Advice and tips for successful quality control of consumer products made in China: sourcing strategies, supplier communication, QC inspections...

I got an interesting comment on a previous article (4 proven ways to enforce your quality standard in China):

If I am hiring a third party to do the quality control should I get a “perfect sample” from the factory, then send it to the third party quality control company? Or is it possible for the factory to send the perfect sample straight to the quality control company?

I responded that there is no universal solution, but I suggested a few ways to do this.

The most reliable way is this:

1. The factory sends you several samples,
2. You approve them (hopefully),
3. You send a few samples back to the inspection company.

This way, the factory has no way of substituting or degrading the sample used to evaluate their production. It can be a real temptation, because it can easily make the difference between a passed report and a refusal.

If you can’t afford to do this way (either because of the cost or the timing), you can find another solution to put a sample at your inspector’s disposal in the factory:

• For example you can sign on a sample when you check the launch of production yourself (make sure you send a photo of the sample with the signature to the quality control firm).
• You can also send the samples to the factory and tell them to keep it in a sealed package, “to be opened only by the inspector himself”.
• Take some products from your own stock and send them to the inspection company. This is only possible if the products are identical to what you want the manufacturer to produce for you, of course.
• If the products are expensive to send (example: furniture, car seats…), you can cut small pieces out of the sample you have in your office. It should be enough for the inspector to compare the materials and their look & feel.

It can be a headache for the first orders, but it is usually easier for repeat orders. Don’t be discouraged, putting an approved sample in the inspector’s hands is necessary if you want to realize the full potential of quality control.

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Should importers simply contact a quality control firm, explain their situation, and follow the advice they receive?

I don’t believe so. It might actually not be the best use of their money, if they want better results out of their procurements in China.

There are basically three best-selling quality control solutions that make up the bulk of QC firms’ profits:

• Product inspections (around $300)
• Factory audits (around $600)
• Laboratory tests to certify regulatory compliance

The industry has no interest in offering a “no frills” service… even though it is in the interest of most buyers.

Let’s see how it plays out for each of these three solutions.

1. Control of product quality:

I distinguished 3 levels of quality inspection.

Bare minimum (very low cost, except for heavy products):

Ask your supplier to send you photos and production samples.

Better (a little time + 150-200 USD):

Have an inspector go to the factory, draw some random samples, count the defects, and take photos of the products and their packaging.

Even better, make sure the factory has a “perfect sample” for reference, and ask the inspector to send a random sample to your office.

Best (some preparation time + 300 USD per man-day):

(1) Define the inspection checklist before production and get your supplier’s agreement.

(2) Make sure a “perfect sample” is in the factory or is sent to the inspector.

(3) Have an inspector go to the factory, draw some random samples and look for defects, verify if each checkpoint is respected (with supporting photos), and run appropriate tests on a few samples.

My advice:

If you can afford to get the “best” solution during production and before shipment, by all means do it! But you should go for the “better” solution if that’s the most you can pay for.

If you start making trade-off and avoiding inspections during production, you are not really reducing risks. What if you only do a final inspection, and you find that most products are unsellable? It’s too late!

Even a quick-and-dirty review of the first finished products can save you several weeks and many thousands of dollars. If issues are found at that point, you have time to plan ahead and to ask the supplier to address the problem.

2. Selection of a supplier:

Bare minimum (some time + very low cost):

Get several contacts on trade shows or online directories; request samples and quotes; ask for other customer references and call them; ask for info about the factory (address, number of workers, photos of the building).

Better (a little time + 200 to 600 USD):

Have someone (you or an agent) go in the factory to check capacity and general organization; ask your supplier to certify that production will take place there; run a background check on the supplier.

Best (a little time + 600 USD):

Send an auditor to check the factory quality system in depth, and if necessary the working conditions.

My advice:

The logic is that same as in part 1. If you can follow the “best” solution to approve a primary manufacturer and a back-up supplier (in case you have to abandon your “partner” at one point during the project), do it.

If not, trade down to the “better” solution but, if your order cannot be canceled, get back-up factories lined up. Except maybe if you have a very stable supplier and he keeps producing the same goods.

3. Certification of product safety:

Bare minimum (free):

Before issuing orders, ask the supplier for a past certification of the same product reference, or at least of the materials to be used in production. It gives no guarantee but it is better than nothing.

Better (can be quite expensive, depending on the product):

(1) Send an inspector to pick some samples at random in the factory and to send them to a third-party lab of your choice.

(2) Ask the lab for the standard list of tests to run on this product for its destination market. Perform all the compulsory tests. Get the results yourself and pay for them yourself.

Best (at least as costly as “better”):

Do the “better solution” on the main materials, before they are used in bulk production.

My advice:

Depending on your product line and your country, lab tests can be prohibitively expensive (that’s what I call the importer’s dilemma). Sometimes it is really necessary to avoid obvious risks (say, for children jewelry that might contain lead). In other cases it is out of question (say, for bed sheets exported to Africa).

If you do need lab tests, go for “better” and if possible for “best”, which might not be more expensive.

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Sometimes a client does everything he can to ensure that inspections will take place in good conditions. They send me clear specifications about the product, they pass the right message to the supplier, and they keep a couple of days between the inspection and the ex-factory date.

And yet… All sorts of unpredictable things happen. Delays from the factory side, of course. Or changes in shipment plans due to urgencies on the customer’s side. Or power cuts that last for 5 days. Or a cancellation of order. The list can go on and on.

In some cases it means we have to spend more time, or allocate more inspectors than we originally planned when the quotation was prepared. For example, if an order is cut in two partial shipments, it takes more man-days to get the two batches of goods inspected.

There are basically two ways to deal with this.

First, the quality control firm can re-issue a quotation based on the new information. That’s what the “majors” of the industry do: “please send us a new booking form and we’ll issue a new quote”. Sometimes it is the right thing to do: if the supplier is causing some troubles, let him pay for all the extra charges he incurs.

The second way is to think “we are here to help the client, and it’s not his fault if plans change”. I often do it with my good clients, and I am certainly not the only one. I might lose a bit of revenue in the short run, but the client remembers it and appreciate the ease of dealing with QC issues.

It is a little dangerous, though. Suppliers can easily abuse the system–I always say it is “exceptional”. Chinese suppliers are quick to see a favor as a given…

Let’s take an example. Last season we maintained a quotation unchanged even though the shipment was split (a bit before Chinese New Year, and the rest after). This season, the same supplier fails to present 1 reference to us because production was late.

Their reaction? They told us “but last time you accepted to come twice”. What I reminded them is that, if they confirm a certain quantity for a certain day and they don’t keep their promise, we don’t come back for free to inspect a second time. Not for free, anyway. And usually at their charge!

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The usual process for third-party inspections of production is this:

• The buyer appoints an inspection firm and communicates the product specs;
• An inspector is sent to the factory with a sampling plan and a checklist;
• The buyer uses the inspection report to estimate whether the production can be sold on his market.

In this context, I can understand why most manufacturers do not like the idea of QC inspections (even though it is often in their long-term interest). When quality issues are noticed and then communicated to their customer, they have the same feeling as a driver who is arrested for speeding.

But, as long as the inspector is professional and reports the situation clearly, there is no reason to complain…

Except when the buyer refuses the goods, asks for corrective actions, and send an inspector again for re-inspection. Of course, this second inspection is at the supplier’s charge. Generally, they have to pay for all the consequences of their mistakes, including penalties for late shipment and/or for air freight.

The amount to pay for re-inspections

If there is only 1 day of work, and if the reason for rejection was very clear and legitimate, the factory can only complain that “it is expensive”. They compare the inspection cost to the salary of their in-house controllers, so even $100 would be expensive in their mind. no need to discuss.

If there are several days of work for the re-inspection, the supplier usually says that they will only pay for 1 man-day because “it can be done in 1 day”. It is really hard to explain why an inspector can only do so much in a day if we want his findings to be clear and reliable.

Another source of misunderstandings is the aborted inspection. Let’s say we send 1 inspectors to check 2 references, and only 1 of these references is presented. A few days later, we have to come back to check the other reference, but we could have checked it if the original planning had been respected. Many Chinese suppliers have a hard time admitting that it should be at their charge.

So all I can do is give a price, respond politely to the supplier, and make it clear that it is a quotation and NOT a negotiation.

How re-inspection fees are settled

The simplest way to settle re-inspection fees is this: the buyer pays for it, and then issues a debit note to his supplier. This way, it is deducted from payment.

Some of my clients prefer to force the supplier to pay my company directly. In that case, I usually ask for payment in advance (except maybe if the supplier seems reliable and is based in Hong Kong).

Chinese suppliers have all kinds of ways to signal their unwillingness to pay. For example they might say “we need your original invoice with your chop”, or “we can only pay in RMB, not in USD”, or “our manager is out of town, so we can only settle it next week”.

Fortunately, importers understand why I require payment in advance.

I am really glad I don’t sell to Chinese companies. Giving credit to customers is pretty common here, and you never know when you will get paid…

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In the industry, we estimate that 80% of importers don’t do control the quality of what they buy (i.e. either by one of their employees, or an external inspector). Even when the goods are headed to demanding markets like Europe or the US.

Is it an economic problem? Sometimes. It seems weird to spend $300 to verify the quality of a $1000 shipment, especially with a regular supplier.

Is it a timing problem? Sometimes. The buyer is in a rush and pushes the supplier to ship “ASAP”. Anything that might delay the operations, even by one hour, is dismissed.

However, I think most importers who don’t do quality control do not do it because of a lack of education about the way their products can be checked in the producing country.

I thought about it when reading this section, in Designing the obvious:

[A fast food chain's marketers] asked a bunch of people if they would find appealing the idea of ordering a low-carb version of their hottest-selling cheeseburger. Resoundingly, people said they would… The marketers knew they were onto something. So they whipped up a plan, sent the recipe-makers into action, and released the sandwich… The sandwich failed miserably.

The sandwich failed to live up to its promise because the promise was based on meaningless conversations with people who thought they would do the smart, responsible thing and make the healthy choice.

It rings so true to me… In met with hundreds of buyers, on trade shows, who said “Very good, we’ll call you next time we have a shipment” enthusiastically. And they never even responded to my email, 6 months after.

Some of them contact me a while later and say “you were right and I should have followed your advice. I got a really bad experience, I lost a lot of money and also the trust of a customer”. Then they are willing to make the effort to make quality control part of their working method.

The point is that people make the choices they know how to make.

Taking the initiative to do quality control is something many buyers don’t know how to do. The first time they are not comfortable about it. They don’t know how to tell their established suppliers. They don’t know how much money and time it is really going to cost them. They don’t know who can help them.

If you are in this situation, feel free to read these articles:

4 steps to start doing quality control

4 proven ways to enforce your quality standard

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