Do only China factories produce bad quality?
How often have I heard, “China factories produce bad quality” or “I didn’t get what I wanted from China”. I think we have all heard this expressed, or know someone who has first-hand experience.
But is this just China? Haven’t these type of challenges existed before in other sourcing markets, even if you go back 20 years you may have heard the same comment about a neighbouring state or even town? The fact is it is easy to blame someone or something else when it becomes difficult, or you don’t get what you think you ordered.
To help reduce barriers that some people have when sourcing, below are some of the reasons why you may have experienced challenges sourcing in China or other markets;
- Not understanding what your customer’s requirements are and poorly relaying relevant information to the vendor that ensures product compliance, AQL level and packaging to name a few, are incorporated into the price.
- Technical information about the product is inadequate and the service level required was not clearly stated for the vendor to provide an accurate cost. The buyer is expected to communicate all product requirements before final pricing and order placement, else substitution on service and agreed materials may occur to maintain the vendors margin.
- Focusing on price rather than the cost to achieve margin or market standard can be problematic. The buyer must understand the product cost break-down if too expensive work out alternatives to increase margin. Over negotiation can result in inferior raw material or service substitution.
- Select the right vendor for the right job. If you want to buy a boat go to a boat shop, not a bicycle shop, same applies to suppliers. Find a vendor that specialises in the product category you require and the raw material type, example: steel and aluminium are different, the manufacturing method for consumer products using these materials are different. If the factory only makes steel they will not have the buying power for aluminium, and they will subcontract the manufacturing as they won’t have the machinery. If you need, 300 units don’t order them from a factory making for Walmart, allocate the production to a factory setup for low volume. Understand your product to select the right vendor.
- Audit the company manufacturing the final product and any downstream partners producing components with your branding or where a compliance risk is high. Conducting due diligence to reduce risk is critical to understand capability, commitment and mutually benefiting relationships. If you use a 3rd party inspection organisation, you will only know the vendor’s ability, not their commitment.
- Not having the time to conduct due-diligence checks on a new vendor or follow a standardised process due to lead-time and customer delivery constraints creates quality and delivery risk.
- First production orders to new suppliers must be a trial order. Buyer and seller must understand mutual business limitations and requirements ensuring right levels of quality and service to be achieved.
- Understand how many parties are involved. If you use an agent in the US, they may use a trading company in ShangHai, that ShangHai may use a trading company in WuHan who uses a factory in HuangShi, who then subcontract to several regional facilities. You must know the chain of custody to ensure controls are in place but also understand how this affects the price and quality. In the above example, the regional subcontract factories will get squeezed on price and quality may suffer, know the chain or custody know the risk.
- Ensure you have a quality control process in place to manage the product life cycle through prototype to delivery and subsequent repeats, ensure you have a seal approval sample of the final approved pre-production product that will be used by the quality inspector. Whoever is doing the final AQL inspection must have one of the approval samples to verify the bulk production.
- Visually sight shipping samples in the head office separate to the final inspection process where the product, vendor or process is new.
While following all these steps will not 100% safeguard you against quality challenges they will certainly reduce the risk. Carefully manage new relationships, both parties cannot assume the other party will know what is required, communication and listening are vital to success.
Below are two examples of past failures I have experienced, in the first case if I had followed steps above delivery would have being fulfilled and in the second example steps above were followed, but delivery was interrupted due to an inadequate process.
Glass Loin Award – We had a short lead-time to produce 200 glass loins for a customer’s award gala. The product type was new to the business, and the lead-time was short, my team sourced a Chinese vendor whose price was competitive, my team evaluated the vendor and believed them capable. Through the process the development sample was incorrect, visiting the vendor we learned the vendor only does glass blowing and as the loin was moulded the vendor subcontracted to a friend’s factory that no one had seen and was 1000km from the current vendor’s location making production a quality control a risk. Finally, the development sample was approved, but it took several tries resulting in only a few days for production. Ultimately there was only one mould, making the delivery schedule tight. The factory duplicated the mould with no approval to achieve the deadline, the result being a defective product not the same as the approved sample and due to the cooling process not followed due to time bubbles had formed in the glass.
The result was order cancellation, and a large customer was let down on a small order that wasn’t delivered for a time-critical moment because the right factory wasn’t sourced corretly.
Indigo CMT garments – This was an order for 25,000 units across five styles manufactured in Vietnam around 1999 in a factory in HoChiMinh City. The fabric was purchased by the company I managed, and the HCMC factory provided CMT and the import export service. Lead-time was reduced due to delayed fabric, but the vendor committed to achieving the shipment schedule. Through the production it was evident not enough production lines were producing the product making the delivery schedule tight, the vendor confirmed workers would work over time to achieve the deadline. Upon final inspection 80% of goods were packed in cartons as per our requirement, however at the time, we did not have an AQL plan for carton selection. The factory prepared cartons for our quality inspectors to inspect; subsequently, the inspection passed.
As the order was CMT and the fabric was imported, customs performed a random goods inspection on this consignment. Upon review customs found 30% of the shipment where the fabric had been cut but not sew thus the goods been shipped did not match the customs declaration. The consignment was subsequently quarantined pending review. After three weeks of negotiation with customs and paying a non-judicial penalty of US$5000 the goods were released allowing the vendor to complete the goods in the quarantine area and airfreight at factories expense to achieve customer delivery.
The result, we still met the customers’ delivery expectations, but the journey in doing so was not an easy one. The factory had previously been used and was known, they over committed and finally did not deliver product to our expectation, but ultimately the failing was ours due to the substandard inspection process.
All sourcing market present a risk not just China, ensure due diligance is in place and the risk will be reduced.
Are you getting what you ordered from your Sourcing? Regardless of your supply method, are you getting a compliant, fit for market product at a value price?
ID Global Concepts has learnt from past mistakes and years of experience. We can help you gain value from your sourcing either through consultancy or management contract.
If you would like to learn more or wish to discuss other supply chain opportunities, please email us at firstname.lastname@example.org.