International outsourcing and the ongoing problems they have had with that. or How have they have fixed it and why it is now successful
International outsourcing to China. Quality control in Chinese suppliers. Economic recovery. Cost decrease. Brand estabilishment. improving our quality systems
We strive to sustain our consumers’ trust by employing strict standards that extend from product design to manufacturing and distribution. In 2008, we brought together our most experienced quality experts to review existing standards and began development of an enhanced Quality Management System (QMS) that will standardize the product integrity process in our owned/operated, as well as our vendor facilities. We designed the QMS to build upon the International
Organization for Standardization (ISO) 9000 system. An external quality systems consultant validated our QMS and Mattel also sought to benchmark our practices and learn from others with leading quality controls systems.

Taking an Integrated Approach
As we reviewed existing standards, we saw an opportunity to integrate the various requirements contained in our product quality and safety procedures with our
Global Manufacturing Principles (GMP), and combined them into one comprehensive system. The new system will streamline our processes, allowing us to audit our owned/operated and vendor factories against our standards for quality and safety at the same time we monitor for social and environmental compliance. Implementation of our QMS is underway at our owned/operated and vendor factories. New vendors will also be evaluated against the QMS standards.
In addition to our internal efforts, the Toy Safety
Certification Program (TSCP) is being developed in the
U.S. by the Toy Industry Association (TIA) and the
American National Standards Institute (ANSI). The goal of the TSCP is to create a sustainable system to certify that toys sold in the U.S. market meet the requirements of the 2008 Consumer Product Safety Improvement Act, as well as any other relevant U.S. regulations and standards that apply to children’s products. Representatives from Mattel’s Product Integrity organization served on the working groups that helped develop the program.

The proposed program is designed to certify that a toy:
1. Meets safety requirements for toy design as attested to by a qualified safety professional
2. Has test reports validating that the toy meets U.S. safety standards
3. Is manufactured in a factory with ISO-9000 certification specifically for toy manufacturing or is subject to more frequent testing

Mattel supports the development of such an industry-wide initiative and has committed the expertise of several of our product integrity executives to participate in the multi-stakeholder dialogue that has produced the program’s core features. The process has included a broad range of skills and perspectives from representatives of the toy industry, NGOs and professional standard-setting groups. We are hopeful that the final TSCP program will be a useful platform for managing compliance with the new regulatory requirements, as well as existing
U.S. Requirements.

Carefully Selecting Materials for Use in Toys
At Mattel, the integrity, safety and quality of our toys are a fundamental part of our commitment to parents who have placed their trust in us for decades— and we continue to earn their trust every day.
Our toys are designed to meet or exceed applicable safety standards wherever they are sold.
Materials in a toy must serve a variety of purposes—such as to make plastic soft and pliable to prevent it frombecoming brittle over time and breaking into sharp edges, or to make plastic hard and durable under stress.
As part of our safety processes, we continually evaluate and carefully select materials and components to create engaging toys that are durable and safe, all while working to comply with each country’s unique regulations.

In some cases, consumers have raised questions about specific materials, such as Bisphenol-A (BPA), which is typically found in polycarbonate plastic, an expensive material that is mainly utilized for its shatterproof properties in specific safety-related applications, such as bike helmets and eye glasses. Mattel uses polycarbonate sparingly in a few specific toy lines and only when utilizing a substitute material would compromise the safety or quality requirements of the product. Recent focus of the debate surrounding BPA has been its use in food contact items, not products where it serves in a safety capacity. To address this concern, in January 2009 we updated our requirements, and notified our licensees to use non BPA-containing materials in food storage and food contact products, such as infant feeding items, plates and cups.

Polyvinylchloride, or PVC, is used primarily to make construction materials and packaging. The toy industry is a small user of PVC compared to other industries like the construction and automotive manufacturing industries.
The use of PVC in consumer products has been deemed safe for more than 50 years by the U.S. Consumer
Products Safety Commission (CPSC), Health Canada and their counterparts in Europe, and we continue to use
PVC in our products and packaging.

We recognize some in the environmental community have concerns about the lifecycle of PVC, including the by-products created during its manufacture and disposal.
As part of our product development efforts, Mattel has started to explore various aspects of a product’s lifecycle.
Given the importance of PVC as a component in some of our toys, we stay abreast of new developments and potential PVC replacements. That said, the use of new materials in our products is contingent upon those materials meeting or exceeding our safety and performance standards, and we have not yet identified a replacement material for PVC that meets those standards.

Harmonizing Global Regulations
Mattel supports governmental efforts to strengthen and unify laws related to toy safety, and strives to work closely with elected officials and regulators. While the toy industry has always been highly regulated, during the past few years a large number of new laws and regulations have been adopted or proposed in countries around the world. To further address legislation around toy safety, in 2008 Mattel appointed a Chief Regulatory Officer, who works in collaboration with our Government Affairs team to promote the development of effective regulations.
Because many laws across various countries often have differing requirements, greater harmonization of regulations would allow companies both large and small to meet a single set of product standards. Mattel believes that harmonization of requirements would also benefit countries that currently do not have regulations in place, or that have insufficient regulations associated with product safety.

Mattel is actively working on these efforts with others in the industry and believes that harmonization carries with it many benefits, including improved product safety on a global basis, the reduction of expensive duplicative testing, cost savings in producing and testing to a single standard, better enforcement of standards, international cooperation among national product safety authorities and facilitating the flow of goods between markets.
Mattel continues its commitment to address this challenge and fully supports harmonization efforts through work on initiatives with various organizations, including the International Council of Toy Industries (ICTI), the
International Organization for Standardization (ISO), the
American Society for Testing and Materials (ASTM) and the European Committee for Standardization (CEN).

Our Response to the 2007 Voluntary
Product Recalls
In 2007, we became aware that some portions of the paint on a small number of our toys tested positive for lead in amounts above the applicable standards for consumer products. As a result, from August to October
2007, we voluntarily recalled approximately 4.2 million toys worldwide.
The recalls were the result of violations of Mattel’s protocols by a small number of vendors. In each case, the vendor either failed to test paint received from suppliers before using it on our products, or used an unauthorized subcontractor and failed to provide the subcontractor with properly tested paint. After testing revealed the first incident, we promptly ceased shipments of all products for approximately two weeks while we instituted a comprehensive program to test samples of all products leaving our own plants and vendor facilities in China.
Our Supply .
In the instances where testing revealed lead levels above regulatory limits, we launched a detailed investigation to determine the cause and scope of the problem. We also initiated a number of procedural changes to address the issues brought to light by the recalls.
• Supplier certification requirements: All vendors are required to purchase paints and other surface coating materials from Mattel certified suppliers. Surface coating suppliers are certified only after satisfying
Mattel’s standards for production, testing and recordkeeping.
After certification, Mattel periodically audits certified suppliers. In the rare instances when a necessary coating cannot be supplied by a certified source, additional testing requirements and oversight procedures apply.

Testing requirements: We increased requirements for testing for lead in paint and surface coatings. Before it is used on Mattel products, each batch of paint, including paint from certified suppliers, must be tested for compliance with lead standards. Samples of paint are tested during production and finished toys are also tested during the initial production run and periodically throughout production thereafter. Because the required testing destroys the toy for future use, we are unable to test every single product. However, we believe that this sampling frequency, coupled with the raw material testing and in-process testing, ensures an extremely high degree of confidence in the compliance of our toys.
• Inspections: We have increased the number of inspections of vendors and subcontractors for compliance with our quality and safety procedures, including applicable standards for lead in surface coatings.