Information technology executives will have to manage
another layer of supply chain complexity if the Bush
Administration’s product inspection proposals announced
November 6 are enacted. That includes allowing the federal
government greater visibility into the practices of American
manufacturers that farm out factory work to subcontractors
abroad. The proposals also would be expected to add compliance
requirements to companies’ product quality standards.
MORE ON CIO.com
How ConAgra’s Pot Pie Recall
Bakes In Hard Lessons for Supply Chain Management
Five Best Practices for
Supply Chain Software to
Smooth the Recall Road
How to Use Disasters to Fine
Tune Your Supply Chain
What You Should Do About
Tainted Goods from China and Other Supply Chain
It all adds up to management of more data, for longer
periods of time, and the ability to get to that data faster in
the case of a product recall, says Joe Barkai, a practice
director at Manufacturing Insights.
After a rash of high-profile product recalls of toys,
toothpaste and other tainted goods imported from China and
other countries, President George W. Bush today unveiled a plan
to bolster federal product safety inspections abroad. The plan,
some of which requires Congressional approval and some which
the Administration can enact by itself, will impact IT leaders
who manage or work with global supply chain systems.
“For many years, we have relied on a strategy based on
identifying unsafe products at the border. The problem is that
the growing volume of products coming into our country makes
this approach increasingly unreliable,” Bush said in
The new Import Safety Action Plan calls for
identifying and targeting high-risk points in the global
supply chain for products made for export to the United
States; increasing the presence of American product
inspectors overseas; creating real-time data exchanges among
exporters and federal agencies about products approved or
rejected for shipment; and empowering the Food and Drug
Administration to impose a mandatory recall of products
deemed dangerous. While consumer safety advocates and some
in Congress have urged more funding for product inspections,
Bush did not address funding in his announcement.
The changes, if implemented as described, would increase the
federal government’s involvement in the overseas legs of
global supply chains which companies now must engineer to get
goods sourced, assembled and delivered around the globe.
The effect would be to force manufacturers to give their
suppliers more time for production to factor in the need for
increased testing, said Simon Jacobson, senior research analyst
at AMR Research in Boston.
“If the administration succeeds in increasing testing,
there’s an implication for lead times you need to give
your suppliers. More testing takes more time,” Jacobson said.
He added that for American manufacturers working with factories
in China, “companies will say, if you want to be our supplier,
here’s what to do. CIOs will want to monitor what those
companies are doing and catch defects before products get
Barkai said that Bush’s proposal is more about
after-the-fact enforcement than about preventing product
defects. “Companies will need more visibility into the internal
inspection processes of their foreign manufacturers. It might
mean US companies don’t do business with overseas
companies that can’t or won’t provide that
visibility,” said Barkai, whose consulting firm, like CIO is
owned by International Data Group.
He added that: “Maybe this will result in companies sourcing
no longer on lowest cost, but on what those suppliers can provide
in terms of product testing and reliable data about product
testing. Lowest cost suppliers may actually cost more, if you
consider the lifetime cost of your product. Recalls are
Michael Goldberg contributed to this report.