QC basics

In this article I explain three fundamentals concepts that every buyer should be familiar with when it comes to quality inspections:

1. Inspection levels
2. The AQL
3. When to inspect?

1. Inspection levels

A word about applicable standards

Militari Standard 105 was created by the US Department of Defense to control their procurements more efficiently. In 1994 they decided to rely on non-governmental organizations to maintain this type of standard. The ANSI, ISO, and other institutes all created their own standard, but in essence they are similar to the latest version of Mlt-Std 105. All third-party QC firms use the same standards and the same statistical tables.

Why use random sampling?

Shipments often represent thousands of products. Checking 100% of the quantity would be long and expensive. A solution is to select samples at random and inspect them, instead of checking the whole lot.

But how many samples to select? On the one hand, checking only a few pieces might prevent the inspector from noticing quality issues; on the other hand, the objective is to keep the inspection short by reducing the number of samples to check.

The relevant standards propose a standard severity, called “normal level” or “level II”. It is designed to balance these two imperatives in the most efficient manner, and it is used for more than 90% of inspections. For example, for an order of 8,000 products, only 200 samples are checked.

When to switch to tightened or reduced levels

Suppose you source a product from a factory that often ships substandard quality. You know that the risk is higher than average. How to increase the discriminating power of the inspection? You can opt for the “tightened level” (level III) and more samples are checked.

Similarly, if a supplier has consistently delivered acceptable products in the past and keeps using the same workshop, you can choose the “reduced level” (level I). As fewer samples have to be checked, the inspection might take less time and be cheaper.

In practice, the relevant standards give very precise guidelines about when to switch, but most importers rely on their “gut feeling”. If you want to respect these guidelines strictly, ask your QC manager or your external inspection provider.

The “special levels”

Inspectors frequently have to perform some special tests on the products they are checking. In some cases the tests can only be performed on very few samples, for two reasons:

1. They might take a long time (e.g. doing a full function test as per claims on the retail box).
2. They end up in product destruction. (e.g. unstitching a jacket to check the lining fabric).

For these situations only, the inspector can choose a “special level”.

So we have three “general” inspection levels, and four “special levels”. For a given order quantity, each level gives a different number of samples to check. Let’s see how it plays in two examples.

Example 1: you order 40,000 products

Special levels				General levels
S-1	S-2	S-3	S-4	Reduced (I)	Normal (II)	Tightened (III)
8 pcs	13 pcs	32 pcs	80 pcs	80 pcs	500 pcs	800 pcs

The number of samples to draw varies from 8 to 800. Depending on the level you choose, the inspection might take only one inspector for one day, or up to 4 or 5 days of work.

Example 2: you order 3,000 products

Special levels				General levels
S-1	S-2	S-3	S-4	Reduced (I)	Normal (II)	Tightened (III)
5 pcs	8 pcs	13 pcs	32 pcs	20 pcs	125 pcs	200 pcs

2. The AQL (Acceptance Quality Limit)

In part 1, we explained the different inspection levels that can be used. Another basic concept rings familiar to many importers, but is often not clearly understood: the AQL (Acceptance Quality Limit).

There is no such thing as zero defect

First, as a buyer, you have to know what proportion of defects is tolerated on your market. If you are in the aviation business, any defective part might cause a disaster, so your tolerance will be very, very low. But you will have to accept a higher percentage of defects if you source consumer products that are assembled by hand in China.

An objective limit is necessary

So, how many defects are too many? It is up to you, as a buyer, to make this decision. There are two reasons why you should not leave this to the inspector’s judgment:

1. When it comes to giving instructions to an inspector, you should never leave gray areas—as they might open the door to corruption.
2. Your supplier should have clear criteria for acceptability, or they will see rejections as unfair.

The AQL is the proportion of defects allowed by the buyer. It should be communicated to the supplier in advance.

The three categories of defects

Some defects are much worse than others. Three categories are typically distinguished:

• Critical defects might harm a user or cause a whole shipment to be blocked by the customs.
• Major defects are not accepted by most consumers, who decide not to buy the product.
• Minor defects also represent a departure from specifications, but some consumers would still buy the product.

For most consumer products, critical defects are not allowed, and the AQL for major defects and minor defects are 2.5% and 4.0% respectively.

Some important remarks:

• A professional inspector will notice defects and evaluate their category by himself. But it is better if the buyer himself describes the most frequent defects and assigns categories to each one.
• Defects can be on the product itself, on the labeling or on the packaging.
• If one sample presents several defects, only the most severe one is counted.

How to read the AQL tables

The master tables included in the relevant standards are commonly called AQL tables. Let’s take an example.

You buy 8,000 widgets from a factory, and you choose the normal inspection level. In the table below, you see that the corresponding letter is L.

AQL table 1:

Now let’s turn to the next table. (It is only appropriate for normal-level inspections). The letter L gives you the number of samples to draw at random: 200 pcs.

And what about the AQL? Let’s say you follow the usual practice of tolerating 0% of critical defects, 2.5% of major defects, and 4.0% of minor defects. The maximum acceptable number of defects is 7 major and 10 minor. In other words, the inspection is failed if you find at least 1 critical defect and/or at least 8 major defects and/or at least 11 minor defects.

AQL table 2:

Additional notes, for accuracy

• The number of defects is not the only cause for acceptance of refusal. The products can be refused because they are not conform to the buyer’s specifications, even though their workmanship is very good.
• If you have two different products (made with different processes or in different factories), you should do two separate inspections. If you inspect them together, one product might be accepted even though it presents too many defects. Why? Because the better workmanship of the other product might “compensate” for its poor quality.

3. When to inspect?

The first two parts focused on the different inspection levels and on the AQL tables. So you know how to set the number of samples to check and how many defects have to be accepted. With these settings and your detailed product specifications, a QC inspector can check your products and reach a conclusion (passed or failed).

But importers face one more question: when should the products be inspected? This is an extremely important issue for buyers willing to secure their supply chain. Spending a few hundreds of dollars to check and fix issues early can be an excellent investment; if might save you weeks of delay, shipments by air, and/or lower quality products that you have to accept and deliver to your own customers.

Four types of inspections

Let’s picture the simplified model where one factory turns raw materials into finished products. (If you also have to manage the quality of sub-suppliers’ products, the same model can be applied to them)

Pre-production inspection

This type of inspection is necessary if you want to check the raw materials or components that will be used in production. Buying cheaper materials can increase a factory’s margin considerably, so you should keep an eye on this risk.

A pre-production inspection might also be a good idea if you suspect that technicians on the factory floor have not been given all the information or have not understood all your requirements. How to make sure of this? By sending an inspector when the very first products are in process (under bulk production conditions).

If you need to help the factory improve its processes, this is also the right time. But you will need to either send your own technicians, or find a highly specialized QC/engineering firm.

During production inspection

How to get a good idea of the average product quality, and be able to ask for corrections if problems are found? Send an inspector during production!

It can take place as soon as the first finished products get off the line, but these samples might not be representative of the whole order. So usually such an inspection is done after 10-30% of the products are finished. What are the main benefits of an inspection at this stage?

• Be aware of quality issues early, and implement corrective actions before it is too late.
• Communicate with your supplier about what is acceptable and what is not.
• Get a precise production schedule.
• If needed, the inspector picks a few samples randomly and sends them to a testing laboratory.

Final (pre-shipment) inspection

Inspecting the goods after they are made and packed is the standard QC solution of most importers. The inspector can really check every detail, including counting the total quantity and confirming the packaging.

Final inspections are usually performed in a hurry, just before shipment. To avoid creating delays, inspectors can usually start after all products are finished and 80%+ of the shipment quantity is packed.

Final inspections are appropriate if the factory delivered the same product in the past without serious quality issues. Otherwise, buyers are strongly advised to have the products checked earlier.

The downside of final inspections is that inspectors are seen as “policemen”. Factories hate the risk of last-minute rejection, after all the goods are made (and might not be re-workable). Buyers have the upper hand and can often ask for discounts and threaten to refuse the goods. This is a major cause for the corruption of QC inspectors.

Most Chinese manufacturers are not organized to keep their processes under control, and they often discover the issues after an inspector shows them defective samples. Helping them with pre-production or during-production inspections usually makes more sense.

Container-loading supervision

In some cases, a buyer wants to make sure the factory ships the right products, in the right quantity, and with the right loading plan.

This supervision can take place immediately after a final inspection (in which case the same inspector does the job). But usually it is a separate service that consists of two steps:

1. Counting the whole quantity, opening a few cartons and doing a quick check on the products, and checking all the packaging details.
2. Supervising the loading of the cartons in the container or the truck.

Notes about the importance of detailed specifications

1. Most quality issues come from miscommunication and misunderstanding. Importers should keep track of all their requirements regarding the product and its packaging. When a good deal of customization is involved, these specifications should be translated in Chinese (for the factory technicians). And for large orders they should be included in a contract. When the time comes for product checking, the inspector will use this information as a checklist.
2. After an inspection fails, the supplier usually agrees to repair the problems and to support the cost of the re-inspection. Detailed specifications are useful in avoiding endless negotiations with your supplier.

4. Putting it all together

Example 1: 5,000 widgets from a new supplier

You have no information about the factory, so you should adopt the normal level (a.k.a. level II).

The order quantity is comprised between 3,201 and 10,000pcs. In the first AQL table (higher in this document), you see the code letter is L.

And in the second AQL table you see that 200 samples have to be checked by the inspector.

If you opt for the standard AQL limits (0 C. / 2.5% M. / 4.0% m.), the inspection is failed if at least one of these conditions comes true:

• One or more critical defects are found
• Eight or more major defects are found
• Eleven or more minor defects are found

And let’s say you want the inspector to check all the product functions on a few samples. This test takes some time. You can choose special level S-2. You see this test will be done on 8 samples.

The 200 samples can be checked by one person in one day, so a third-party QC firm would quote you one man-day.

When to inspect? If this is a standard product and you have flexibility with timing, a final (pre-shipment) inspection should be enough.

Example 2: 30,000 watches from unknown supplier(s)

You suspect that your supplier gave orders to several workshops to produce your goods, but he won’t tell you. And these items are rather valuable. A level-III inspection is probably the most appropriate.

If we read the AQL tables as we did above, we have to inspect 500 samples, and the maximum number of defects is: 0 critical, 18 major, 18 minor.

If a visual check on all samples and a function/accuracy check on a few pieces is enough, it probably takes two or three man-days.

When to inspect? If the supplier refuses to disclose the factory information, you have to go for a final (pre-shipment) inspection.

Example 3: four different styles of garments from a good factory

You know that this factory’s workmanship is quite good. But you want an inspector to check all the conformity elements, and in particular the measurements. Level I should be enough.

You sell these products in boutiques at a high price, so you can only accept 1.5% major defects (M) and 4.0% minor defects (m). Note: for garments, there are generally no critical defects.

The fitting is quite important, especially for the brassiere and the brief, so 3 to 5 samples should be measured in each size.

There are 4 different types of products, so there has to be 4 inspections:

Product	Order Qty (in pcs)	Code letter (level 1)	No. of samples to check	Max. No. of defects	No. of samples to measure
Nightdress	1,000	G	13	1M, 2m	3 sizes x 3 pieces
Camisole	3,500	J	32	2M, 5m	3 sizes x 3 pieces
Brassiere	6,000	J	32	2M, 5m	6 sizes x 5 pieces
Brief	11,000	K	50	3M, 6m	3 sizes x 5 pieces
TOTAL	21,500	-	127	-	63

The total number of samples to check is only 127 pieces. But this order cannot be checked in one man-day, for two reasons:

• There are 4 different inspections to carry out. For each product, the inspector has to check all the conformity elements (fabrics, colors, accessories, stitching…). And there are 4 reports to prepare.
• There are 63 samples to measure, across 4 different products and many sizes.

So it will probably take 2 inspectors (maybe 3, depending on the products complexity) for one day.

When to inspect? The best is clearly during production, when the products are on the line. As the 4 products might not all be processed at exactly the same time, it might be preferable to send an inspector at different times. And if an inspection is failed, a re-inspection can probably be performed at the supplier’s charge.

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This article was also published on the China Sourcing Blog in April 2009, in 4 parts:

• Inspection levels
• The AQL (Acceptance Quality Limits)
• When to inspect?
• Putting it all together