I always tell importers not to trust Chinese manufacturers’ certificates. I am trying not to cast doubt on ALL Chinese suppliers, because some of them are honest. On the other hand, it is better to push inexperienced importers to be on the cautious side, and to adopt sound QA systems rather than following their “I trust this guy” feelings.

To offer a somewhat balanced view, I feel obliged to write about a huge scandal that was recently uncovered in France. It is actually quite similar to some Chinese scandals (melanin in powder milk and in dog food, anti-freeze in toothpaste…).

A fraudulent company, called PIP, sold breast implants that might release undesirable (but, it seems, not carcinogenic) substances. According to CNN, “300,000 women in 65 countries around the world are thought to have had them fitted, both for cosmetic reasons and in reconstructive surgery following treatment for breast cancer.”. Ouch!

According to the Guardian, PIP did circumvent the tests conducted by the laboratory they chose for their CE certification:

The trouble began after PIP had obtained its CE mark. TÜV Rheinland, which has a good reputation in Germany, did send in inspectors on occasion. But PIP knew they were coming. A defiant Jean Claude Mas, the owner of the company, admits he was buying cheap industrial-grade silicone to fill the implants, costing €5 a litre, instead of medical-grade which cost €35.

“TÜV would announce its visits 10 days beforehand,” he told French journalists. “That was the routine. I would give the order to hide all the documents regarding the non-authorised PIP gel and as far as the containers were concerned, the staff would organise themselves to make them disappear.”

Another similarity: the regulation is not adapted (remember, Chinese suppliers do not run any risk if they ship unsafe products abroad):

Manufacturers of breast implants and hip joints must get CE mark rather than licence based on evidence from clinical trials.

Oh, and one last similarity: salespeople tended to offer “visits to the spa” to influencers/purchasers (how about KTV?):

The European-wide trade body, Eucomed, set out an ethical code in 2008, requiring members not to meet doctors unless for work and not to offer rounds of golf or visits to the spa.

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Related article: 5 tips for testing China products against regulatory standards

Over the last month, I received several messages from readers on this topic. So I tried to think of a few ways to reduce the frequency of QC inspections without taking high risks.

1. Two methods I approve of

The two most common solutions are:

• Reducing the inspection severity (i.e. checking a smaller number of samples by choosing the “reduced” severity);
• Skipping some lots randomly.

But then, how to select which orders can receive a “lighter dose” of quality control? In the words of one of the importers who wrote to me:

We write PO’s to many factories and my gut tells me which factories are good factories with regard to quality but it is difficult to quantify. What would be your suggestion to quantify this?

The ISO 2859-1 standard actually gives a method to switching from normal severity to reduced severity, when a factory get to a certain score. I reproduced a summary of the switching rules below.

If you want to follow this rigorous process, you should work hand in hand with a quality control firm — unless you are already familiar with this standard.

I don’t know of any rigorous method for determining which manufacturers deserve a “skip lot” procedure, though.

As a rule of thumb, if two inspections in a row on reorders of the same product are fine and you trust the factory owner, you can switch to controlling only 50% of their shipments. Make sure the skipped lots are announced at the last moment, and in a randomized manner.

[UPDATE: please don't miss the first comment below this article, which offers some great ideas on this topic.]

2. Some other methods you should avoid

As I wrote in How to reduce your QC inspections budget?, I have seen buyers take decisions without much thought, with disastrous results:

Bad ideas to reduce your quality control expenses:

• Skip inspections on all orders below 20,000 USD (for example)
• Pay only for 1 day of inspection, even when the professionals advise to spend several man-days
• Look for a cheaper provider of QC inspections (in China there is always a lower price, but the service is usually quite different)

Do you agree?

I recently had the opportunity to work with Hubert Delelis Fanien, founder of Aka Outspring. He has set up a training center for QC inspectors in Shenzhen, China. He also helps local companies hire and evaluate their inspectors.

I was impressed by his unique teaching approach and by his experience in managing Chinese staff. He was kind enough to respond to my questions.

Q: Can you tell us a little about your background and how you developed the methods you use to teach QC inspectors?

In my 16 years working for a major French multinational — including 12 years as a Business Unit Manager in China – I have recruited and trained hundreds of Chinese team members.

My mission was to ensure customer satisfaction through Quality. I had to adjust my training and coaching method in order to become more effective. I had to adjust the way of delivering the competency, rather than the content itself (which is exclusively concrete, with a strong focus on the “sense”). My teaching method has been validated in the field, through trial and error (doing and then measuring results).

I used this experience to set up an exclusive and unique Operational Training Center [see below photo].

Q: What service would you offer to a sourcing office with, say, 5 inspectors on the ground and no in-house training/auditing system?

The aim of my company is to transmit competency: to make people and their organization autonomous. So my offer would be :

1. Train the team and provide the coaching tools,
2. Identify the person capable of being an instructor,
3. Coach the future instructor to create and implement the training on his team.

Our objective is autonomy by creating a learning cycle.

Q: What are the most widespread mistakes committed by inspectors in their job?

I have observed 3 major mistakes and/or difficulties that impact systematically reliability and efficiency of the inspection:

1. The way to pick cartons for inspection (randomness does not mean there is no procedure to follow),
2. The variance between 2 inspectors in judging the same non conformity,
3. Missing or forgetting control points (non-respect or non-existence of the sequence in the inspection process).

Q: I noticed that you spend some time explaining to the trainees what a foreign buyer expects. What are the most frequent causes of misunderstanding?

Probably the most frequent cause of misunderstanding is the difference of value of a “YES” for a Westerner and for a Chinese.

As a Westerner, there is only one value, only one level. From a Chinese perspective, I used to say there are 3 levels: “yes, I hear you”, “yes, I understand you” and “yes, I will do”. You’d better know which one you are getting when your Chinese supplier replies “yes” to you!

Q: You also search and evaluate candidates for the position of quality manager. What traits and skills do you look for?

I always focus on personalities, because competency can be learned while personalities don’t change.

Each position and company will require specific traits. It is important to know and observe how the company and its employees work, in order to identify which traits will increase the chances of integration and future success inside this company.

For the position of Quality Manager, the candidates with the most suitable personalities will demonstrate :

1. An active attitude (a passion in acting, doing, using his hands),
2. A masculin dominant character (a desire to do well, strong convictions, and a willingness to go ahead),
3. A rational intelligence (capacity to extract patterns and to identify links between situations).

All those attitudes will make it easier for the candidate to identify non conformities and variances, to convince their co-workers, to obtain concrete action plans, and to lead permanent progress.

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If you have questions, you can contact Hubert by email at: h.delelis [at] akaoutspring.com.

Let’s say you are an importer, looking for a provider of QC inspection services in China. You will evaluate candidates on how serious they look, on their size, and maybe on their knowledge of your product line, right?

Well, you’ll be missing one important question: are they focused on flexibility or on reliability? Inspection firms be both very flexible and very reliable.

I distinguish two types of companies in the industry.

Note: I excluded the largest companies from this analysis, because they are more focused on serving big retailers, and they make most of their money from laboratory tests.

Type A: the “high flexibility, low touch” agency

This model appeared less than ten years ago, but its pioneer has grown extremely fast and has inspired a series of copycats. They are very present on the internet, so you will find them easily via a Google search.

This is a suitable offer for purchasers who:

• Need to be able to book an inspection for the day after tomorrow (and who can’t tolerate a response such as “sorry, all our inspectors are already assigned to jobs, can we do this in 3 days?).
• Work on simple consumer goods, and are happy to get reports with many photos and little text.
• Want to know the inspection cost in advance, in a predictable way.
• Don’t mind booking the inspections by themselves, every time.

Type B: the “high reliability, high touch” agency

In contrast, some QC agencies follow a very different model.

This is a very good offer for purchasers who:

• Value quality over speed, and who are willing to pay, or to wait, a little more just to be sure that they will receive exactly what they have ordered.
• Work on complex products, or have special requests. They want to work hand in hand with a technician who will come up with a suitable solution.
• Want to work with a partner company (who takes over certain activities in their organization) over the long term. This is not a one-shot deal.

This is what I call hands-on buyers: they tend to work with fewer manufacturers, they often deal with one product category only, and they sell in a channel that won’t accept quality problems.

As a side note, these importers are very pleasant to work with, compared to most hands-off buyers.

How to spot whether an inspection firm is type A or type B?

Nobody admits to favor flexibility at the expense of reliability, of course. Everyone claims to employ the most qualified inspectors. It is amazing how a sleek website and a confident sales force can distort a potential client’s perception.

However, since type-A and type-B companies target different importers, their sales pitches focus on different arguments:

• Type A (high flexibility, low touch) firms boast an online booking system, how fast they are, and an all-inclusive price.
• Type B (high reliability, high touch) firms mention their outstanding service and offer a wide range of solutions. They don’t show a price on their website.

All right, now you are warned… You wouldn’t use a Ferrari to go off-road, or a Land Rover for extended highway travel. Don’t make these mistakes when you pick a QC firm.

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Some importers often over-estimate the amount of time it will take them to manage a third-party quality control (QC) firm. So I made a list of the main “touch points” and of the required steps.

Writing clear specifications and/or sending a reference sample

If you appoint an independent quality inspector and you want to make the most of his service, you need to give him the checkpoints. He will not guess what you want to see on your product & packing.

That’s a tradeoff between hiring your own QC staff and working with a service provider: your own staff will know exactly what is important, whereas an independent QC guy will need your input, preferably in a written and structured way.

But, guess what? Your suppliers also need these specifications in a written and structured way. If you weren’t doing it until now, it is a good idea to start right away…

Insisting on inspections, and tying payments to quality confirmations

If you pay for a QC inspection, you’d better use its findings to take a decision that is respected by your supplier, right? Then you need to do two things:

#1. Make sure your suppliers know that the inspection is not optional, that it will take 1-2 full days in their production schedule, and that they can’t ship out until they have your green light.

#2. Paying only after quality is confirmed. For more details, read this article if you pay by bank wire, and this one if you pay by letter of credit.

By the way, suppliers have a harder time challenging the motives of a third-party inspector (who simply records his findings) than those of a member of the importer’s staff (who might have been told to be particularly tough because this order actually didn’t sell all that well).

Booking the inspections

The inspection agency will need to know the factory address, the service date, and your product specifications. There are basically two ways this information can be provided:

• The supplier books the inspection (by filling out a special form), and the buyer sends the product specs on his side (by email).
• The importer must book the service by himself, and then the QC firm contacts the supplier to know the address and the date. I stopped counting the inspection firms that offer an “online booking system”. The ability to book an inspection on a website is appealing to some importers, but after some time they realize it can eat a lot of time.

Reading the inspection report template

If you use your own QC staff, you’ll likely have a very short (1 page) report after each day’s work. And that’s fine, since your employee knows (in theory) what is really important. On the contrary, a service provider works for hundreds/thousands of clients, and should report much more information — who knows what will make this customer tick?

In my view, the perfect report shows the most important information (the non-conformities to the buyer’s specs) toward the top of the report, and the least important at the bottom (most of the photos). It also tells the buyer on which pages the major problems are displayed.

Surprisingly, this is seldom the case. The trend over the past 10 years has been to display more and more photos in the body of the report, which means the purchaser needs to read through a 20- to 40-page report. Ouch!

General business relationship management

This generally takes a very insignificant amount of time. There are always a few emails to exchange. Approving invoices takes a few minutes at the end of the month. And that’s about it…

Except if you work with the wrong people and you have to send them complaints, of course!

As part of their quality control plan, importers should decide when final random inspections should take place.

As I wrote a while back (see here), each option has drawbacks. An earlier inspection is easier on the factory, and it allows for a faster shipment. BUT the inspector’s conclusions are less reliable and less comprehensive.

My friends at the Quality Wars blog published an article (Performing Final Inspection at less than 100% Packed) that sums up this tradeoff nicely:

The most common time to inspect the goods is when they are 100% completed and packed. This is the safest choice; right for a buyer who has serious concerns about the quality of the goods. Since the goods are 100% packed prior to inspection, the inspection sample will be drawn from the entire lot of goods that is shipping. Therefore, the likely hood that any issues in the shipment, including those related to the packaging, will be identified in the inspection, is very high.

Another common standard, especially for retailers, is that inspections can take place any time after the goods are 80% completed and packed. With this standard the buyer offers a little bit more flexibility to the factory, since production timelines are usually very tight. However, these is always some risk that if the goods are inspected when only 80% is complete, the other 20% that is not complete when the inspection is performed, will contain unidentified quality issues.

The most flexible option would be to allow inspection to take place anytime after 50% of the goods are complete, and not considering how many are packaged. Although this option is extremely flexible, and good for those that are on extremely tight timelines, it opens up a range of issues. The reason for this is if there are quality issues with the packaging or in the part of the shipment that was not included in the inspection, it will not be identified prior to shipment.

I very much agree. An importer of time-sensitive promotional items will often be very flexible, whereas other buyers will require 100% packed — and might ask for inspection abortion when this is not the case.

Whatever the acceptable proportion is, there is one thing importers should not negotiate: the time between the inspection date and the ex-factory date. I used to send the below illustration to my clients, to make sure they impose it to their suppliers. I hate working in a rush!

I have been to Chinese factories a few times for solving problems. In one case, the factory pretended the goods really couldn’t be made as intended by the importer (that was true). In another case, the QC inspector found many defective goods that seemed to come from the same issue, production was still running, and the manufacturer was incapable of finding a solution.

I recently read about the steps usually followed in the Toyota group for solving a problem, and I think it is a very valuable approach. Make sure you come back to this page when you have some on-the-ground troubleshooting to do!

1. Identify the problem

What is causing a problem? How bad is it? What are the consequences (delays, scrap, poor quality…)?

The problem is certainly hurting the manufacturer financially in one way or another. Remind them about it, to get some buy-in on their side. You’ll need their patience as you go through the next steps.

2. Clarify the problem

Go on site and see what happens:

• First, make sure you know what should be happening if all were running fine
• Second, see what is actually happening, and identify what goes wrong
• Look for the point of cause, and observe it

It is important to be disciplined and to follow this process. Looking for the point of cause (i.e. where things go wrong and cause the problem) can take hours, but it s time well spent.

3. Investigate causes

• What is the direct cause of the problem?
• Launch a 5-why investigation, until you get to a cause that, if addressed, will prevent recurrence of the problem.

Again, most of the factory’s employees will try to come up with solutions, and will be tempted to skip this step. It is a mistake. Solutions are obvious if you are very familiar with a problem, so spend time to understand the situation first.

4. Test countermeasures

• Address the root cause, by changing only one factor at a time (to keep cause & effect relationships clear)
• Test new approaches until the problem stops

This is the time to implement solutions and to test them. Again, if you have followed the first 3 steps meticulously, this should be easy and obvious.

5. Follow up

• Confirm the problem is solved for good
• Make the countermeasure part of the standard operating procedure

If the manufacturer is not well organized, chances are that you will have to train the operators (not just in the day shift!) to do their job correctly. Troubleshooting is done, but is never really over in China…

Some buyers don’t want random inspections. They don’t trust the manufacturer to produce consistently at the right quality level. So they need to check 100% of the goods.

A few months ago, I described inspections on a platform, where the shipment is inspected outside of the factory before being shipped out (if it is accepted for shipment). Some large importers of apparel resort to this solution. It is also very popular with Japanese buyers.

However, it is impossible in countries like Indonesia, where most factories are in free-trade zones (and are considered bonded warehouses). The manufacturers get the fabrics and the accessories free of import duties, and they must ship the goods out directly. They can’t take the products to another warehouse.

Then, how do demanding importers do, when platform inspections are not an option?

The line inspection process

I recently met with the founder of Saxa, an Indonesian quality control firm. He explained to me that they set a team of 10 ladies at the end of each production line.

I got the below explanation from Saxa’s website (click on the image to enlarge).

The process looks like this:

• The QC team checks the garments and sorts out the defectives
• The factory packs them
• A QC team member checks the quantity and breakdown inside the cartons, which are then sealed.

There is one problem with this setup: the manufacturer doesn’t care about the 15% of pieces that need some rework. They are not aware of what it costs them, therefore they don’t make efforts to improve their reliability.

How to align the buyer’s and the manufacturer’s interests?

Saxa recently started to adopt a different approach with the help of some clients:

1. They start with piece-by-piece inspection (paid by the manufacturer)
2. They see what defects come up most often
3. They give advice to the manufacturer to decrease the most frequent defects
4. If the proportion of defectives goes below a certain target, they switch to random inspections (paid by the importer)
5. If the proportion of defectives goes back up, they switch back to piece-by-piece inspection (paid by the manufacturer)

I love this deal. In the mid-to-long run, it decreases the costs for the importer by forcing the factory to address the real issues.

What do you think? Any similar example?