Stores Magazine - December 2007 - (Page 50)

NUTS AND BOLTS / SUPPLY CHAIN The smartest retailers are ports an estimated $15 billion to those who will not only figure $20 billion in goods from China out how to assure safety and each year. quality, but how to turn it into “Right now, our model is ‘We a competitive advantage Sell for Less’,” Scott told a recent conference at the Center for Retailing Excellence at the University of correct specs when the item is produced Arkansas. “If we have to sell products in one factory,” Lal says. “But if the for more because our competitors are screws are coming from one place and sourcing more efficiently and effectively the casing or other components are from for the same quality of product, our another then there may be a problem. It’s model doesn’t work. the price you pay for globalization.” “We cannot be at a price disadvanIn testimony before the House Approtage,” Scott said. “Lest anyone forgets, priations Committee on Agriculture, 20 percent of Wal-Mart customers don’t Grocery Manufacturers of America have a checking account and they do not president and CEO Cal Dooley introhave the economic luxury of making a duced a “Four Pillars” action plan debroader social statement.” signed, in part, to bolster the FDA’s relatively meager resources in the face of Quality control escalating imports and to promote an However, no one disputes the need for integrated approach to food safety that greater quality control by manufacturcalls for due diligence from every segers and their overseas subcontractors. ment of the industry. That plan would “Quality control is the manufacturer’s consist of: responsibility,” Lal says. “But quality • A mandatory foreign supplier quality control is a statistical analysis. If, for assurance program some reason, you believe the quality of • A voluntary qualified importer food a product is not as good as it should be, safety program then the number of items you sample for • Bolstering the capabilities of foreign governments to ensure food safety quality control increases. If you find that practices 99 percent of products are what you ex• Building up the capacity of the FDA pect, then the amount of effort put into so as to make it the “gold standard” sampling is reduced. It just makes busifor food safety regulations ness sense.” This is no easy task, however, as proModified activism curement systems have changed dramat“The general resistance to inspections ically in recent years. “It’s easy to make and regulations that has been the DNA sure something is manufactured to the 50 STORES / DECEMBER 2007 of the food industry is doing a big about-face,” Rand says. “Companies are rediscovering the value of government regulation to make sure we have plausible cover. It’s a return to modified activism.” Improved quality control is the central factor, he says. “Consumers are not insisting that everything be high-end, but they need minimum assurances of product safety. If you can’t offer an assurance of minimum quality, what’s the value of a brand? “We’re at a point where another 30 cents off the price is not worth it if the quality of the goods is so low that they become dangerous,” Rand says. Jones agrees. “In my corporate days with electronics and appliances, we used to look at products in terms of defects-per-thousand,” he says. “As such, two defects per thousand were O.K. But when it comes to things like toys, toothpaste, pet food or seafood, it’s no longer acceptable.” The smartest retailers, Rand says, “are those who will not only figure out how to assure safety and quality, but how to turn it into a competitive advantage.” Still, the overall situation calls out for shared culpability, according to Jones. “Mattel is being beat up because they went full bore into Chinese production and are now paying the price,” he says, alluding to the recent recall of toys containing lead paint or shoddy design. “But they are handling it the right way by standing up and saying that they are ultimately responsible.” American consumers are also part of the problem, he says. “In Europe, people tend to buy something of quality that will last longer. I hate to say it, but we are victims of our own choices. We are a throwaway society that has taken disposability to an unheard-of level.” StORES Len Lewis is a veteran retail industry journalist and commentator and the editorial director of Lewis Communications. WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of Stores Magazine - December 2007

STORES - December 2007 Contents Executive Editor's Page President's Page Holiday Shopping Extravagance What Shoppers Think 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Niche Marketing Eight Predictions for 2008 Concept2Watch Merchandising Strategy Sourcing E-Commerce Supply Chain Warehouse Management Software Contactless Payments Marketing Marketing Online Loeb Retail Letter ARTS Update Point of View NRF News Retail Industry Calendar Last Laugh

Stores Magazine - December 2007

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