Last week, Wal-Mart, one of the world’s most influential global retailers indicated that it will set new quality standards for it suppliers amid the recent food safety contamination incidents occurring in China.  I for one applaud this effort from Wal-Mart.

A news report picked-up by many media outlets quotes Mike Duke, the vice-chairmen of Wal-Mart Stores Inc. international division, as indicating that the retailer has been working on this heightened quality initiative for over three years, but the increasing number of incidents concerning the quality or safety of Chinese made products have made transparency in the supply chain “even more important”. The story further outlines that Wal-Mart has had to deal with the effects of previous incidents in 2007 relative to pet food and pet food treats, the scandal involving the recall of toys manufactured for Mattel Inc., and a recent incident involving faulty safety pegs within infant cribs, that were also manufactured in China.  The thrust of these revised standards is to insure that suppliers to Wal-Mart take complete responsibility for quality up and down the supply chain.

Taking full-responsibility for the transparency of quality throughout the supply chain is no easy task, especially for firms that are new to the global sourcing experience.  The need for clearly identifying potential supply risks, insuring early-warning mechanisms and mitigation strategies will occupy executives of all types.  But as many a large and smaller supplier has learned in the past, ignoring a Wal-Mart directive can prove to be very costly. Further, Wal-Mart bound products have a tremendous presence within and across China’s existing supply chains, and this directive, when enforced, will surely also have far-reaching implications.

I have been in the process of designing a workshop that dives into this rather timely topic of supply chain risk management, and specifically how companies can overcome challenges impeding the development of an effective supply chain risk management strategy, as well developing a framework to address management and mitigation of these risks.  The specifics to workshop scheduling and availability will be made available over the coming weeks. If you or your company has specific interest, you can send an email to scminfo@theferrarigroup.com . Please indicate your name, company, and email address and we will contact you directly with the specifics when they become available.

Bob Ferrari