6%. There is a trend of consumers “getting older younger” as technology develops. The demand for high tech toys and video games is growing.

In the recent years Mattel has experienced issues with product recalls resulting from manufactures in China using lead based paint, and also product design failures. The relationships that Mattel has to these manufactures oversees have become a problem as innovative products have such a fluctuating demand that the suppliers are not being used fully and are not content. Mattel places a large need for lower prices brought on by warehouse stores becoming the major suppliers. Labor costs are also on the rise in China which is conflicting with Mattel’s demand for low-priced manufacturing. The lack in quality control is a sign an issue of the operations in oversea manufacturing. Mattel does have in place Mattel the Global Manufacturing Principles (GMP) that is monitored by the Independent Monitoring Council (MIMCO) which they use to oversee the production and did increase quality control after the lead based paint issue, but it is still an ongoing issue with oversea production in a less developed county. The lead based paint issue was of a MIMICO approved supplier and Mattel cut back one-third of its suppliers after the event. There is still an issue knowing and controlling the sub-contracts from oversea producers. Mattel needs to solve issues about their production supply chain to create a more efficient supply chain.
Solution:

In order to solve issues about outsourcing and control of the production supply chain Mattel should carry out the following strategy. The functional products (Barbie, Monopoly, Hot Wheels, Fishser-Price toys, ect) should stay outsourced to the pre-existing Mattel owned manufacturing plants because these products have a fairly constant demand and will continue to use the plants to full capacity. The Innovative products however should be more localized to the demand...

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