POINTE-CLAIRE, QC, Canada -- When news broke that some retail chains were selling toy fashion accessories containing high levels of cadmium, it was looking as if it might be a case of déjà vu all over again. The story, part of an Associated Press investigative piece, prompted swift responses from the Consumer Products Safety Commission and Asian toy manufacturers.
For the bulk vending industry, it seemed like a replay of the lead crisis of 2004, when the CPSC coordinated the recall of vendible metal jewelry sold by four leading toy importers. The recall nearly six years ago targeted about 150 million pieces that might have had lead levels that posed a health risk that had to be removed from vending machines. The National Bulk Vendors Association pointed out that lead is found only in die-cast jewelry. Read more about the 2004 bulk vending recall.
But this year's toxic toy scare, involving cadmium, never seemed to materialize into an industry crisis, in large part because of the vigilance of the bulk vending suppliers. The majority of suppliers had already been testing for hazardous materials on surface areas of their products to comply with federal regulations. There are currently no federal guidelines for cadmium and therefore product substrates have not generally been tested for the metal element, which melts at a relatively low temperature (600°F). However, once guidelines are put into place, suppliers who VT spoke to say they see no reason why they can’t be accommodated.
Adam Dorfman, president of Allstar Vending, based here, is one of those suppliers who is ahead of the regulation curve.
“We’re already running tests for cadmium on the surface area as well as phthalates, lead and other potentially hazardous materials,” he told VT. “We test according to whatever protocols they put into place.”
These tests, which are mostly done by independent labs on site in Chinese factories, are not cheap and add to product costs. In most retail products, the added cost is not as noticeable. Testing costs are simply added onto retail prices to the consumer in relatively small increments. In bulk vending, however, with its fixed price points and low profit margins, testing costs come directly out of the bottom line.
Tests are generally not priced on a sliding scale according to product size. The cost to test a 1.1" capsuled item that vends for 50¢ could cost as much as a large product retailing for $50. According to Dorfman, testing as a percentage of product cost can differ even within the bulk industry between 1.1" (25¢ and 50¢) and 2" products (75¢ or $1).
Testing expenses can also vary according product composition. “We had one product that consisted of five separate pieces, and each component had to be examined,” Dorfman observed. “Those costs add up quickly and you practically need a degree in science to understand what’s required. In one toy alone, we ran tests for microbial contamination, efficacy of preservatives, ingredient review and toxicological risk assessment.”
This kind of analysis could have a constraining impact on what types of products are offered. At least one supply company admitted it has passed on some products because testing would add too much to the cost.
"Testing is one of those hidden costs, such as shipping, that has to be taken into account when suppliers select their merchandise from overseas factories," Dorfman pointed out.
Lab costs are the additional administrative expenses that accrue through time and effort on the part of the supplier. These recordkeeping expenses can add up quickly for a supplier that cycles through many different vendible lines.
However, Dorfman sees an upside to comprehensive product testing. With virtually every major bulk vending supplier complying with federal safety guidelines, the whole industry reaps the benefits. Operators can purchase goods with the confidence that they are getting products that meet or exceed government standards -- and can back up that claim with documentation from accredited labs in the U.S. or overseas. In a marketplace where supply chains can be murky, the Allstar president said, this is a big plus.
“Testing adds definite value to bulk products,” he explained. “Not only does it provide assurances that items are safe, but it also adds credibility to the entire industry.”
This kind of product integrity is no small thing, particularly in the corporate world where the assurances provided by testing could open doors to big accounts like fast food franchises and nationwide retail chains. Being part of a closely monitored and regulated industry provides location management with a greater understanding of bulk vending's supply chain structure.
If there is a silver lining to the testing quandary for operators and suppliers, it is the continued mainstreaming of the industry by meeting the challenges that are part and parcel of a complex global supply network.
Allstar Vending was founded in 1989. It is a major bulk vending operator in Canada, and began manufacturing its own equipment and products a decade ago. The company serves operators throughout North America, maintaining shipping facilities on the East and West Coasts of the U.S. to speed service and minimize customer expense.