How to control a Chinese supplier?

by Renaud Anjoran on March 10, 2010

I received several emails recently from readers asking how they can increase their control over a Chinese supplier.

They experience late shipments, unacceptable quality, and/or price increases mid-way through production. Sometimes they get no response to their emails. They have the feeling that the supplier does not care about them. What should they do?

In a few words: work on the supplier’s incentives and follow production closely.

And how to do it? I have listed 4 solutions below (1 “carrot” and 3 “sticks”). They will help you control a supplier more effectively.

1. Be seen as a “good customer”

If you want to control your supplier, do not be associated with small and unprofitable orders… Because they are seldom given attention and priority.

The objective is to ensure that your suppliers take care of your current production because they are happy about it and they hope to get future orders. There are two things you can do:

  • Make your orders look more appealing: don’t drive their profit margin down to zero; be clear in your requirements and keep development work easy (for example by providing a sample to copy); do not stay in the factory for two weeks in a row, etc.
  • Find suppliers who will value your business: your orders might seem insignificant to a big manufacturer, so try to find a smaller factory. It is important that top management keeps an eye on your orders.

Want to know more? Read How Chinese factories treat their customers.

2. Know what is really going on

If you let your supplier ship the goods without somebody checking quality on your behalf, you are running huge risks.

When it comes to consumer goods for Western countries, it is safe to estimate that the average Chinese exporter ships products that are inadequate–for one reason or another–at least 20% of the time.

If you cannot control quality by yourself, get assistance from an inspection company. They propose tools for different situations. Here are two of them:

  • You should try to detect quality problems before shipment, because a container cannot be returned to the factory. So most serious buyers conduct a final random inspection, to confirm that quality is acceptable.
  • And if you suspect the supplier is not doing a good job, you should catch the issues early (and avoid poor re-work and late shipping) with an inspection during production.

Want to know more? Read Four simple steps for starting to do quality control.

3. Tie payments to results

“If you owe $100 to your bank it’s your problem; if you owe $100 million to your bank, it’s the bank’s problem.” You have probably heard this line before. The logic is the same to control your supplier.

As long as you owe money to a supplier, he has to comply with your requests (for fear of a cancelled order or a request for discount).

Then, how to ensure that (1) quality is satisfactory, and (2) timing is respected? The solution is to settle final payment only after an inspection is passed AND the goods are shipped out. This is totally standard, and you should not hesitate to require it.

Let’s take an example. You write “Penalties for late shipment: 5% per week after promised ETD” on your P/O, and you negotiate to wire 70% of payment after shipment. In this case, the supplier will think twice before delaying your order.

Unfortunately, there are cases where this will not help you control your supplier:

  • You give orders in a continuous flow, and you depend on your supplier for a good part of your business. In this case, try to work with several suppliers to minimize risks.
  • You purchase products with no customization, and the supplier can easily sell them to somebody else.

Want to know more? Read Paying by bank wire (T/T) and Paying by letter of credit (L/C)

4. Sign a contract

If you cannot follow the above recommendations, you can try to do business on familiar grounds: with a legally-binding contract.

There are lots of misconceptions. No, a purchase order is not a contract. No, Chinese suppliers are not used to signing contracts, and sometimes they don’t even read them. But yes, a contract can be enforced (in China only, except if the supplier has assets in your country) if it is drafted by a lawyer specializing in Chinese law.

A contract can give you more control over a supplier, in many ways. If you approve a factory, it can discourage sub-contracting. If you have valuable intellectual property, it can prevent copying (or re-use for other buyers). If you are not happy about your supplier’s behavior, a demand letter can frighten him into cooperating.

Contracts are mostly used for big orders, or for very sensitive projects. My clients (SMEs buying from China) do not use any contract. And, from what I observed, even mega-retailers do not bother with it (they rely heavily on the hope for repeat orders, on product inspections, and on penalties.)

What not to do

Equally important is what I did not mention in the above list. Let’s take an example: developing a personal relationship with a factory boss. It might help. But importers often think that it is sufficient, and they are mistaken.

That’s why so many local trading companies cannot control the behavior of the manufacturers they work with–even when they pretend to own the factory. Sometimes they have all wrong:

  • The factory sees them as a bad customer, since they have access to so many other manufacturers and they push prices down.
  • If they have a personal bond with the factory boss, they don’t dare to inspect quality, and they don’t even think of a contract.
  • Their payment depends on the importer’s payment, so this element of pressure is somewhat lost.

This is good news for savvy importers. If they use the right tools, they can control their suppliers. If they want to take care of sourcing by themselves, they do not need any intermediary.

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Checking quality takes more time in the factory

by Renaud Anjoran on March 8, 2010

Checking quality in a factory always takes longer than in an importer’s warehouse. Sometimes I give a quotation to a client, who replies “why do you charge 2 days? It would only take me 1 day!”

I never like to be suspected by my clients, so I have to explain the situation to them. Here is what I usually respond:

In perfect conditions it is doable, yes.

If you have to get to the factory, check the quantity, select and open the cartons, check all inspection samples carefully, take the measurements and do all the tests, check all the details of labeling and packaging… It takes time, but in theory it is doable.

The problem is, you might forget to consider three factors:

Less time available for checking quality in the factory

  • Factories do not want the inspector to arrive too early (9am is considered early),
  • They want us to get out during their lunch break (everyone goes to eat and then have a nap for at least 90min, so the factory is usually closed),
  • The last bus is around 6:30pm in the bus station.

Lower productivity while checking quality

  • The factory people often discuss the inspector’s method along the way. They are watching the job being done, so no shortcut can be taken.
  • Before leaving, the inspector has to call a manager and talk him into signing the list of findings.
  • A third-party inspector can never be as familiar with a certain product (and its specs) as its buyer.

The danger of overload

An inspector should never have to hurry up. If he does, certain issues might be overlooked, and the job is not done properly.

He should do his work methodically and follow the procedure all along (i.e. take photos, refer to documents, write down every finding, etc.).

Some clients also try to “negotiate” to get a “better offer”. For example, I tell them we can check 200 samples visually, but we will only check 5 samples for measurements. (This is based on the complexity of the product and the time we estimate it will take.) Then they ask for 10 samples in measurements, hoping to settle for 7 or 8.

This type of discussion usually takes place with new clients, who don’t understand the way we work. They think we are lazy and we don’t try to “go the extra mile” to get their business.

What they don’t understand is that an inspector in a hurry is not a reliable inspector, and they are working against their own interest.

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Inspection during production: a necessity?

by Renaud Anjoran on March 6, 2010

During Production Inspection

The inspection during production (or “DUPRO”) is the second most frequent type of QC inspection, after the final random inspection (see the list of the major types of quality inspection services).

Why is it often necessary?

Inspecting the goods after production is finished is often too late. In some cases, a whole order is found unsellable just before shipment; the factory is unable to repair it; re-ordering materials and re-producing would take 2 months; and the supplier refuses to do it for free.

After a few such experiences, many importers conclude that inspection should take place earlier (during production).

The objective is to catch quality issues before it is too late:

  • The few products that were already manufactured can (hopefully) be re-worked without inducing a delay;
  • The same issues can be avoided on the rest of production.

If quality problems are found at this stage, buyers are advised to force the supplier to work on a corrective action plan. It is a way to document an issue to make sure it is repaired appropriately… and also avoided for repeat orders.

A side about communication with suppliers… It is often better to frame it this way:

An inspector will come to check a few samples to help you adjust your internal QC efforts, so that both of us have no last-minute surprise.”

When to conduct an inspection during production?

The ideal timing actually depends on the product type and the experience of the factory. But a few rules of thumb can be followed for 80% of consumer goods, if these conditions are true:

  • The factory is used to making this kind of product involving this level of complexity,
  • The cycle time to get the first finished products out of the lines is no more than 10 days.

In such cases, the below sketch is applicable:

Inspection During Production: timing

Let’s take the example of an order of 20,000 pieces that takes 30 days to manufacture. If some finished products appear 8 days after production started, and if 600 products are available for inspection 4 days later (in the early morning), the good time for a DUPRO is 12 days after production start.

There are two dangers to avoid:

Checking too early

The very first products that get off the lines are not representative of average quality (they are usually worse). And the factory needs to have time for their internal QC, or they will claim that “of course, they would not ship this kind of defects.”

And if you think you can inspect products that have gone through a few processes but are not finished, you’d better be sure you can find quality issues this way. It depends on the type of products, but inspection firms usually don’t have the expertise to do that.

Checking too late

Most factories in Asia produce in very large batches–this is why finished products often do not appear before one or two weeks into production (and sometimes more).

If the buyer waits until 50% of the products are finished, it is likely that another 30% are already being processed. If quality issues are found at that stage, they might already be present on 80% of the order!

What is checked during production?

Naturally, the inspector verifies that production is taking place in the workshop. He can also ask for the updated production planning.

An inspection during production can be failed for three reasons:

1. Non-conformity to specs:

All the relevant aspects of the product (quantity, components, assembly, aesthetics, function, size, labeling…) are controlled, based on the buyer’s requirements.

2. Too many visual defects:

Based on the sampling plan, the inspector selects and checks some products, and then he compares the number of defects to the AQL limits.

3. Failed on-site test(s):

Some simple tests can be done by the inspector in the factory (instead of sending samples to a laboratory). For example: a full function check, to make sure that a DVD player really “works”.

What are the limits of an inspection during production?

First, it is not enough in itself. A factory might identify some problems, hide them away from the inspector, and then ship them out. This is why an inspection during production should be followed by a final random inspection, to confirm average quality.

Second, for sensitive projects, the factory might need some guidance from the beginning of production. This is the work of a technician capable of setting up processes as required.

One of my clients was sending some experienced sewing technicians to China: they were checking the way the fabric was cut, and then the way the operators did they job. Unfortunately, they stopped doing it because Chinese factories did not welcome their “assistance” and did not apply their “suggestions”… It can only work with small workshops that have few other customers.

Third, in certain cases production takes place on multiple lines or even in multiple factories. One inspector will not be able to get an idea of average quality in one day… He should stay for longer and monitor both production schedule and quality.

Fourth, very often labeling and packing cannot be checked properly. Chinese factories tend to receive packing accessories towards the end of production (because they delay payments of inputs as much as they can).

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Final random inspection: a guide for importers

by Renaud Anjoran on March 3, 2010

Final Random InspectionThe final random inspection is by far the most popular QC service in China (see my last post, where I listed the other major types of quality inspection services).

It is suitable for nearly all types of consumer goods purchased in Asia. The final inspection report is typically used by the importer to authorize shipment and trigger payment.

When to conduct a final random inspection?

It takes place at the end of production. The whole shipment quantity should be finished and available for sampling. Packing should be nearly (at least 80%) done, so that the cartons can be counted.

If these conditions are respected, the factory cannot hide defective goods in a back room. So timing is of prime importance when it comes to final checking.

I drew a little sketch to represent the key dates to watch closely:

Final Random Inspection: timing

A final random inspection usually takes place in the factory, rather than in the forwarder’s warehouse (or nothing can be repaired). So it is performed before the goods are sent out of the factory.

For urgent shipments, the inspection might occur a few hours before the products are loaded in a truck and then shipped out by air freight. This is not ideal for several reasons:

  • The purchaser has no time to study the report and ask questions to the inspection firm or the supplier.
  • The inspector only has time to write a non-official report (handwritten and without photos), so misunderstandings can occur.
  • In many cases, importers just tell their suppliers “you ship if the QC report is passed” and cannot be reached in time for a decision. This puts a lot of pressure on the factory and the inspector. And what to do if the report is failed? Or if something unexpected is found that might be unacceptable by the buyer?
  • If some quality issues are noticed, the factory might not even have a few hours to do a quick repairing!

This is why I always advise to set the final inspection at least 2 days before ex-factory date (e.g. on Monday if the ex-factory date is on Wednesday).

Some importers take more precautions: they ask for final inspections at least 2 weeks before shipment date, to leave room for potential re-work and re-inspections.

What is checked during a final random inspection?

Three types of issues can trigger the failure of the inspection, and potentially the refusal of the shipment by the purchaser:

1. Conformity to specs:

All the relevant aspects of the product are controlled: quantity, components, assembly, aesthetics, function, size, labeling, packaging, etc.

Ideally, the buyer has constituted a document listing all the specifications of the product to inspect, and these specs become the inspector’s checklist. When no such information is provided, the inspector simply collects information for the buyer’s review.

2. Number of visual defects:

Based on the sampling plan, the inspector selects a predefined number of products at random. He checks them one by one, and counts the number of defects, which are compared to the AQL limits.

3. On-site tests:

Depending on the type of products, certain tests are included in the inspector’s job. For example: a product drop test on 3 samples, from 80cm high on concrete floor (if at least 1 sample breaks or does not function any more, the test is failed).

What are the limits of a final random inspection?

Suppliers resent it

Importers often put a lot of pressure on suppliers, who risk a tough re-negotiation of prices (or even an order cancellation) if the products have serious quality problems. QC inspectors are seen as policemen, and might be bribed if supervision is not sufficient.

No 100% guarantee

It is conducted on samples drawn randomly, not on the whole quantity. There is always a small chance that findings are not applicable to the whole shipment, even if the so-called “normal” or “tightened” levels are followed.

Similarly, a dishonest factory can short-ship of switch the products just before shipment (unless the loading of the goods is also monitored).

Too late

If the purchaser only sends inspectors after production is finished, it can be too late. Either because the defective products have to be re-produced, or because re-work takes too long.

This is why I usually advise to conduct an inspection during production, in addition to a final random inspection: problems are caught early, and some suppliers see it as assistance rather than policing.

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Corruption of inspectors: the role of social pressure

by Renaud Anjoran on March 1, 2010

Like in most business, most problems in the QC industry come from human factors. The main challenge to proper execution of our mission is without any doubt the risk of corruption of inspectors in factories.

There are basically two types of bribery:

  • Outright corruption, where (generally) an envelope of cash changes hands. All inspectors know it is forbidden and they are taking risks.
  • A more subtle game, and certainly more frequent, where the supplier treats the inspector in a way that makes it nearly compulsory for him to repay these favors. The force at play is social pressure. This is what I am studying in this post.

Why is it difficult for inspectors to avoid social pressure, and why is it compulsory to pay the supplier back? All inspection firms make it clear to their staff that it is forbidden. Yet I have seen many Chinese inspectors being passive victims of savvy suppliers.

I found some insightful elements of response in Influence: The Psychology of Persuasion, a bestseller written by Robert Cialdini (a professor of psychology). It helped me respond to several questions:

Why would an inspector feel like he has to pay back the supplier’s favors?

In some cases, inspectors feel the obligation to report their findings in a manner that is more positive to the supplier:

The rule [of reciprocation] says that we should try to repay, in kind, what another person has provided us.

By virtue of the reciprocity rule, then, we are obligated to the future repayment of favors, gifts, invitations, and the like. so typical is it for indebtedness to accompany the receipt of such things that term like “much obliged” has become a synonym for “thank you”, not only in the English language but in others as well.

After intensive study, sociologists like Alvin Gouldner can report that there is no human society that does not subscribe to the rule. And within each society it seems perversive also; it permeates exchanges of every kind.

Then, why don’t inspectors always refuse transportation and lavish meals provided by suppliers, since their employers reimburse this type of costs?

Some inspectors emit signals that they would appreciate a ride to the factory, or a nice lunch. But does it change something if it is the supplier who invites them, or even forces their hand? Apparently not:

“Another person can trigger a feeling of indebtedness by doing us an uninvited favor.”

Another social scientist, Marcel Mauss, described the social pressures around the gift-giving process in a very clear way: “there is an obligation to give, an obligation to receive, and an obligation to repay.”

This is the heart of corruption by social pressure… It can be either active or passive, but the result is the same!

But is it possible to refuse the first gift, to avoid feeling indebted?

Absolutely, it is possible. But very difficult. A local inspector naturally feels social pressure.

Cialdini describes an extreme situation where a a sect guru in Guyana called for the mass suicide of all residents, in 1978. One woman did not comply and left the village:

She attributes her unwillingness to do so to her earlier refusal of special favors from him when she was in need. She turned down his offer of special food when she was ill because “I knew once he gave me those privileges, he’d have me. I didn’t want to owe him nothin’.”

This is the key: if an inspector does not want to be biased in his reporting, he should not ask nor accept any favor from factories. But that means he should be prepared to be rude to the supplier, because that’s what it takes to be faithful to his employer.

Bottom line: if you pay your inspectors well and they feel good about their company, they will try not to play these games. If you pay them a “competitive salary” and the only thing you do is check on them, as the large QC firms do, your inspectors will not fight social pressure.

How strong is social pressure in China?

According to many social studies, the rule of reciprocity works in all human societies.

I am certain that social pressures around gifts, favors and rituals are stronger Chinese culture than in most other cultures. And, to make things even worse, the Chinese don’t distinguish their personal and professional relationships as clearly as we do in Europe or in the US…

Implications for inspection firms

Unless we pay inspectors above market price, make them feel part of a team, and make them feel they are making progress in their job, we run a high risk of inaccurate reporting because of these human factors.

Another solution would be to bring foreigners in China to perform inspections… But that’s not realistic on a large scale.

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PS: I know corruption is not exclusive to China. But this blog is focused on this one country, so that’s the context in which I discuss this topic.

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The four types of quality inspection services

by Renaud Anjoran on February 26, 2010

Four types of quality inspection services are usually distinguished. Each one corresponds to a particular step in the production process. They are all part of the toolbox of every importer, when it comes to buying in China and other low-cost Asian countries.

Recently I tried to summarize the options available to buyers, in a visual manner.

The four types of quality inspection services:

Quality inspection services

All quality inspection services are not adapted to the same situation:

1. A pre-production inspection tells the buyer which kind of raw materials (or components) will be used. Factories are often suspected of lowering their costs by purchasing substandard materials, and this can be disastrous for the buyer (e.g. the wrong kind of chip in an electronic device).

The pre-production inspection can also focus on the processes followed as production starts. Sometimes this can also be critical, as Chinese factories very often cut corners and do not respect the buyer’s blueprints (e.g. patterns for cutting fabric are received from the buyer, and they are modified to make the process easier and faster).

2. A during production inspection (often called “DUPRO” in the industry) allows the buyer to have an idea of average product quality, early in the production cycle. It is the most useful and the most under-rated tool at the disposal of importers, who often only rely on final inspections.

It usually takes place once some finished products have come out of the lines. If quality issues are found, what is already produced might be re-workable, and corrective actions can be taken for the rest of the job. It gives buyers the time to plan ahead, and even to avoid delays (repairs and re-inspections take much more time when problems are noticed after all production is finished).

3. The final random inspection (also called “pre-shipment inspection”) is by far the most common type of QC check. It takes place once 100% of shipment quantity is finished and at least 80% is packed, so the inspector can really choose samples are random–this is not exactly the case if inspection takes place earlier–so suppliers cannot play games.

It puts pressure on suppliers and gives power to buyers. Its objective is really to confirm a shipment’s quality, rather than catching issues early. Therefore I usually advise my clients to complement final inspections with a DUPRO, to avoid finding disasters at the last minute.

4. The container loading inspection, like the pre-production inspection, it is seldom used. But it can be a worthwhile option in some specific cases.

It can be useful if the buyer has a precise loading plan and needs it to be respected very precisely (e.g. some cartons are too fragile to be placed at the bottom), or if the packaging is not conventional (e.g. some garments hung on bars, with no carton protection).

It can also ensure that the right kind of products are shipped out in the right quantity, when the importer places no trust in his supplier or when several suppliers bring their products for consolidation.

A final note about the use of quality inspection services:

Only the most sensitive projects require all four types of inspection. Generally, only one or two of these tools are used, depending on the risks identified by the buyer.

These quality inspection services are used mostly for consumer goods involving little customization. Different approaches are often chosen for ensuring that industrial products are up to specs (much more attention is spent during development and early production).

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China product quality: any improvement?

by Renaud Anjoran on February 25, 2010

Some buyers ask me if China product quality is going up over time. It is a tough question.

I am not going to badmouth Chinese factories in this post. They are certainly not the only ones to blame. A good proportion of quality issues in China pop up because the importer doesn’t take his responsibility.

Anyway, I don’t think there is an easy answer:

  • On the one hand, most sourcing professionals say that yes, there is improvement over time. I think what they mean is that the number of “good” factories to choose from in China is increasing. Overall they are probably right.
  • On the other hand, from my observations, product quality does not tend to go up in certain industries in China.

So the response cannot just be “yes” or “no”. Over the past five to ten years, China quality has only increased in certain product lines.

First, which products have seen clear improvements in quality?

Certain kinds of products cannot be sold at all if a certain quality standard is met, and cannot be repaired easily in the importing country. This ensures that buyers spend time and energy to find suitable suppliers and monitor their product quality.

This is what Mr. Pinney, from BCG’s Shanghai office, recently wrote in Can China Meet the Quality Challenge?:

A direct correlation seems to exist between Chinese suppliers’ adherence to quality specifications and the degree to which their industry is regulated in the West. For instance, pharmaceuticals and foods tend to be more advanced in quality control “largely because of the pressures and incentives at the client end,” Pinney says. Similarly, Pinney sees significant quality improvements in the automobile and white-goods industries.

For sure, China manufacturing has made huge progress. Many luxury cars are made here. And I see some successful Chinese brands getting distributed in high-end department stores and boutiques, at the price point of most imported products.

Second, why has average quality stagnated, or even decreased, in certain product lines?

I have worked extensively in sourcing and then quality control of textile products. My opinion is that quality has NOT improved in that industry. I see mainly three reasons:

  1. As Pinney also wrote, “The downside to quality mess-ups is relatively small in shoes and textiles.” If a T-shirt is a little too small, the worst case scenario is a re-labeling. Finding a discount channel to sell garments is not difficult, if prices are low enough.
  2. Pressure on price is intensifying, so importers deal more and more directly with manufacturers. It means there is no trading company to have a look at product quality, and sometimes this function is not replaced by third-party inspections.
  3. As costs go up in the traditional exporting areas of China (around Guangzhou and Shanghai), new factories open in cheaper cities like Shantou, Quanzhou or Wenzhou. The learning curve is not always respected before they start exporting to developed countries.
  4. Small workshops, producing the lowest grade of products, keep opening up. Established suppliers subcontract all kinds of orders to them (including products for export to the US or Europe) to widen their margin. This is what keeps competition so tough in China. Here is how Jack Perkowski describes it in Managing The Dragon:

Where do these Chinese competitors come from? New entrants sometimes seem to appear out of thin air, but they actually emerge from a purely local market—a market that’s beneath the radar of most foreign observers, and in most cases is much larger than Western competitors would ever expect.

The China market is actually two distinct markets. For virtually every product, there is a ‘foreign/local’ market, characterized by higher technology and higher price, and a second purely ‘local’ market, which is characterized by lower technology and lower price.

Due to vast income disparities, the total China market tolerates all levels of technology and quality. (Average incomes in cities like Beijing and Shanghai are $2,500 per year, while average incomes in the countryside, where 750 million people live, are approximately $500.) Any company, no matter how low its quality and level of technology, will find a market for its products in China—if its price is cheap enough.

Anybody has experience in another product line, and agrees/disagrees?

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Checking the export cartons

by Renaud Anjoran on February 23, 2010

The export cartons are the cartons handled during transport to the importing country. Many importers leave the cartons’ specifications up to the supplier’s choice, but in Asia this can be a big mistake.

Properly-designed export cartons ensure that the products, but also the “inner packing” (which is often used on the point of purchase), are protected. A poor outer packaging can turn perfectly good products into unsellable items.

So this is a very important point to check, for 98% of QC inspections performed on consumer goods.  Exceptions are products that are either shipped in bulk or shipped with another form of packing.

Recently I found some very interesting information on this issue, and I am going to reproduce it below.

First, what conditions are export cartons often exposed to?

In The Importance Of Packaging (an article from a Pro QC Int’l newsletter), an expert explains why export cartons’s strength and construction should be studied carefully:

Frank Ruotolo, an experienced packaging engineer, explains that “the most important consideration is the shipping environment for that product.” He adds that “you need to know how the pack will be stacked and handled throughout the entire distribution cycle. The environmental conditions that the pack will be exposed to are also extremely important. For instance, a carton will lose half of its stacking strength in one week in a high humidity environment. Imagine what happens to the carton strength of a product that spends six weeks on a container ship from Asia the United States!”

Not understanding the shipping environment is the most common mistake that Frank sees in applications . One example he notes is the failure to recognize how the cartons will be stored in the shipping container or trailer, which affects the carton’s integrity. Orientation is an important consideration because the carton itself only has stacking strength in one direction, which is why it is imperative that the pack be designed the way it will be stacked in transit.

Frank recommends that master cartons be corrugated RSC (regular slotted containers). “The corrugation of the carton should run vertically when in its intended shipping/stacking orientation. The board strength of the carton should be adequate for the size of the carton, the weight of the product and the shipping environment.” He also adds that for “international shipments, the long shipping time in a high-humidity environment is not always factored into the corrugated board’s strength selection. The carton’s compression strength will be severely decreased by the time it arrives at its destination. It then still has to go through the remainder of the distribution cycle in this weakened state.”

These are very good points. Export cartons have to be able to withstand several shipments. In many cases, this is what happens to them:

  1. They are shipped from China to the destination country, which means at least on loading and one unloading (and more for LCL shipments),
  2. They are stored in a warehouse for up to a few years,
  3. They are loaded again on a truck or on pallets, and delivered to the store.

Second, what are the main points to specify and to check on export cartons?

In Retail Packaging Check – Verifying your China goods pre-shipment, Andrew Reich makes a list of the usual checkpoints regarding packaging. It focuses on the export carton and the other packing elements (gift box, polybag, etc.). If you have to specify what you require in terms of packaging, make sure you read this post.

Third, aren’t there industry standards?

Some standards are widely used. For example, the ISTA 1A for the carton-drop test (designed to check the resistance of boxes). I have proposed it to several clients, and I got very diverse reactions.

  • A Swiss mail-order company told me it was really too tough on the products, so we settled for an easier test. I remember we were preparing an inspection of glass products, so I can understand their reaction.
  • Conversely, a Canadian wholesaler told me their standard was tougher than the ISTA 1A, simply because of their customers’ high requirements. The export cartons had to be brought to several distribution centers, and from there the inner cartons were shipped to individual stores.

To sum up, I will say these consideration depend both on the type of product and on the distribution channel… There is no one-size-fits-all solution!

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Chinese factory workers: it’s all their fault!

by Renaud Anjoran on February 21, 2010

Chinese factory workers are often seen as the obstacle to higher quality, fewer working hours, and better safety measures. Let’s study each of these issues separately:

1. Chinese factory workers, not capable of good workmanship?

As I wrote before, managers like to point to individual operators as the cause of quality problems. And I admit it is quite tempting in certain cases.

For example, Chinese factory workers usually don’t stop their work flow, even when they notice defects that were created in the earlier processes. From the whole factory’s perspective, it is useless work that will have to be repaired (and it might even render re-work impossible).

In other cases, some workers do a poor job themselves, and don’t seem to care a bit.

What do their managers say, in these cases? “They don’t invest themselves in their jobs, because they might leave to another employer soon”, ”they have no concept of what is acceptable on Western markets”, “they come from farms and have very little education”, etc.

This is just too easy. Most factories offer no training to their employees. They don’t even show them a sample of the desired finished products. They create no procedure that says “if you see faulty products, go see your supervisor”.

It is actually even worse. Chinese factory workers are paid according to the number of pieces they produce, so their individual output quantity is the sole objective… No matter how they are producing it.

To sum up, the fault rests entirely with management. Not operators.

2. Chinese factory workers, pushing to work longer hours?

I heard this one several times, and it often means “nothing can be done, the situation is desperate”. Here is an excerpt from The China Price, by Alexandra Harney:

“The basic trouble is the workers want to earn more in a short time”, Chan told me. “If any factory has overtime in some area, all the workers will go to it. Workers like overtime. They tell me, ‘I haven’t come here for a holiday. I’m here to earn money.’ If you don’t want to have overtime, they will leave.”

“All Chinese people want more money because it’s the culture… the workers like to work and earn money because they don’t want to stay here very long. After a few years, they’d like to go home and have a very small business”.

So, most factories do not respect the maximum number of working hours because they need to find workers? Whose fault is it?

Local governments, in most areas, are not strict regarding this issue. They only make a few inspections, and they probably don’t really care about it.

Large importers (particularly brand name companies) make this situation worse with social audits. They don’t care about the real situation: all they want is nice audit reports. They have actually pushed factories to hide non-compliance, and to cheat with double accounting systems. In the end, it makes it harder to solve this problem.

And another issue was created by large importers. They constantly switch suppliers for a slightly better price. How can a factory invest in a better organization (for higher productivity and higher quality) if it is forced to keep rock-bottom prices just to keep its customers?

So I would say the fault rests mostly with foreign buyers.

3. Chinese factory workers, refusing to wear protective gear?

What is seen as acceptable regarding worker’s safety in China (and other developing countries) is a bit scary. The employees might not be aware of–or care about–risks, but their  employers are responsible for health and safety conditions.

I just read a beautiful post about Worker Safety In Chinese Factories (h/t to CLB).

Chinese factory workers without protection

The author visited a very rudimentary Chinese factory (see photo above), and questioned the manager about safety issues:

The factory manager told me they tried a while ago to get the workers to wear goggles, gloves, boots, face masks and other saftey equipment. But the workers refused.

The factory manager said they tried to introduce a scheme to penalize workers 5RMB (US$0.75c) each time they were found not wearing safety gear.

But after a while, with too many fines being docked off their salaries, workers began to leave the factory in droves to work at other factories where stringent health and safety requirements were not in place. So the factory gave up the scheme.

Oddly enough, it’s not only factory bosses who don’t care much for worker safety. It appears that workers themselves don’t care much for their own protection either. Unlike in the West, where things have almost gone to the other extreme, there is no health and safety culture among folk in China. The only way health and safety standards can be improved in Chinese factories is for tougher laws to be introduced and for stricter enforcement of existing health and safety legislation. Random inspection of factories would be a good start. Sometimes it can be a government problem with a lack of manpower, but at other times corruption can be an issue.

Is it really due to the Chinese factory workers’ lack of awareness about the risks they are running? I don’t think so.

One element the author overlooked is that protective gear (be it goggles, gloves, etc.) slow down the operator. And the precision of the work is also reduced.

It means the same operators would have to keep at it for longer, and probably for a higher proportion of defects, just to produce the same output… And to get the same pay.

Is it fair to impose protective equipment, if a worker cannot earn as much when wearing it? What the manager should have proposed is (1) to wear protections, and (2) to get a higher pay per piece. Anything else it unreasonable.

Once again, Chinese factory workers are not at fault. I’ll give some of the blame on the factory managers who do not want to increase salaries.

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Statistical quality control tool: get a valid sampling plan

17 February 2010

What is the difference between statistical quality control and unprofessional inspections? A professional inspector will follow a valid sampling plan.
A sampling plan should take care of three fundamental concerns:

There should be a clear limit between acceptability and refusal,
This limit should be set before inspection starts (actually, even before production starts) and be transparent for the [...]

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