Monday, April 22, 2013

The dangerous business chain

Another example is coming to light of the ridiculously long chains of supply that companies are getting themselves involved with, and getting themselves into trouble as a result.

I've posted about this before, the extra costs it causes, the middle men profiting, the loss of control over supplies.

The latest one involves Target, who are in legal trouble as a result of a chain.

Department stores Myers and David Jones have exclusive rights to sell Estee Lauder's MAC cosmetics, but Target decided to bring in grey imports of the range, advertising it at up to 40% discount.  Now they're being sued by Estee Lauder for selling counterfeit MAC product.

Target's problem is the chain - they don't know where the product came from.

The Sydney Morning Herald reports that Target has launched its own investigation to uncover where its supply of MAC was sourced...worryingly revealing that it cannot be sure who the eventual manufacturer was for the alleged counterfeit make-up.

Instead of dealing direct they stupidly got involved in a vague chain. They went to an Australian importer. The importer went to a wholesaler in Arizon. They went to a tiny one-woman company in Texas, called Mudd Puppy. The trail goes cold there and they're taking legal action against Mudd Puppy to reveal their source of supply.

Ridiculous. Stupid. Unprofessional.

We're not talking about a corner store here, a small family business.

Target is part of Wesfarmers, a huge conglomerate that dominates our retail economy. There are over 300 Target stores which turn over nearly $4 billion a year. You'd think they'd be able to source stock without setting up an unnecessary, costly and dangerous chain.

Why do so many companies do it?

Sydney Morning Herald has the details here

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