In this podcast, Renaud and Paul Adams (Sofeast senior engineer) discuss everything that buyers need to know to get a lot out of factory visits to their suppliers' factories.

They cover checking:

  • The basics that buyers need to be looking at. A selection of things you need no special training to check, such as the general state of the factory (is it dirty, etc).
  • Quality Control basics. What you should look out for regarding the supplier's grasp of QC, such as the tracking of data, etc.
  • Documentation. If documentation is in Chinese you may be prevented from checking certain things like procedures, so what can you do in this case?
  • Inventory. Is it 'good' to see a busy factory with lots of inventory? What can we learn here?
  • Production speed. This affects lead times, so how to check this? How about a production planning system?
  • Social compliance. There are audits for CSR, but when sourcing you can evaluate basic supplier compliance, such as fire prevention, emergency exits, etc.
  • Engineering capabilities. Why a focus on new product development is important. Can the supplier help you with development? Can they understand your product and blueprints?

 

In part 2 of this podcast series, we continue to discuss the 10 elements of a strong quality assurance strategy in China.

In part 1 we went through elements 1-5: 

  1. Background checks on the potential supplier
  2. Reliability audit on factories
  3. Evaluating the fit of the new supplier
  4. Fair payment terms 
  5. Contracts

Quality Control

6. Product Specification Definition - a common mistake of new importers is not defining their specifications in great detail. Your supplier needs to be reminded about your requirements, which can include materials, design, quality, and even packaging. The specification sheet acts as that reminder.

 

7. Quality Inspections - another error is rushing to get the products shipped without performing quality inspections. Having been to the supplier's factory and even seeing that some of the first products off the line were fine is not enough - some buyers have received their goods to find that 40% or more had to be scrapped due to poor quality. By performing inspections, it allows any issues to be solved in the factory before shipment and the payment of the balance- after shipment and when you've paid 100%, anything like that becomes 'your problem' in most cases.

Buyer/Supplier Relationship

8. Building Long Term Business Relationships - you need to find a way to be seen as a long term, stable customer who won't shop around to save a small amount. Chinese suppliers may not believe any claims you make about being a good customer, so the best way is to walk the walk with a clear roadmap, purchasing plan, inspection policy, etc. This professional outlook gains you respect. Fulfilling your promises also gains you a lot of credit, so placing orders when you promise to and being upfront and honest about changes of the plan also helps win hearts and minds, as does not negotiating too hard on the price to the point where you put them in a jam.

 

9. Regular Face-To-Face Meetings - you need a contract and procedure in place before placing orders, but buyers should actively go to China and visit suppliers regularly. Buying from China can't be done remotely forever, you need to call in and keep an eye on things. Also, it is not necessary to be drawn into big dinners, socialising etc, this isn't advantageous unless you want it to be - they will respect professionalism and your stable business more than socialising.

 

10. Improvement of factory operations - you should find out what suppliers have been doing and see if there are opportunities for improvement. If you're a reasonably large customer you will have the sway to push them to improve. The message here is not to hesitate to make the suggestion even if it is 'their factory,' as if you can help a Chinese supplier improve without costing them a lot of money (which is often possible) they will like you even more as a customer.

 

You can look at the overall strategy in more detail in this blog post from QualityInspection.org: https://qualityinspection.org/quality-assurance-strategy-china/

In this podcast, Renaud is joined by senior Sofeast engineer Paul Adams to explain the 10 key elements of a strong QA strategy for importers in China.

The strategy can be broken down into 4 themes which each include specific elements.

Let's get started with the first:

Qualification of the new supplier

1. Background checks on the potential supplier - the assurance that you're choosing the right supplier is gained by performing activities like checking their legal documentation, purchase orders and logistics, certifications, and more.

2. Reliability audit on factories - importers can't take a new supplier's word as gospel, they won't necessarily check the quality, maybe have no process controls, ignore work instructions, etc. Therefore it's important to seriously examine how they control quality by performing factory audits.

3. Evaluating the fit of the new supplier - there's a difference between being a minor customer of a large factory that scores well on quality and a more important customer of a smaller factory that scores a lower grade in a quality audit. The former may not really care about you, provide good prices, or finish your orders on time if you only provide a small percentage of their business, whereas the smaller factory really cares about your orders and will strive to keep your business. For this reason, there's a need to check whether a factory is a good fit for you, even if they have some weaknesses in certain areas.

 

Purchasing methodology

4. Fair payment terms - some guidance on the types of payment terms you should accept to protect yourself, especially with first-time purchases from a new supplier. We also discuss how to split up your payments (with a smaller deposit first) in order to keep some leverage over the supplier.

5. Contracts - you may work with a lawyer to create a Chinese-language manufacturing contract which protects you in China - if you have future orders where the terms are the same you can re-use this in future. Chinese suppliers take legally binding contracts (in China, not your own country) seriously. If you have no budget, consider creating a document spelling out your terms clearly to avoid misunderstandings.

 

6. Failsafe purchasing steps - every buyer should put together a procedure including supplier screening and certain checkpoints in order to raise red flags if something seems wrong. There will be approvals, such as: receiving a production sample and agreeing it is OK or sending an inspector to check product quality during production who confirms all is well. You should also negotiate before placing an order when to pay the supplier.

 

Remember, you can listen to part 2 of these 2 podcasts here.

 

You can look at the overall strategy in more detail in this blog post from QualityInspection.org: https://qualityinspection.org/quality-assurance-strategy-china/

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