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HOW TO HELP OUR PLANET > BAN all "Made in China" from your life !!
Best Advices to Westerners still tempted to manufacture in China
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PiJo:
Author's page : http://www.globalsources.com/NEWS/SIC-china-manufacturing-and-how-to-prevent-quality-problems.HTM
China manufacturing and how to prevent quality problems
November 14, 2016
By Dan Harris
Our China lawyers have been getting an uptick in calls from foreign companies help on quality control problems with their China manufacturers. We usually tell them there is little we can do to help with the quality problem that necessitated their call, but there is a lot we can do to help prevent such problems in the future.
In a long ago but still highly relevant WSJ blog post, China auto industry expert Michael Dunne discussed how quality fade occurs when initial production meets all applicable standards, but later production level deliveries are defective. The defects are in hidden components not easily discovered by surface inspections. Over time, the problem gets worse, hence the description “fade.” Though the quality of China manufacturing has risen considerably since Dunne wrote his blog post more than four years ago, the likelihood of quality fade has risen as well. As China makes increasingly more complex products, their ability to engage and get away with quality fade increases as well. To put it bluntly, it is easier to hide a reduction in material quality in a massive and complex product than it is in a pair of socks. As the goods made in China become more complex, the risk of hidden defects only increases.
What can you do to minimize your China quality risks ?
• You can never relent in constantly monitoring quality. Most foreign companies with whom we work assume that Chinese manufacturers will improve over time. The whole premise of quality fade/quality creep is that the opposite is true. The first few deliveries are likely to be the best delivery. Without active intervention, you should expect each subsequent delivery to be worse than the previous. Since this result is counter-intuitive, you need to be constantly on guard. Active intervention is costly and mentally exhausting. Most foreign buyers eventually tire of the process. However, such active involvement is the price of purchasing from Chinese manufacturers.
• Do not take current success as an indicator of continued good performance. Many Chinese companies will perform well for several years, causing the foreign buyer to drop its guard. After the guard is down, a sudden drop in quality will occur, causing extreme damage. The fact that you have not had a problem with your China manufacturer for many years means only so much in predicting future quality.
• Do not expect that a desire for a good commercial reputation will act to control the behavior of your Chinese manufacturer. Most manufacturers in the OEM world operate under shockingly thin margins and are in a constant struggle to survive. Many are too busy focusing on day-to-day survival to think about the long term. The stronger state owned enterprises are protected by the state. A bad reputation with foreign entities is not important to their long-term survival
• Do not assume you know where problems will occur. It is not uncommon for a Chinese manufacturer to make the primary and expensive component just fine and then ruin it with non-standard and defective accessories. This happens often in the home furnishings sector: an otherwise well made sink set is ruined with substandard faucet fittings.
Again though, what is the solution? The main point I want to make is that there IS a solution. The solution works as follows:
1. Choose your China manufacturer wisely. Conduct due diligence before you buy.
2. Make all of your purchases from China under a well-drafted contract enforceable in China. Purchases under informal purchase orders do not work for China. For more on China OEM Agreements, check out the following:
• China OEM Agreements. Ten Things To Consider.
• China Supplier Agreements. With Apologies To Kansas..
• Drafting A China Manufacturing Agreement. Watching The Sausage Get Made.
• China OEM Manufacturing Agreements. What Should Go In Your Term Sheet?
3. Your contract with your Chinese manufacturer must provide for a mechanism that allows you to exercise constant control over the quality of your product. Liability for defect must be made clear and it must fall hard on the Chinese side. If possible, no defective product should ever be permitted to leave the Chinese factory. If defective product is discovered outside of China, the Chinese side must be absolutely liable for dealing with the problem. The standard procedure (in China, anyway) for dealing with defects through a discount on future purchases must not be used.
4. You must actually follow through and constantly monitor the quality of your product. The best contract with the best procedures is no good if you do not implement the procedures outlined in it.
I am often asked if China product quality is getting any better. I usually give the standard lawyer answer: yes and no. Chinese manufacturers are not doing a better job on their own at maintaining quality. But China’s legal system and foreign company knowledge about how to deal with Chinese manufacturers have progressed to the point where Chinese manufacturers are more often being forced to operate in a reasonably acceptable manner.
And just in case you think the above is too harsh, I strongly urge that you read Chabuduo! Close enough. How China became the land of disastrous corner-cutting.
Dan Harris is founder of the Harris Bricken law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.
You might also like (expanded links below this article) :
Partners to keep close in China product sourcing & importing
Getting China manufacturers to pay certification costs
Three Days of Take Aways from the Smart China Sourcing Summit
What most China sourcing agents do not want you to know
How to conduct a product quality inspection in a China factory (Checklist)
Preventing product defects starts with negotiating with suppliers
6 crucial steps for sourcing a good factory in China
6 ways Chinese suppliers can cheat importers
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Author's page : http://www.globalsources.com/NEWS/SIC-partners-to-keep-close-in-china-product-sourcing-importing.htm
Partners to keep close in China product sourcing & importing
January 26, 2016
by Li Zhang
In the world of China product sourcing and importing, partner companies create solid links in your supply chain.
Here is a list of vital partner companies to keep handy.
Express Company (Courier)
This is that important partner in charge of toting packages from point A to point B. Packages of samples that are “hot off the presses”, for the long leap from China to your office. And of course sending China sample packages from your office to China.
Most Americans use FedEx or UPS. But even on using these large companies, you want to have contacts within your local office who understand your business and expectations. When the express receive a phone call from you to come to your office, they know what to expect, who to speak to and the sample package send-off should be seamless. If you are scheduling a pickup; it should not always being a hassle describing China and giving the Chinese city names to the courier contact.
Keep in mind that whenever timing is not urgent and you want to send a sample to China, USPS is an economic alternative to UPS and FedEx.
Likewise, remind your Chinese supplier, that if timing is not urgent, EMS (a wing of China Post) is an economic option.
Testing company
This is the company that you send samples to; to certify the product, check for CPSIA, lead-free..any and all forms of safety testing. You probably have a contact for this in your home country.
Product safety testing in the promotional product industry is vital and every year becoming more a heavier focus…rightfully so!
I recommend having a contact office in China to keep close by as well. Put this China office or lab in touch with your supplier. By doing this, the testing process becomes more efficient. You can step out of the way and product can go directly from the supplier to the lab. The renown testing labs have offices throughout China.
3rd Party QC company
If you are ordering substantial quantity from China it is hard to justify relying ONLY on your supplier for 3rd party inspections. This is inviting trouble. There are reputable and efficient 3rd party quality inspection companies throughout China. Many of these companies are Western-operated making for easy communication.
Contact me, Ms. Li Zhang and I will inform you the companies we use and you can tell them I sent ya!
Freight Forwarder
This important player takes the mass production merchandise from point A to point B… It would take entire blog posts to explain the necessity of having a good relationship with your freight forwarder.
You want a freight forwarder who is going to care about your business. Especially in the promotional product industry, you want a freight forward who is going to understand your delivery time expectations.
Too many freight forwarders do not care and treat everything as another project, without grasping the special characteristics of each job.
Lastly, it’s important to find a freight forwarder who understands your overall expectations. Avoid reinventing the wheel and having to waste time, with every project having to describe again, where to deliver, your expected price terms, where is pickup, etc… Eventually you want a trusted freight forwarder to fill in the blanks themselves.
Customs agent
If you have a stellar freight forwarder, this company may be the least necessary for you to keep close by in your contact grasp. But if your freight forwarder is slow on the uptick, it’s a good idea for your to have someone in the customs’ department of your home country.
In the United States, for example, this customs contact is able to receive samples and accurately inform you the ruling for the import duty rate. You can research this information yourself; but then it’s open for error.
Also if you plan on developing a new product line, it’s good to have the duty information down from the early stages of your business.
Li Zhang has worked in international manufacturing and exporting since 2003. She has served global brands such as Bayer, Coca Cola and Warner Bros. Her background is in design and engineering. Li is a native of Jiangsu Province and currently finds herself back and forth between Suzhou, China and the USA. Contact Li at info@jlstyle.com, or find her penning manufacturing thoughts at her blog.
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Getting China manufacturers to pay certification costs
January 04, 2017
By Renaud Anjoran
If you want to reduce your legal risks, you might need to pay many thousands of dollars in laboratory tests and product certifications for each type of product you buy from China… For each order and re-order.
If you purchase many products in relatively small quantity, this is probably unaffordable. That’s a real challenge for most small importers.
What do they do? they ask for certificates from their suppliers, they send an inspector to run tests using the factory’s equipment (unfortunately a minority of factories are properly equipped), they might do just 1 or 2 tests in a laboratory to avoid the major risks, and they hope for the best…
Now, what do large importing companies do? And the publically-listed, high-profile brands/retailers? Certainly they pay for all the laboratory tests, right?
Wrong (in most instances).
The big boys’ strategy is generally to push testing costs up the supply chain. In other words, to have the manufacturers and their sub-suppliers to pay for testing and certification, but in a way that can be traced and verified.
Having suppliers paying for testing components and products will certainly be reflected in the FOB price, one might object. Well, not entirely, for two reasons.
First, it is a better use of money, since the same component batch can be tested once and then be sold to different customers who accept that test report.
Second, Chinese suppliers will look for a “good deal” from testing laboratories. They will push for using Chinese labs rather than Bureau Veritas, Intertek, or other multinationals.
Are all the tests done properly? Not really. But the buyers are aware of this and accept more or less risk based on the product category… They will be more lenient for a plastic garden chair than they would for a barbecue grill or a toy.
By the way, many buyers also try to devise a reasonable and optimized testing plan. I touched on this before.
Renaud Anjoran has been managing his quality assurance agency (Sofeast Ltd) since 2006. In addition, a passion for improving the way people work has pushed him to launch a consultancy to improve factories and a web application to manage the purchasing process. He writes advice for importers on qualityinspection.org.
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Three Days of Take Aways from the Smart China Sourcing Summit
Posted: April 19, 2016
By Peter Zapf
My take-aways from Global Sources Smart China Sourcing Summit. Please feel free to add yours in the comments.
Day 1:
Manuel Becvar (ImportDojo): When I was working for a large trading company, we spent 0.7% of revenues on Quality Control (including inspections). I estimate Amazon sellers could very well be spending 10% of product sourcing costs on Quality Control (including inspections). [PZ Note: A 1 man-day inspection costing $300 on a $3,000 order would work out to 10%.]
Ben Wong (Global Sources): Bringing a new electronic product to market incurred $179K of total cost for an initial run of 5,000 units. This included:
(a) $54K of product development costs: design costs ($7.5K), hand made samples ($5.2K), mold costs ($11K), Safety & Compliance costs ($14K), crowdfunding Marketing ($7K)
(b) $79K for manufacturing 5,000 units and
(c) $46K for fulfillment of the crowdfunding campaign.
Christ Thomas (Hibermate): It takes 2 – 3 times longer to get a new product to market than you expect. And for product development, finding an intermediary (with product knowledge) that can help with design and DFM (design for manufacturing) is helping me a lot.
Ash Monga (IMEX Sourcing): There are certainly advantages for FBA sellers to work with smaller factories rather than the mega-factories. With these factories, you’ll be a bigger fish in a smaller pond. You’ll be more likely to get and keep the factories attention and less likely to have your order bumped because of another customer.
Michael Bellamy (PassageMaker): When I ask a supplier for a non-compete (or any other important terms and conditions), I try to review it verbally with the boss and as many of his colleagues in attendance as possible. The potential loss of face among his colleagues prevents violations better than any threat of legal adjudication.
Supplier Panel (they were totally awesome): We get too many inquiries that say “send us your catalog” or “send us your price list”. If you want meaningful responses from us, just send a detailed inquiry, with detailed product requirements that makes it look like you’ve thought about the product, you understand what you need, and you understand your market’s needs.
Gary Huang (80/20 Sourcing): When you are at the exhibitors booth, ask the supplier which countries they export to. If they mainly export to the Middle East and Africa, you may get a different quality level than you expect. If they export to Japan or Korea, you may get great quality at somewhat higher prices. It’s hard to bring a factory geared toward lower price and quality to higher quality. Their sourcing, labor skill, QC, etc., isn’t set up for this. Ask about price last, after you’ve ascertained issues like quality level. [PZ: Asking about their main export markets is a good tip for online sourcing as well.]
Greg Mercer (JungleScout): When you see a product you like on the trade show floor, look it up on Amazon to get its BSR. You can then goto JungleScout.com/estimator to get estimated sales volume. Helps you understand product demand when you see products you like on the floor.
Day 2:
Patrick Muir (SellerLabs): I was sourcing a product for 25 cents. I asked the supplier to prep the product and I thought they were going to double the price. They incrased the price to 26 cents per unit. It’s faster and cheaper to have products preped by the supplier and ship direct to FBA than other options. I stopped shipping to my house and started shipping direct to FBA when my wife got tired of all the inventory in our house.
Ash Monga (IMEX Sourcing): In a lot of cases, trading companies or agents provide value that you may not get going factory direct. This can include an English speaking account manager, better QC processes, credit terms, or product accessories the manufacturer may not be making.
Michael Bellamy (PassageMaker): Consider a term and condition in your purchase order for the supplier to pay for the inspection if the inspection fails. [PZ: You may then spend more time ensuring the QC requirements are written clearly and fairly, as the supplier won’t want to pay for a failed inspection that is really quite okay after all – it only failed because the QC specifications were poorly written.]
Sam Boyd (GuidedImports): My supplier qualification checklist includes: does the supplier attend exhibitions or fairs (suggests they are more serious about growing their business), will they allow quality inspection visits and audits (if they don’t, they might be a trading company that is trying to hide the real manufacturer), will they provide you a business bank account to wire to (rather than a personal account, in which the company may say they didn’t receive a payment).
Sam Boyd (GuidedImports): One logistics option is to use local China freight forwarders. They tend to have better rates than international freight forwarders. You can also ask this local forwarder to consolidate samples from multiple factories and ship them to you. You can use Upwork to find these freight forwarders. And you can use Transferwise to pay them in RMB.
Anthony Chen (Flexport): Freight forwarder quotes should have all cost line items broken out. Most quotes do not include customs duties, so don’t forget to factor this into your overall costs. If you have high value goods that may gets stolen (think tablets), use black shrink wrap to wrap the pallets – it costs the same as clear shrink wrap.
Habib Rkha (Asia Quality Focus): (a) Include product specifications with your quotation. The more detailed the product specifications, the less likely there will be mis-understandings between the buyer and the supplier (b) For regulatory compliance, own the process and own the results. That way you can be sure the certifications are real. Do these through your inspection company or other partner rather than through the factory. (c) Pepper grinder example required US$722 in testing fees to check for FDA regulatory compliance. (d) Stuffed bear example required $474 in testing fees to check for ASTM regulatory compliance. (e) Regulatory compliance is not always expensive.
Day 3:
Anthony Lee (ZonBlast): Sales velocity is an import component of ranking in Amazon search results. For new products, instead of treating historical sales as 0, Amazon treats them as null values. That means it’s easier to get ranking out of the gate, and if you are going to do PPC, start on day 1 to get the sales velocity and subsequent ranking boost that PPC provides.
Danny McMillan (Amazon Specialist): A couple PPC strategies including running multiple auto campaigns for the same products, but with higher bids for each campaign. Interesting to watch which words each campaign delivers results for.
Will Tjernlund (AMZHelp): If you have several products but are running into working capital problems then (a) put your money into your highest margin/return items and (b) sell your lowest margin/return business line to raise cash. Demand is higher than supply for Amazon businesses, and Amazon businesses are currently selling for 2 to 3 times annual profits. [PZ: I have a new nick-name for Will - “The Information Machine Gun”. What do you think?]
Paul Johnson (Seller Labs): It’s okay to lose money on Amazon PPC, Facebook Ads, Youtube ads, etc. The advertising will drive improved sales velocity, which will improve organic sales, which will make up for losses on advertising. Your mileage may vary, but worth thinking about.
Michael Michelini (Host, Global From Asia Podcast): A lot of Amazon businesses are incorporating in Hong Kong. Makes the most sense for digital nomads and/or Amazon businesses of US$500K annual revenues or more. Benefits include lower corporate profit taxes (16.5%) and multicurrency account online banking with low/no TT fees and instant transfers in many cases.
More:
Anthony Lee (ZonBlast): Showed some very interesting optimization examples they'd done with customers. Moved from a product image to a lifestyle-like product image resulted in double the click throughs and 50% increase in conversion rate, generating three times as many sales. A title optimization example that resulted in 5x sales increase.
Will Tjernlund (AMZHelp): One Amazon strategy is to find a brand whose products are being sold by multiple sellers, not following MAP, and with poor product descriptions. Call up brand owner and tell them you'll represent their brand on Amazon with better listings, resulting in better sales and better brand presence. But, if they don't manage their supply chain well, and some of their distributors or retail customers sell on Amazon below MAP, you'll break MAP, sell out your inventory, and end the relationship with them. Do this as a vendor, buying their inventory, rather than a sales partner on commission.
Peter Zapf (Global Sources): In order to mitigate quality risk, get a pre-shipment inspection done. Established Inspection companies, like Asia Quality Focus, charge US$300 per man day. Best if you can also define your product specifications and quality requirements with the purchase order. Factories often source parts and components from other suppliers, and may not be able to control the quality. If you share your quality requirements as part of the purchase order, the supplier may tell you he can't meet those requirements even before you even pay your 30% deposit. It's good to learn and know this as early as possible and move on to another factory.
Anthony Lee (ZonBlast): Do something creative in your review follow-up sequence. He's had luck with including an instructional or thank-you video as part of his follow-up series. If the link is to something stored on Amazon S3, it will get through Amazons filters. He's seen 29% and 45% review conversion rates with tactics like this, which are far above the typical 3% rates.
Food: If you know someone who joined, ask them about the food. Hint: it was good!
A big shout out to the speakers and attendees. Really appreciate everyone's generous support!
Feedback from the April Summit
We had a great group of attendees, great speakers, great networking, and a lot of learning. Here are some of the posts about the summit from the Smart China Sourcing Facebook group.
Next Summit is 17 - 19 October, 2016
Want to join the next Smart China Sourcing Summit in October? We'll be holding it 17 - 19 October 2016 at the AsiaWorld Expo in Hong Kong, co-located with the Global Sources Mobile Electronics and Gifts & Home shows. We haven't finalized the agenda, but you can reserve a ticket now at the super early bird price. To get a feel for what we'll be doing, you can see the description and agenda of the recently concluded April 2016 Summit.
How to Keep Updated
Keep up with Smart China Sourcing News by signing up for our email updates on the top right of this page. You can also join our Facebook Group, but Facebook only displays very selective posts in your news feed, so you may not get all our messages.
Hong Kong-based Peter Zapf is Chief Information Officer at Global Sources Ltd.
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Author's page : http://www.globalsources.com/NEWS/SIC-What-most-China-sourcing-agents-do-not-want-you-to-know.html
What most China sourcing agents do not want you to know
March 26, 2012
by Mike Bellamy
To test my theory that the vast majority of vendors encountered by foreign buyers are actually just middlemen or brokers rather than actual manufacturers, I decided to attend a trade show in Mainland China. I brought with me an electronic fuel pump used in the quality intensive US automotive marketplace. This product combines electric and gasoline - one would assume anybody willing to quote on such a dangerous and technically demanding product would have a lot of production experience. I stood in the main hall of the trade show and held up a sample of the fuel pump and said in English "Can anybody here make this item?" In the blink of an eye I had 15 interested parties. All claimed "mei wenti" ("no problem") and boasted of their factory direct connections and great pricing. If only it was this simple to find a supplier.
After interviewing all of them, it became obvious that these were people (both Western and Chinese) with only loose connections and no industry experience. They were essentially just middlemen. One was even a cab driver who carried the brochures of all the factories in the area. He would ask the foreign visitor what product they were looking for then magically pull out a brochure from the truck. He then would invent a cousin that has ownership in the given factory thus making up a story about why he could help broker a deal for the buyer to ensure good price and quality. Some naive foreign buyers actual did business with him only to learn that their price was inflated 15% by the back door deal worked out by the cab driver and the factory. Worse off, the factory was just randomly picked based on the recommendation of the cab driver and it turned out this supplier had no proper QC system and as a result most of the parts delivered had quality problems. Today, the amount of money involved in the China Sourcing game is so large that when visiting China just about anybody (bar tenders, hotel staff, exchange students, tour guides, translators, friend of friends and even cab drivers) will offer to be your source in hopes of making a quick buck. BUYER BEWARE!
Definition of middleman
There are good and bad middlemen. For the sake of this book the bad type of middleman is an intermediary who provides little value in the supply chain, perhaps only playing match maker but building in a margin. On the surface, in order to have more perceived value, they may claim an intimate relationship with the factory, but if they do not allow you to communicate directly with the factory, then you are dealing with a middleman.
If the intermediary is providing legitimate value (for example logistics, project management or quality inspection) then perhaps there is a place for them in the supply chain. But if the intermediary is not transparent in where their margin lies, then most likely the actual value for their inspection or project management service has been greatly inflated. Before you sign up with an intermediary simply ask that they separate the costs for their "service" from the "production costs". If they fight this, then you know their actual value to you is minimal.
Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. He is also the author of "The Essential Reference Guide to China Sourcing" and founder of PassageMaker Sourcing Solutions.
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Author's page : http://www.globalsources.com/NEWS/SIC-How-to-conduct-a-product-quality-inspection-in-a-China-factory.htm
How to conduct a product quality inspection in a China factory (Checklist)
August 12, 2013
Download a free and ready-to-use product inspection checklist (Word document).
This comprehensive template has been created exclusively for Global Sources' buyers and is not available anywhere else.
by Renaud Anjoran
If you let a Chinese supplier ship the goods out without inspecting them, and if you discover quality problems after delivery in your country, is there anything you can do? For most importers, the reply is no.
- Chances are, by that time you have already paid the supplier in full. And there is little hope of getting any of your cash back. You might be offered a discount on a future order, but do you still want to work with such a supplier?
- What can you do with the defective products? If you sell them in a distribution channel that does not make exceptions to its quality standard, you might as well have to take a trip to the local dump.
- Reproducing the same goods in another factory might take a long time. In the meantime, what do you tell your customers (especially if they are the ones who found out about these quality issues)?
In a nutshell, the quality inspector is the last defense of the customer!
If the size of your orders does not justify the cost of at least one inspection before shipment, you need to mitigate your risks in any way you can - for example, by always working with the same reliable manufacturer, and by keeping some stock in your warehouse at all time (in case a shipment needs to be scrapped).
2. At what stage should you check production quality ?
It depends on the major risks you identify:
- If the main risk is that your supplier purchases substandard materials (or components), it is wise to check them as soon as they are delivered (and before production starts).
- If you know that a particular process step is the most likely cause of failure, you should check the way that step is conducted.
- If you are not sure about what type of problem might appear in production, checking the first batch of finished products is a good way to catch problems before they become widespread - and to ensure corrective actions are taken.
- If you feel relatively confident about the factory's quality standard, but you still want an inspection of the quantity, product quality and functionality, and packing, a final random inspection (a few days before shipment) is the right choice. I do not advise to wait until the end of production if you are dealing with an untested or unstable supplier.
The two most common types of inspections are:
1. The final random inspection, because it is the only time when samples can be picked at random and when most of the bulk is packed.
2. The inspection of the first finished products, to catch issues as early as possible.
But when do the first finished products appear?
It really depends on the organization of production:
- In a traditional batch and queue production system, your products are kept in an unfinished process during most of the cycle, often for several weeks. They go all together through one operation, then they wait, then they go through another one, and so on. Depending on the type of processes your order needs to go through, the first finished pieces might appear after three weeks, and the whole order might be packed a few days later!
- In a system where products flow more easily from one process step to the next, some products are completed much earlier. An inspection of the first finished products is well suited for this situation, while the previous case calls for a final random inspection only.
3. Checking production status
3.1 If production is under way
You might want to ask these questions:
- How many lines are working on these products?
- How many workers per line, and total number of workers on these products?
- When were the last materials / components delivered?
- Has bulk production started? When?
- When did/will bulk production start to run at full speed?
- How many pieces are processed every day?
- When does the factory estimate that 50 percent of the quantity will be completed?
- When does the factory estimate that 100 percent of the quantity will be fully packed?
- When does the factory estimate that the order will be shipped out?
- Will the full quantity be shipped out?
3.2 If production is in an advanced stage
If you come for a final inspection, you need to put pressure on the manufacturer to present all the products (or at least 80 percent of them) fully packed. Above a certain order quantity, this is the only way for you to count the pieces. And this is important because you want to pick samples from the entire production run - you do not want 30 percent of the goods to be hidden in a back room!
Important note: if some products are packed and others are waiting to be packed, make sure to pick both unpacked and packed samples - ideally in the same proportions as the total batch.
4. Checking product and packing specifications
4.1 Preparing the checklist
Now is the time to make use of the product specification sheet that, hopefully, you have prepared before production started.
Before inspection, you simply need to paste the checkpoints and requirements (from the specification sheet) into the columns on the left of the inspection template. And, during the inspection, you enter findings on the right (in the white column).
This information coming from the product specification sheet...
...is pasted this way in the product inspection report:
4.2 Notes about the template
- Sampling, by default, is 5 pieces in the template you can download at the top of this article. But you should feel free to adjust this number. If all the products get off the same mold, you might want to measure only 1 piece. If there is more variation due to a hand-making process, or if a checkpoint is particularly important, do not hesitate to increase the sample size.
- This template is applicable for checking one type of product. If there are several items, you will need to make adjustments in the format.
4.3 The procedure to follow
- The number of cartons to pick up should be at least the square root of the total number of cartons in the order. Example: at least 8 cartons if there is a total of 50 cartons.
- The inspector must select export cartons from different parts of the pile -- from the top, from the bottom, from the sides, and from the center.
- Once the cartons are opened, start by taking a few pieces (it depends on the sampling you chose for the product and packing inspection). Make sure you take these pieces from the top, middle, and bottom of the cartons.
- Keep the cartons near you, if possible. You will need to draw more pieces for the next part of the inspection.
5. Checking visual defects
5.1 Checking more samples
After checking a few cartons and a few pieces in detail, you need to check more products visually. You will look for aesthetic defects (for example, stains, scratches, poor alignment), but you should also run quick tests (for example, plugging in an electrical product and switching it on/off, or stretching the stitching of a garment).
You should only select a few "quick tests" to check on all samples. Actually, you will need to make a trade off. Conducting many tests (or a few time-consuming tests) on the whole sample size might take you a lot of time. But if you do not run any test on the whole sample size, you might miss some quality issues.
5.2 Following industry-standard statistical rules
I strongly advise to draw a representative sample by following industry-standard statistical rules (MIL-STD 105E or commercial equivalents ANSI/ASQC Z1.4, ISO2859).
These rules will give you two pieces of information:
- How many samples you should pick up from cartons and check visually.
- What the limits in the number of defects (beyond which the inspection is failed) are.
5.3 How many samples to check this way?
For simplicity, let us say you follow the same settings as 90 percent of importers of consumer goods:
- Inspection level II in normal severity
- AQL limits of 0 for critical defects, 2.5% for major defects, and 4.0% for minor defects.
There are two statistical charts that you need to be familiar with:
1. First table: Sample size code letters
Let us assume that the order quantity is comprised between 3,201 pieces and 10,000 pieces. The code letter is "L".
2. Second table: Single sampling plans for level II inspection (normal severity)
Your code letter is "L", so you will have to draw 200 pieces randomly from the total lot size.
And here are the limits -- the products are accepted if NOT A SINGLE critical defect AND NO MORE than 10 major defects AND NO MORE than 14 minor defects are found.
Read more about these concepts:
What is an inspection level in ISO 2859?
What is the "AQL", and when it is applicable?
6. Checking the loading of a container
Like in part 4, you will need to define your requirements before conducting the inspection. Here is some information you should try to specify:
6.1 The products to ship
- Conformity to the buyer's requirements (did the factory swap the products before shipment?)
- Total quantity
6.2 The packing
- Number of cartons to be loaded
- Number of pieces per carton
- Numbering of cartons
- Pallets size, weight, and material, if applicable
- Number of cartons per pallet, if applicable
6.3 Condition of the container(s)
- Containers are in good condition, inside and outside. They should not have any holes, strong smell or humidity
- A seal is affixed to close each container, with a unique number
6.4 The loading process
- No carton should fall on the ground or be damaged when the factory loads the cartons
- If a loading plan was given to the manufacturer, is it respected?
- If not, are the heaviest and strongest cartons loaded at the bottom?
Renaud Anjoran is the founder of Sofeast Quality Control and helps importers to improve and secure their product quality in China. He writes advice for importers on the Quality Inspection blog. He lives full time in Shenzhen, China. You can contact him at info@sofeast.com.
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Author's page : http://www.globalsources.com/NEWS/SIC-preventing-product-defects-starts-negotiating-suppliers.HTM
Preventing product defects starts with negotiating with suppliers
June 02, 2017
By Samantha Lim
Imagine you’re manufacturing portable DVD players at a factory in Shenzhen, China. Like most importers, you decide to inspect the order before shipping to check for any quality issues. QC inspection reveals some problems that are easy to address, such as errors in the printed user manual for your product.
But you also find more serious issues that will be more difficult to remedy. Many of the DVD players are malfunctioning because the factory used substandard components. Your supplier tells you the components you want will increase your costs. And shipping is now delayed indefinitely, as the factory will need weeks to replace the parts and repackage the order.
Wouldn’t it be great if you could’ve prevented these quality defects from occurring in the first place?
Your best defense against quality defects is prevention (related: How Experienced Importers Limit Product Defects in 3 Stages [eBook]). And the most crucial time to prevent product defects is when beginning your sourcing journey, as you sift through potential suppliers. Let’s look at the various steps you can take at the start of your relationship with a new supplier to limit your chances of finding unacceptable quality defects later.
How to prevent product defects when negotiating with suppliers
Nearly every importer has had to deal with product defects in their shipments at one time or another. Defects are an inescapable reality of manufacturing—no factory is perfect 100 percent of the time. But that doesn’t mean you should resign yourself to poor quality products from your suppliers. Preventing a quality defect when first beginning the supplier relationship is almost always far easier and cheaper than trying to correct it after it appears.
When it comes to factories’ production capabilities in Asia, not all factories are created equal. Some factories are high-tech powerhouses on par with innovative manufacturers in Germany or the United States. Others are small and simple operations that may rely on sub-suppliers to manufacture most parts of your product. Every importer’s manufacturing needs are different. But regardless of your own quality standards, it’s essential to begin the conversation about your expectations before choosing to work with any particular supplier.
Be upfront about order volume
Importers sometimes promise large and frequent orders when searching for prospective suppliers, even when they have no intention of following through on that promise. They often think this overpromising will convince suppliers to work with them, offer more competitive pricing or pay more attention to their product quality over that of other buyers.
But in truth, this kind of misleading doesn’t set a good foundation for a strong relationship between the factory and buyer. Suppliers hear overpromising all the time. Most receive countless requests from importers who paint an optimistic picture of a steady flow of business for them. And for that supplier that believes you, your early dishonesty will likely hurt your supplier relationship. That supplier is more likely to deceive you about their own deliverables and their willingness and ability to meet your quality requirements.
Rather than just telling the factory what you suspect they want to hear, suppliers usually appreciate it if you’re upfront about your order volume from the beginning (related: 5 Tips for Negotiating with Chinese Factories). Honesty tends to be reciprocated in supplier relationships, and this honesty typically extends to the quality of your product.
Don’t haggle too hard on price with suppliers
One of the main deciding factors for most importers’ in choosing a supplier to manufacture their product abroad is cost. They want lower production costs offering higher profit margins. And importers have come to expect lower costs, especially lower wages, in many Asian countries. But if you expect higher quality products, you have to be willing to pay for them.
When haggling on pricing with your supplier, tunnel vision can be your worst enemy. Focusing on getting the lowest price possible can have severe implications for your order’s overall quality. Suppliers need to make money too. And your supplier needs a decent profit margin to continue operating. If you push for a low price, they’ll need to make cuts somewhere to ensure those margins are healthy enough.
Ultimately, you get what you pay for. With a super low price that seems too good to be true, any number of scenarios is possible. The factory might:
- Use cheaper materials than specified (e.g. lower quality timber than required in an item of furniture)
- Substitute lower-cost alternatives for product components (e.g. cheap antenna in a mobile phone)
- Rush production to process your order faster, which often leads to defects caused by worker carelessness
- Prioritize other orders ahead of yours, typically leading to production and shipping delays
Any or all of these outcomes are likely when you put excessive pressure on your supplier for price. You can usually prevent these problems by striking the right balance between price and quality.
Offer suppliers a target price to set your standards early
One way you can avoid the challenges posed by trying to balance quality and price is by offering suppliers a target price directly. Some importers think this will hinder their opportunities to reach a lower price. But a target price actually helps you to set expectations from the very beginning regarding product quality and requirements. The price you mention should reflect the quality of input materials and components you want and will helps prevent suppliers from cutting corners with product quality.
If you’re unsure of the appropriate price for your order, you can use several methods to get an idea as to what is acceptable to pay (related: 3 Tips for Getting the Best Price from Suppliers)). Some approaches to consider include:
- Gathering price quotes from multiple suppliers producing similar products
- Asking for documentation from prospective suppliers like a bill of materials (BoM) and itemized pricing—these will often help you understand the cost of various parts and materials in a product
- Requesting a product sample to get a sense of product quality and determine how much it’s worth paying for
By gathering a price quote and breakdown of pricing from several prospective suppliers, you can more easily filter the “good” suppliers from the rest (related: 5 Qualities of a Good Supplier). After gathering this information, you’re better equipped to set a reasonable price for your order given the competition in that area, while maintaining quality standards.
When you’re honest about your order volume and desired price, you might actually find a supplier that refuses your business. This might seem like a huge step back in your sourcing process, but it could actually be a sign of an honest supplier that knows they probably can’t meet your standards. And that allows you to find another supplier that can actually provide what you want at your desired price and quality level.
Auditing a prospective supplier’s factory to avoid quality problems
Auditing a prospective supplier’s factory is often the final step in deciding on a sourcing partner. There are many types of audits that provide the importer with a variety of insights into a factory’s operations. For example, good manufacturing practices (GMP) audits ensure regulatory guidelines are met for the production of food, cosmetic, pharmaceuticals and medical products. And social compliance audits help you confirm whether a factory complies with local labor laws or particular brand or retailer standards.
But the most common audit importers perform at potential suppliers’ facilities is a quality management systems (QMS) audit. QMS audits are especially relevant in helping you avoid working with a supplier with glaring quality problems in their factory.
How a QMS audit helps predict quality issues before mass production
Sometimes also called a supplier review, the QMS audit focuses on assessing a factory’s ability to manufacture products while maintaining a certain level of consistent quality. The audit is usually based on the ISO9001 standard, which is founded on a set of seven internationally-recognized principles to guide an organization’s process improvement.
Just like some importers who overpromise on their intended order volumes, some dishonest factories are prone to overpromise on their production capabilities. A QMS audit provides you with information to deduce whether a supplier’s factory can deliver the product quality you require before mass production begins. A QMS audit reports on a number of areas in a factory related to product quality, including:
- Machine and equipment maintenance and calibration
- Internal QC procedures and related personnel for material, during-production and finished goods control
- Any internal lab testing and dedicated lab technicians
- Engineering and design capabilities, including typical lead time for preparing tooling for a new product
Learning of any problems found in a particular area can signal “red flags”, helping you to avoid working with a supplier that can’t meet your quality standards. For example, an audit might find that factory workers don’t properly maintain and calibrate machines and production equipment. This is an indication that product quality may not be consistent and shows that a higher defect rate is likely at that factory.
The information provided in a QMS audit report can also be helpful throughout your manufacturing process, not just in choosing a supplier. For instance, you might avoid relying on a factory’s internal QC staff for inspection if an audit reveals they’re inadequately trained to inspect your product. With this information available, you’ve got a better idea of which product inspection method is best for you in identifying quality defects (related: 4 Ways Importers Conduct Product Inspection [eBook]).
Conclusion
Preventing product defects through negotiating with suppliers saves importers a tremendous amount of time and money in trying to fix these issues after production. But preventing defects shouldn’t be a one-time process you only consider when first choosing a supplier.
In following these steps during the sourcing process, you can also avoid mistakes that are damaging to your relationship with your supplier. You can continuously build on a strong supplier relationship to set high quality standards for your product and minimize quality defects over time. And with higher product quality, you can boost your reputation with your customers and set your business apart from manufacturers who fail to comprehensively monitor product quality.
Samantha Lim is a Client Manager at InTouch Manufacturing Services, a QC firm that performs product inspections and factory audits in Asia for clients in the US, EU and Australia.
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Author's page : http://www.globalsources.com/NEWS/SIC-6-crucial-steps-sourcing-good-factory-china.HTM
6 crucial steps for sourcing a good factory in China
July 05, 2017
By Adam Gilbourne
In our previous article, we identified the top 3 mistakes to avoid when selecting a manufacturer in China. Mistakes generally occur because importers make decisions based on their emotions and how a salesperson made them ‘feel’, rather than tangible evidence of a factory’s quality, export experience, production capacity, internal quality control systems, documentation etc.
In this article, we will go through 6 crucial steps that importers should take to ensure they pick the right supplier. Before we get to that, let’s have quick look at the benefits of careful factory selection:
- Greater control over your supply chain
- IP protection is made easier
- Less chance that the factory will collapse from unpaid debt obligations
- Greater confidence in product quality
- Legal recourse if a problem arises
- Less chance of receiving defective product
- Quicker lead times
- Supplier reliability
- Better communication and service
Step 1: Know your product – if you don’t know the specifications (input materials, dimensions, components, packaging requirements), the compliance requirements to sell into your country, along with the quality demands of your market, then it is very hard to determine which manufacturer is right for you. Price should never be your only concern!
Step 2: Research – Trade websites are a great tool for finding factories. However, many professional manufacturers will not advertise through these portals and are instead found through Google, Baidu (the Chinese equivalent) or through industry specific trade shows. Keep up to date as to when and where specific trade shows are held, both in China and in your own country.
Step 3: RFQ – Sending out a request for quote is important as it allows you to gather information about a factory and their capabilities, along with their price levels. It’s also an opportunity for yourself to demonstrate that you are a serious buyer that will bring the factory good business over the long term.
Step 4: Vetting suppliers based on – communication, location, size of the factory, specialisation, export experience, legitimate operating entity, and the level of interest.
Communication: can you communicate efficiently with the manufacturer? Are they prompt in replying to your calls and email? Are they ok discussing specifications in detail?
Location: factory location will have a bearing on lead times. It will also impact prices through labour costs, access to raw materials, rent etc. Avoid companies that don’t provide the location of their production facility as they are probably a trading agent or middleman.
Size: typically you want to represent 5-30% of the factory’s business during that period. Anything less and you won’t be a priority for the factory and you’ll have limited leverage with price negotiations. It’s also worthwhile investigating the operation size, production capacity, equipment and staffing.
What they specialise in: China’s manufacturing sector is highly competitive. As such, Chinese factories are forced to specialise in production to maximise efficiency. I’d be wary of purchasing from a manufacture who claims to manufacture a wide range of products. They are probably a trading company.
What markets they sell to: if your product must comply with strict national standards, it is wise to choose a factory that has experience manufacturing that product for sale into your market.
Legitimate operating entity: check the ownership papers of the factory. Also, depending on the value of your order, auditing the factory can be worthwhile.
Level of interest: sometimes good factories have no interest working with you. There’s no point pushing.
Step 5: Ask for samples – request that the supplier sends samples of the product. For off-the-shelf products, the samples should closely match the specifications you supplied to the factory. If the factory can’t match your samples, then unless you are willing to spend time and money on re-tooling and product development, the factory is probably unsuitable.
*it is common to have samples redone and redeveloped in order to reach your desired outcome. Don’t write-off a factory too quickly if the first sample is not perfect.
Step 6: Visit the factory – this is by far the best way to determine if the factory is suitable. By visiting the factory you can eyeball the equipment, the factory’s capacity, the quality of the factory workers, the sample room and the factor’s internal quality control systems. It also allows you to negotiate pricing directly with the factory boss.
Adam Gilbourne is the founder of Easy Imex Ltd and helps importers to source product & manage their supply chain in China. He writes advice for importers on the Easy Imex blog. He lives full time in Shanghai, China. You can contact him at adam@easyimex.com.
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Author's page : http://www.globalsources.com/NEWS/SIC-6-ways-chinese-suppliers-can-cheat-importers.HTM
6 ways Chinese suppliers can cheat importers
March 01, 2013
by Renaud Anjoran
This is the second part of the presentation I gave a group of Chinese suppliers. The first part, about the initial sourcing phase, is here.
I made a list of the most common ways foreign buyers are cheated in China. My message was, basically: “When a buyer feels cheated, he will try hard to find another supplier. Be very careful.”
1. Price increases after a deposit is transferred
The supplier quotes a price, gets an order and a cash deposit, and then tell the buyer the price has increased. Usually a reason is invoked (materials just got more expensive, the product takes longer than expected to produce…).
And, if the buyer asks for reimbursement of his deposit, it is denied because “it was already used for purchasing the materials for your production”.
It is perceived as very dishonest. Sure, quotation mistakes happen. But, when costs are under-evaluated, it should be at the supplier’s expense (just like the opposite is at the supplier’s benefit).
My advice to suppliers is to ask for the deposit “to pay a cash advance to material suppliers, and to ensure prices don’t go up”. And then, never ever increase prices after a deposit is wired — except if the buyer changes some requirements.
2. Price increases from one order to the next, without relation to production cost increases
Let’s say the RMB/USD rate suddenly raises by 20%. Importers will not be shocked if you raise your prices (expressed in USD) for future orders.
Now, let’s say the product in question is made out of plastic, and oil prices suddenly go up 20%. If the supplier increases the final product by 20%, he is actually widening his profit margin. The oil cost is well below 100% of his total production cost, let alone his selling price.
In most cases, suppliers simply say “material costs go up, and labor costs go up, and the exchange rate goes up, so the new price is XX USD”. They do not want to give more data that could allow the buyer to challenge their calculations.
Importers see this lack of transparency with great suspicion. It is not as bad as a price increase after a deposit is received, but it can make a purchaser feel cheated.
Here is my advice to suppliers:
- Back it up with objective data.
- Don’t announce it once the buyer tells you a new order is coming up. Send revised prices every month, for example.
- Offer alternative solutions (e.g. substituting a cheaper material) in case the new price is not acceptable.
3. Lack of reliability: late deliveries, inconsistent communication…
Here are a few manifestations of poor reliability that are very upsetting to buyers:
- Shipment delays announced at the last minute, even though production managers could see it coming 2 or 3 weeks before.
- Consistent over-optimism, which means consistent disappointment on the buyer’s side.
- Lack of respect of contracts in general.
My advice to suppliers is to keep the customer updated along the production cycle. Share information quickly if there are problems, and show that you are hard at work trying to fix them.
4. Inability/unwillingness to reach the desired quality standard
Some importers are flexible with quality. Give them a discount when you mess up, and the business relationship is maintained.
Others are not (if quality is below a certain standard, products CANNOT BE SOLD AT ALL in their distribution channel).
My advice to suppliers is to evaluate each buyer’s quality standard. Sometimes it is obvious: “we sell these parts to Honda” or “it will be distributed as medical supplies in US hospitals” really means “if you mess up, we won’t take the goods”.
5. Non-respect of IP rights
For example, an importer asks two Chinese manufacturers to develop a new design. But only one gets the order. Here are two ways this can go wrong:
- The manufacturer that gets the order might try to produce the same design and sell it to other customers.
- The other manufacturer feels that he can do what he wants with the design. Since he did the hard work of developing prototypes, he will try to make money out of them through sales to other customers.
These attitudes are perceived as very dishonest by buyers. In case famous brands are counterfeited this way, there are many risks — including for the supplier, as Steve Dickinson from Harris & Moure explained to the same group of suppliers just before it was my turn to speak.
My advice to suppliers is to respect your customers’ intellectual property rights. Not respecting them is like stealing money in someone else’s wallet.
Now, some importers are more accommodating. Sometimes, a European buyer doesn’t mind if you sell the same designs outside of Europe. If that’s necessary to make the supplier happy with small orders at a low price, it might be acceptable to the buyer. But be open about it!
6. Lack of transparency
The two most frequent cases where lack of transparency hurts the importer are as follows:
- Subcontracting production in a small workshop in order to cut costs (and without regard to quality requirements);
- Changing a component, a packaging accessory, or a process step.
At least 95% of the time, the importer is not informed.
It is perceived as dishonest if discovered after the fact. But many importers don’t mind, if it is brought up the right way and if explanations are reasonable. For example: “we are very full, so we need to place production in another workshop if you really need us to respect this shipment date”.
My advice to suppliers is to avoid this as much as possible, and to do it for the right reasons (e.g. insufficient capacity, rather than cost savings).
I didn’t include outright scams (when the supplier stops communicating after a deposit is wired) in this list. I focused on what can go wrong when a business relationship is already in place.
Renaud Anjoran is the founder of Sofeast Quality Control and helps importers to improve and secure their product quality in China. He writes advice for importers on the Quality Inspection blog. He lives full time in Shenzhen, China. You can contact him at info@sofeast.com.
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