China Manufacturing Decoded
 

China Manufacturing Decoded

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Join Renaud Anjoran, Founder & CEO of Sofeast, in this podcast aimed at importers who develop their own products as he discusses the hottest topics and shares actionable tips for manufacturing in China & Asia today! WHO IS RENAUD? Renaud is a French ISO 9001 & 14001 certified lead auditor, ASQ certified Quality Engineer and Quality Manager who has been working in the Chinese manufacturing industry since 2005. He is the founder of the Sofeast group that has over 200 staff globally and offers services (QA, product development & engineering, project management, Supply Chain Management, product compliance, reliability testing), contract manufacturing, and 3PL fulfillment for importers and businesses who develop their own products and buyers from China & SE Asia. WHY LISTEN? We‘ll discuss interesting topics for anyone who develops and sources their products from Asian suppliers and will share Renaud‘s decades of manufacturing experience, as well as inviting guests from the industry to get a different viewpoint. Our goal is to help you get better results and end up with suppliers and products that exceed your expectations!

Episodes

Factory Testing Facilities | Vetting Chinese Suppliers (Part 8)

Wednesday Oct 14, 2020

Wednesday Oct 14, 2020

In This Episode...

You're listening to part 8 of our guide to the effective vetting of Chinese suppliers that will help you to find the best possible manufacturer for your products.

In this episode, we're discussing factory testing facilities and how they can help you to assess how capable a supplier is. Ask the question: "How can this supplier know that their product is good if they're unable to test that products reach my specifications, quality, and safety requirements?"

So, when vetting a supplier, paying attention to their testing facilities is a worthwhile step either for yourself (if you're visiting a factory in person) or for your auditors who assess the supplier on behalf, as their professionalism in testing speaks for their overall ability and quality-consciousness.

Show Notes

00:00 - Intro and catch up about the state of things in Hong Kong and China re: manufacturing and restrictions to visiting these days (late 2020).

03:33 - What testing gets done in a factory (or not) and why is this important to pay attention to? Some Chinese suppliers won't do much more than a visual check on products before shipping. Therefore this possible lack of testing can cause problems for the buyer if a supplier doesn't check components, materials, or finished products. Therefore auditors will be interested in in-house testing equipment and its processes and condition.

08:00 - Why checking the factory's testing equipment is the easiest way to flag a manufacturer that doesn't care about quality (if it's unused or in poor condition this should tell you what you need to know).

09:11 - If your supplier conducts its own testing and provides you with a test report or self-declaration certificate of some kind, what are you looking for here? Firstly, this is a good sign that they take quality and compliance seriously. Secondly, if you were, say, sued and in court, after a product caused an injury, what you as the 'supplier' did to ensure consumer safety would be investigated and product testing reports from your supplier would be of benefit to you to dispel accusations of negligence. Thirdly, ideally, you will also conduct your own lab tests on some random samples picked from the batches in addition to your supplier's in-house testing, as this provides you with solid evidence of product quality, safety, and compliance that cannot be 'tampered with.' 

13:03 - Some examples of testing for different types of products and some key observations about what suppliers may or may not do in these cases:

  • Garment factory - they often don't record test results after doing them.
  • Consumer electronics (music amp) - buyers usually perform their own tests in order to keep electronics suppliers accountable and drives improvement.
  • Batteries -  suppliers will be doing tests on 100% of the batteries. It's important to get data about batteries that haven't passed in order to make sure that the tests aren't just for show.
  • LED suppliers - it's fairly standard for them to have quite expensive in-house testing equipment and this will be expected by customers.
  • CMM machines - these are expensive devices to precisely check the dimensions of mechanical parts. Even though the cost is high some factories even have one of these machines simply as it's expected, but don't use it!

Key point: If a supplier shows you some fancy testing equipment, make sure that they can back up its use by showing you accurate results.

20:50 - Do even very simple products call for a supplier to require in-house testing facilities? Some tests, such as chemical tests will need to be in a lab so this kind of equipment likely will not be in-house. A better way to look at this is how often you're likely to need to do the tests - on simpler products it would perhaps be less so. Therefore, conducting occasional tests in a 3rd party lab would be fine as the expense of purchasing in-house testing equipment may be prohibitive for a supplier in this case.

23:07 - Is it helpful to have a supplier's test reports in hand when you go to a laboratory to conduct your own tests on the product samples? While having a test report from a client is useful as we discussed earlier, you should not need it to know which tests to perform. In order to buy from China safely, you need to be fully aware of the kinds of tests your product is required to undergo in order to be compliant and safe (so you're not taking a supplier or lab's word for it alone).

24:49 - The risks of 'buying cheap stuff from China' without understanding your liabilities as an importer and what kind of testing is required. An example: The very unbalanced PPE industry has now got a lack of trust on both sides, which has been increased by people rushing into buying without performing the necessary checks.

27:22 - Why the testing of high-risk products is all the more important based on the experiences in the PPE market in 2020. 

28:12 - Some examples of the testing equipment you'll typically find in factories which produce products with common processes, such as electronic assembly, injection molding, etc. Smaller factories often won't be proficient in testing at all, but larger factories often have sophisticated and expensive testing equipment in the factory. 

33:51 - Conclusion: Factory testing facilities and in-house tests are useful in a vetting sense as they help you to assess supplier proficiency and red flag those that aren't quality-conscious.

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What Is Compliance Testing And When Is It Appropriate?

Wednesday Oct 07, 2020

Wednesday Oct 07, 2020

In This Episode...

Today we're discussing compliance testing.

Compliance testing is not only a crucial tool for reducing product risks and assuring their safety, but it also enhances consumer trust and confidence in your brand which is ever more valuable in today's world.

You'll carry out tests on your products to assure that they're safe, don't include restricted materials, and are saleable in your markets. Tests may also include your packaging, too. Jump into the episode to start to explore just why this testing is an important step that YOU need to be in control of.

Show Notes

0:00 - Podcast & topic intro + introduction product tests. Defining what product tests are into roughly 2 large families of tests, reliability tests and compliance tests. Includes some examples, such as drop tests. Why many compliance tests are dictated by consumer safety regulations which can be rather country and product-specific.

07:00 - Why not all compliance testing leads to certifications and examining what a test report is. The big difference between a test report and a full certification. Why test reports may not be trustworthy...what to be cautious of, such as NOT getting a test report from a supplier (the level of trust you have with a supplier is connected to the manufacturing contract you have with them).

14:19 - Exploring what 'certification' means. This is more serious than a 'test report.' They tend to be product-specific and are done towards the end of the development stage of a new product. A lab will test the products AND provide certification to a certain standard which is more complex and with increased oversight.
They often look at manufacturing processes and systems and so are more difficult to obtain. 

15:48 - The benefits of regularly testing to a certification's standard. This isn't the same as becoming certified, but it will provide oversight on production runs to assure that they remain compliant and safe. A random testing regime is better if testing 100% of batches aren't possible. Not testing and/or letting your supplier know when products are or are not being tested opens you up to abuse.

17:53 - Is it 'safe' to use Chinese testing labs? Many larger companies prefer testing in Hong Kong as they have trust issues with mainland labs in general. Chinese labs' internal control may not be as high as foreign names, but they're likely to be cheaper. Checking that the lab is certified to ISO 17025 and checking that their nominated scope applies to your product type is a 'must do.' Where to find lists of accredited labs. A few horror stories about a lack of integrity in labs.

24:36 - Vetting the right lab. Discussing best practices for when trying to find the right lab for your compliance testing.

26:09 - How do buyers know what kind of testing and certifications they require? Many resources exist online in paid and free formats for buyers to research the right standards that apply to their products. You can speak with people who have been there and done it before. There's also the option of working with companies like Sofeast or Compliancegate on your project to assure the correct testing and procedures are followed for your compliance. A good tip is to request quotations from testing labs - this will provide you with the tests they believe you require to be compliant (this may vary from lab to lab).
The dangers of doing 'too many tests' as this can get quite expensive and they may not all be strictly necessary.

31:28 - Would you instruct factory auditors to focus on the key tests and standards products must undergo and comply with? Yes, auditors can bear these in mind during the initial vetting process, or ongoing factory audits on a factory who has been producing for you over time. Checking if the factory is doing the testing that they have, say, committed to do is just another process to check during process audits, for example.

34:24 - What information should you provide to testing labs when requesting a quotation? Giving you a helpful list of the product-specific information points to prepare, such as region for sale, materials, image, instructions, etc.

35:47 - Wrapping up - knowing your risks and why compliance testing protects you. A serious compliance issue can be enough to kill a company and the supplier usually doesn't share responsibility. Reiterating that for safety's sake YOU need to control the compliance testing process, not leave it to your supplier. Also, your own certification (with your name on it, not your supplier's) can also be used to market your product.

 

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Analysing the (NPI) New Product Introduction Process & its Benefits

Wednesday Sep 30, 2020

Wednesday Sep 30, 2020

In This Episode...

We're going through the NPI new product introduction process. Renaud will explain what this process is, why it can help to reduce your risks and provide other benefits throughout a new product manufacturing project from design to mass production, and the phases included in the NPI process which you can follow for your production.

Planning ahead before rushing into production is so important, and in this episode, you're going to learn exactly why reducing risks before you go into production by following a sound NPI process is worthwhile.

Show Notes

Start to 05:19 - Introduction to the NPI process. The dangers of trying to manufacture new products without a process to guide you.

05:19 to 08:55 - The single greatest mistake that companies make when they're developing a new product. Going from prototype to mass-production misses out some crucial actions. Why Chinese suppliers might rush into mass production, even though it's a mistake.

08:55 to 23:30 - What is the makeup of our suggested NPI process? - looking at the different phases of the process in detail that would typically be useful for electrical and mechanical products:

  • 09:18 - Phase 1: Document specifications & requirements in a clear and measurable manner. 
  • 11:03 - Phase 2: Feasibility study / Proof of Concept - especially useful for more complex and technical products.
  • 13:22 - Phase 3: Prototyping - source components suppliers who can do the best job and test the prototype/s to be sure that the product reaches expectations.
  • 16:07 - Phase 4: Tooling - when to order new tooling and testing it to make sure it's perfect and creating the final prototype or golden sample (relevant blog post on QualityInspection.org: The Conundrum of Investing in Tooling Before a Final Prototype).
  • 18:40 - Phase 5: Pilot run & pre-production prep - risk analysis, process FMEA, process control plan, small production batch, pre-production review of processes and materials.
  • 22:30 - Phase 6: Production - ordering materials, applying the plans made and improving and solving issues over time.

23:30 to 30:16 - Is such a detailed NPI process necessary for every product type? - dependant on expected volumes to be ordered, product complexity, and money at stake, as reducing risks for large amounts is more crucial. Some of the negatives you can expect if taking too many risks! Balance the risks and plan ahead.

30:16 to 33:44 - How Chinese suppliers can rush into production which contradicts prior-planning and following an NPI process - many Chinese suppliers want to ship the goods ASAP in order to get paid, therefore they often dislike time-consuming pre-production steps.

33:44 to 38:20 - Adding your expectations to a manufacturing agreement - large manufacturers may take a hands-on approach to assure that the supplier follows the NPI process in the factory.

38:20 to END - What can a buyer expect from implementing an NPI process and its impact on quality? - a clear standard, a less risky product design that leads to fewer quality issues, the manufacturing process that causes less quality issues as it has been honed over time, more consistent production that is closer to the golden sample.

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Exploring Process Audits | Vetting Chinese Suppliers (Part 7)

Wednesday Sep 23, 2020

Wednesday Sep 23, 2020

In This Episode...

Join us as we continue our deep dive into the vetting process used when sourcing new Chinese suppliers.

We've already discussed quality audits and social compliance audits, and this time we're going to cover factory process & system audits. While this type of audit may not differ too much in terms of structure (an auditor still goes into the factory observes, questions staff, and takes notes), this time we're checking the maturity of the factory's systems and process controls with the objective of assessing how reliable they are, if they've put thought into how they manufacture, if they follow best practices, and, therefore, if they're going to be capable of fulfilling your expectations in the longer term.

As a part of the supplier vetting process, process audits give great insight into whether you're selecting a supplier who can fulfill their promises to you.

Show Notes

Start to 9:35 - What are factory process audits? A general explanation of what auditors do when they go into a factory. How many audits don't focus on production processes and the new product development side of things (which can reduce risks at an early stage). The auditor checks processes (for example, the cutting of materials) in detail and assesses them while considering if all possible issues are avoided. 

9:35 to 12:05 - Why it helps process auditors to have real-world knowledge about the production processes and products being manufactured, but that they also require an open-mind and the willingness to ask a lot of questions.

12:05 to 14:56 - What kinds of businesses will benefit from performing process audits? Order size and the nature of the products will impact if they're useful. Importers with a lot of money at stake or producing technical or high-risk products will find them useful for providing an in-depth analysis of the risks involved with dealing with that supplier.

14:56 to 15:36 - A quick definition of 'high-risk products.'

15:36 to 32:58 - What is usually checked in a process audit? A list and explanation of each point are given:

  • Management systems (16:30)
  • New product introduction (16:54)
  • Specific process controls that are relevant to your needs and product (using plastic injection molding as an example) (18:00)
  • Training & staff evaluation when hiring (21:12)
  • Equipment - funny anecdote about a factory doing CNC machining in a shocking way (21:50)
  • Predictive/preventive maintenance (24:22)
  • Mistake proofing for operators (26:13)
  • Statistical analysis of processes (27:13)
  • Measurement devices (27:42)
  • Environment - good anecdote about a kids' toy factory (29:41)
  • Office activities (32:15)
  • The shop floor - warehouse and suppliers to check components (32:28)

32:58 to 34:32 - GMP checklists - if the supplier is following this, it reduces the need for the auditor to be extremely familiar with the manufacturing processes in use.

34:32 to 39:05 - Can process auditors give advice to spur positive improvements? This is dependent on context - a 3rd party auditor is unlikely to do this, however, internal or 2nd party auditors may well do this.

39:05 to END - Outlining roughly what is in a process audit checklist - capacity / incoming material check / setup of processes / process controls / checking finished products / HR / Equipment (read this blog post for more details about audit structure).

 

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How & why to create a valid China manufacturing contract

Tuesday Sep 15, 2020

Tuesday Sep 15, 2020

In This Episode...

We're discussing manufacturing contracts. These are an essential piece of the puzzle for buyers with suppliers in China or elsewhere in Asia as they provide you with a way to clarify your requirements with your supplier, outline your expectations and the penalties for if they aren't met, protect your IP from being used or distributed incorrectly, and provide a legal framework to take action if things go wrong.

Hopefully, if you have an enforceable contract you will never need to resort to litigation, but we do touch on this, too.

Show Notes

Start to 02:47 - Introduction & do buyers work with suppliers without a manufacturing contract? - this is fairly common, but the idea that contracts are not enforceable in China (which is fairly prevalent) just isn't the case.

02:47 to 05:30 - What makes buyers feel secure enough not to use a contract when dealing with Asian suppliers? - this could be down to a lack of awareness about the need for a specialized manufacturing contract that is enforceable in, say, China, because they're used to not requiring a new contract per project in their countries. They may not know about the risk-reducing benefits of a valid contract, especially where larger orders are concerned.

05:30 to 07:53 - Payment terms which can help mitigate your risks - exploring preferential payment terms which may be acceptable to suppliers if large orders are placed, such as paying by letter of credit or paying a 20% downpayment and the balance after delivery.

07:53 to 12:22 - What are the benefits of having a valid and enforceable manufacturing contract? - outlining key benefits. The number one is the ability to outline and clarify your expectations to the supplier and have them commit to it in writing. Using a clear quality standard as an attachment is also important here.
The second key benefit is the extra leverage that the contract provides to buyers in the event that something goes wrong.

12:22 to 25:45 - What is included in a manufacturing contract - there are roughly 3 elements to consider (although this will depend on your needs and the type of supplier you deal with) and we'll go through them one by one:

  • Confidentiality agreement - China NDA or more comprehensive China NNN agreement - this will prevent the supplier from sharing your IP, using it to compete against you, or reaching out to your customers behind your back. Note - keeping penalties sensible is important.
  • Product Development Agreement (PDA) – (if developing product/s with your supplier) - this controls who will own the IP and outlines who financed what, etc. This will help you to move to new suppliers and take tooling and designs with you if needed.
  • Manufacturing Agreement (MA) - this outlines what you want the supplier to commit to. Product, spec, quality standard, price, shipment date, etc. It takes away any ambiguity and makes your requirements 100% clear.

25:45 to 27:05 - Further discussion about when these 3 elements may or may not be appropriate - for instance, if a Chinese supplier has rightfully developed the product that you are, say, white-labeling, then it is not appropriate to insist on a clause of exclusivity for the design.

27:05 to 31:53 - What else should go into the manufacturing agreement? - you may include payment terms, a clause about access to their factory for audits and checking, that no sub-contracting is allowed, the inspection process, and when products will be allowed to ship (contingent on passing inspection), what happens if products are received, but many quality issues are found - Why many lawyers struggle to distinguish between manufacturing and design defects which can lead to conflict between supplier and customer if the wording of the contract is not clear on this point and defects occur after some time that the products have been in the field (which would usually indicate a design defect, not a manufacturing defect that the supplier would be responsible for unless they developed the product, too) - also clauses on when a supplier may be sued or termination of the contract can be actioned.

31:53 to 34:36 - Manufacturing contract templates and contract depth - the length and depth of your contract is influenced by the size and type of supplier you work with and your order size and complexity. A small supplier may not have the bandwidth to deal with a very long and detailed contract.

34:36 to 36:40 - The strength of the manufacturing agreement to remove ambiguity - how the contract keeps everything in black and white and prevents managing a project via skype, wechat, email, etc. This could cause problems if trying to find fault for issues, in comparison to a contract where everything is clear and simple.

36:40 to END - How realistic litigation is if there are problems - this will depend on the contract. If it's not enforceable in your supplier's country litigation will be harder, but holding the supplier accountable in general will be affected. The dangers of being 'too trusting' and not planning ahead for the worst-case scenario.

*Please note, we are NOT lawyers. Any information provided in this episode is of an casually informative nature, but we recommend contacting a lawyer who is familiar with China/Asian law to help you produce your manufacturing contract.

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All You Should Know About Management System Standards & Auditing Them

Wednesday Sep 09, 2020

Wednesday Sep 09, 2020

In This Episode...

This podcast uncovers everything importers are likely to need to know about management system standards. We'll discuss key standards, their benefits (for both manufacturers and buyers), good and bad ways to implement them, auditing them, and more.

What are management system standards?

Certifications of these standards are achieved by organizations to demonstrate that they're able to perform the tasks required to achieve their objectives or those of their clients and/or drive improvements in a certain area. An example would be the ISO 14000 family which relates to environmental management being adopted by a manufacturer whose factory must limit pollution and other negative environmental impacts in order to be able to work for an environmentally-conscious client. 

When a supplier is certified for a standard this will allow a buyer to feel confident in working with them if this standard is important to their business, therefore it's one factor to consider as part of the vetting process.

Show Notes

Start to 4:04 - Introduction - explaining why management system standards are important to pay attention to, especially when vetting new suppliers or auditing your own operations (as they can form the basis of an improvement checklist).

4:04 to 09:50 - Tying in management system standards to working with Chinese suppliers specifically - the difference between adhering to a standard and being officially certified. Where to check certifications if they're claimed. The role of standards in building client confidence. Warning about fake certificates and those provided by companies who are less credible.

09:50 to 14:07 - Key management system standards - all of these are sets of requirements with different purposes:

  • ISO 9001 - the basis for many standards due to its framework. Quality management system standard for an organization to adopt when focusing on its customer's needs and improving.
  • Other QMS standards specific to certain industries, like ISO 13485 for medical devices, IATF 6949 for the auto industry's components, and others such as for aerospace.
  • ISO 140001 - environmental management / friendliness
  • ISO 45001 - occupational health & safety
  • ISO 27001 - information security

In Chinese factories, ISO 9001 & 14001 are usually the most commonly adopted certifications as foreign clients often demand these before for working with them and so they are more appealing if they hold these certifications.

14:07 to 18:40 - Does the Chinese government's focus on the environment provide an impetus for manufacturers there to gain environmental management certifications? - discussing the government's environmental regulations and enforcement in recent years and how effective this has been. Why ISO 14001 certification would make sense for companies who are close to the limits of environmental regulations in China. Positive global recognization of greener companies, like Patagonia.

18:40 to 30:40 - Certifying to multiple standards - if a company wishes to certify to more than one standard it is possible to do this without an enormous amount of work as many standards are quite similar in many ways. Also, discussing the differences between good and bad implementations - explaining how you can save time and money in a 'good implementation.'

25:05 to 29:03 - Why and how certifying bodies and auditors often push in the wrong direction - how they can sometimes drive clients to do everything from scratch unnecessarily costing them extra money! What a good certifying process looks like. Being wary of being in a position where you're overpaying certifying bodies.

29:03 to 30:00 - Does the certification process vary a lot per certifying body? - why their similarities prevent this from being particularly problematic.

30:00 to 35:25 - The logical path for learning more about standards - the same bodies do the training and the certifications and often push companies to purchase a standard to learn from, then implementation training, and then learn how to do the auditing by doing internal and then lead auditor training. How all of these activities don't necessarily make sense and can be very expensive, especially if you have some understanding or past experience in implementing standards. It's also possible to find a lot of the information you need for free online in order to start the learning process.

35:25 to 46:21 - Why and how are audits of the management systems carried out? - explaining the difference between 1st (internal audit by supplier's own staff), 2nd (customer sends an employee or uses an external agency like Sofeast to go an audit the supplier), and 3rd party audits (auditor from a certifying body goes in to perform the audit sticking strictly to the standard's clauses), and their benefits and drawbacks.
Auditing will help buyers to vet new suppliers (a higher score than other options being favorable) or can help keep the pressure on current suppliers to assure that they maintain the standards you require.

46:21 to END - How auditors can help to suggest improvements for the future - this is especially the case when working with 2nd party auditors and using the audits as a part of an improvement program.

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7 Manufacturing Challenges Due To Lack Of Transparency In China & How To Mitigate Them

Wednesday Sep 02, 2020

Wednesday Sep 02, 2020

In This Episode...

Recently Renaud wrote a blog post on the 'China Law Blog' titled: Verifying and Monitoring Your Chinese Suppliers. In it, he discussed 7 challenges facing buyers with Chinese suppliers which stem from a lack of transparency. We'll discuss these challenges in today's episode.

When we speak of risks and challenges these days many buyers are thinking of the effect of the US/China trade war, the situation in Hong Kong, and other political issues on their business, but the risks covered here are related to the daily struggle that buyers have just to receive their products at the quality they expect and some of the steps you need to take to mitigate them.

Show Notes

Start to 4:35 - Introduction + what are the 'risks' and challenges facing buyers today that are NOT box-office news topics like US/China trade war, Hong Kong, Xinjiang, etc? The 7 situations where challenges occur due to a lack of transparency and how these are very damaging. Podcast episode on social compliance audits (referred to around 2:25)

4:35 to 12:17 - 1. Supplier screening & qualification - taking control of your supply chain and not letting the supplier keep sub-supplier information, etc, from you. 

12:17 to 18:33 - 2. New product development (manufacturing side) - includes how prices can be increased without warning and suppliers can skip pre-production steps like a pilot run.

18:33 to 25:54 - 3. New product development (design side) - including why you should expect to be given up-to-date designs for your product and not being sucked into losing the rights to your IP to OEMs who want to lock you in by holding your designs. Podcast episode on choosing the correct supplier (relevant to this section).

25:54 to 30:40 - 4. Confidentiality of information - how Chinese suppliers can play 'fast and loose' with information and IP that should remain confidential and how to safeguard against this.

30:40 to 37:29 - 5. Purchasing materials & components - being wary of counterfeit components and how to keep tabs on suppliers who may switch out components to improve their profits.

37:29 to 40:02 - 6. Manufacturing (Sub-contracting) - can you be sure that the production is truly carried out at your supplier's factory as agreed, or is it being subcontracted to a sub-supplier that you don't know about due to being too busy? Solutions to this issue.

40:02 to END - 7. Your supplier selling your products without permission - are you open to abuse by the supplier because they have your tooling and can use it to produce your products and sell to other clients or in your market against you? What to do to avoid this.

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Why Conduct On-Site Social Compliance Audits? | Vetting Chinese Suppliers (Part 6)

Wednesday Aug 26, 2020

Wednesday Aug 26, 2020

In This Episode...

We continue our exploration of the vetting process when sourcing new Chinese suppliers in this episode. You can read more about this topic in the series of blog posts on QualityInspection.org which we refer to throughout - read all of those posts here.

Social compliance audits are the next factory audit type that buyers need to be aware of and consider, certainly if you're from a big brand or in a niche where social issues (such as child labor) are common, for example, apparel.

Ideally, using a social compliance audit to assure that your supply chain is free from illegal practices such as modern slavery is an important factor in vetting and working with a new supplier. Many large companies, like Walmart for instance, have their own standards that they insist that suppliers meet concerning employee welfare, adherence to local laws, and elements like environmental standards, too. Fundamentally, a social compliance audit protects you from being associated with things in your supply chain which could damage your company or brand.

So, let's explore what this type of audit is, how effective it is, and the drawbacks it has, too.

Show Notes

Start to 8:53 - Introduction + explaining WHAT a social compliance audit is. Some examples of the 3 'big' circumstances that importers want to avoid: Child labor, forced labor, and dangerous working conditions.

8:53 to 10:24 - Does adding in the cost of improving working conditions increase costs overall for buyers? Why the costs associated with paying injured staff, negative government scrutiny, or reduced efficiency due to a shortage of staff put off by unsafe conditions can quickly escalate.

10:24 to 13:55 - Elements of a social compliance audit that are probably given too much importance, for example, working longer working hours and overtime. Even where hours worked are into an 'illegal' amount, this doesn't mean that abuses are occurring, especially in China with migrant workers.

13:55 to 17:20 - What does a 'dumb' importer do when performing a social compliance audit? The dangers of sticking rigidly to a standard in terms of forcing suppliers to lie in order to pass (this may be unavoidable if big customers demand certain things).

17:20 to 18:00 - How the 'smarter' importer approaches social compliance auditing with a selective focus. If the supplier is safe and improving, this should be the goal. Focusing on things like consensual overtime is a red herring.

18:00 to 20:30 - The different social compliance standards and how these have become a good business for large testing groups, to the point where it can be used by buyers and labs to profit from the suppliers who are forced to be audited in order to win business.

20:30 to 22:30 - How and why factories in places like China and Vietnam are improving over time naturally these days and why, therefore, many social compliance audits aren't helping other than for improving the buyer's image.

22:30 to 23:26 - The risks of social compliance auditors being corrupt.

23:26 to 24:45 - How buyers train their suppliers to lie by enforcing rigid social compliance audits with a lot of short-term pressure (pass or lose the order) and also possibly create corruption in the supply chain if the wrong auditor goes in.

24:45 to 26:52 - Why a rigid social compliance scale is good for a buyer's statistics, but not so helpful on the ground. Is it merely ass-covering?

26:52 to END - Exploring a better, more holistic way to approach social compliance audits which is likely to be less open to abuse and more likely to lead to positive changes.

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The end of Just-In-Time (JIT) manufacturing?

Wednesday Aug 19, 2020

Wednesday Aug 19, 2020

In This Episode...

A lot of commentators are discussing what's going to happen to the manufacturing industry 'post-COVID19,' in fact, we've discussed it ourselves before here!

But one topic keeps coming up, JIT manufacturing and how it has been negatively affected by the virus and other circumstances.

So, let's explore this supply chain model - why has it been so popular, how has it come under strain this year, and what's next for importers who currently use it?

Show Notes

Start to 1:31 - Introduction

1:31 to 11:22 - Some examples of what JIT is and what it isn't. Discussing the dangers of holding too much inventory, especially where risk and working capital is concerned, and long supply chains.

11:22 to 12:51 - 3 benefits of JIT: Lower working capital, ability to be more responsive to the market by accelerating production of good sellers rapidly, and the ability to cut losses on poor sellers and halt production quickly in order not to hold stock of them.

12:51 to 16:00 - Why JIT (Just In Time) Manufacturing works well with a short supply chain with fast processing times, such as automakers.

16:00 to 23:05 - How and why is JIT susceptible to external circumstances, such as the coronavirus pandemic. Is it even JIT's fault that disruption from the outside can happen, or is it actually your supply chain's setup? 

23:05 to END - What's the scope for things to get 'back to normal' or will there be lasting changing to the way supply chains are structured? The role of the US/China trade war in spurring change in, specifically, American companies.

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The Importance Of On-Site Factory Quality Audits | Vetting Chinese Suppliers (Part 5)

Tuesday Aug 11, 2020

Tuesday Aug 11, 2020

In This Episode...

We continue our exploration of the vetting process when sourcing new Chinese suppliers in this episode. You can read more about this topic in the series of blog posts on QualityInspection.org which we refer to throughout - read all of those posts here.

Now that you have done a preliminary investigation into your potential new Chinese supplier and perhaps even visited their factory to do a subjective evaluation, the next step in the vetting process is to perform a factory quality audit.

Understanding your manufacturer's grasp of quality and in-house quality systems means that you're able to assess whether they're going to be able to fulfil your quality needs down the line. Even if they're a legitimate company, this doesn't mean that they're able to produce your goods at the quality you need.

This is where an experienced auditor's keen eye and checklist can help you. A personal factory visit is useful, but do you have the expertise to look into the quality system (or lack of one) and root causes of quality issues?

So, this episode will give you a detailed introduction into how and why factory quality audits are a logical 'next-step' in your supplier vetting process as now you start to get a real understanding of your supplier's quality capabilities and reliability.

Show Notes

Start to 2:00 - Introduction + China/UK weather update (!). A reminder of the vetting new Chinese suppliers mini-series of episodes (here's episode 1 to get you started). 

2:00 to 9:00 - WHAT is a factory quality audit? Factory audits defined, different types, the difference between such an audit and a factory-visit where you form subjective evaluations.

9:00 to 12:15 - Talking about audit structure and standards, such as ISO 9001:2015.

12:15 to 15:33 - Explaining what a 'Quality System' is and why it's important to audit it. The effect that ancient Chinese wisdom from Sun Tzu, for example, still has on today's Chinese businesses and their approaches to quality.

15:33 to 19:15 - How the auditor will approach auditing your potential supplier. Importance of the checklist they need to follow and controlling the audit. What they do to cut through 'BS' manufacturers are likely to show or tell them.

19:15 to 35:47 - Renaud's TOP 8 CHECKPOINTS to focus on in a factory quality audit.

35:47 to 38:55 - Will potential suppliers be resistant to a factory audit which could be uncomfortable for them? How some suppliers can try to discourage visits by professional auditors.

38:55 to END - What can factory audits miss or what are their blind spots? Wrapping up the pod.

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