Promotional Products Industry: Balancing Risk and Reward
But every situation could result in a personal civil penalty of $100,000 per violation. Well, that's getting serious, isn't it? Unless, of course, there is a death involved with a product failure. Then the fines go to $250,000 per incident for individuals and $500,000 per incident for companies. In short, choosing to sell a product that does not have a readily available certificate of conformity means the question becomes, "Is it worth that risk?" Risk has a way of finding its way all the way down the supply chain—from supplier, to distributor, to end-user. And in the eyes of the CPSC, everyone shares in that risk.
Now Let's Consider the Potential Rewards
When it comes to that risk-reward decision-making process, risk, of course, is balanced against the potential reward. For the sales rep, of course the reward of revenue (and commission) from the sale is the end game. Unfortunately, the CPSC has a thought about that, too.
Should the commission choose to seek criminal penalties, they can also include forfeiture of the assets gained from the sale of a product that failed. Huge sale, huge commission, new boat for a sales rep? Yes, that's an asset gained from the sale of a product that failed. As far as the CPSC is concerned, any asset purchased as a result of profit from the sale of a product that failed is fair game.
As you might imagine, between fines, costs of recalls, PR nightmares, and the ill will generated among present and future customers, it's the kind of thing many companies (and individual reps) could not survive.
How to Mitigate Risk
Even though you might be working with limited resources, there are a number of ways to mitigate risk. It starts with the transparency of the supplier's supply chain and the importance of understanding that getting a good price is not mutually exclusive to getting a safe and compliant product. Asking the tough questions of a supplier, making sure they can prove they have the right answers is just good sourcing practice. And that conversation should not come separately from the discussion of price and service. I'd be remiss not to mention that if you really want to be confident that you've mitigated your risks, one sure way (though, not the only way) is to buy from a QCA-accredited supplier. No matter how it's done, it is about doing what's right for the customer, even more than being the right way to do business.
Jeff is executive director of the Quality Certification Alliance (QCA). Prior to that, he was responsible for developing safe and compliant brand merchandise for Michelin. He has worked with brands in publishing, consumer products, broadcasting and film for over 30 years. Follow Jeff on Twitter, and QCA on Facebook.