By: Michael L. Hetzel, VP/Americas Pro QC International
Much has been written about supplier quality management in China. Most of the information is fairly accurate, although not always. Quality management is a complex issue, particularly the management of distant sources, and a field that entire educational programs and careers are dedicated to. So the key issue for someone who is not a QA professional becomes one of successful application of the available resources for the best possible results from your outsourcing activities.
For the purposes of this article we’re referring to custom products, not buying a stock product such as an MP3 player. Rather than discuss the details, let’s begin with the broadest issues and the options that will influence your results. Unless you plan to build a career in QA, what you really need to know is how to hire the right QA professionals to manage your quality and conformance interests.
--Select a Competent and Motivated Supplier--
I’ll immodestly call this “Hetzel’s Law” – Good Supplier, Good Results; Bad Supplier, Bad Results. I’ve found this to be true throughout my career in manufacturing (20+ years) and my experience in global outsourcing (18+ years, including the last 6 years with Pro QC), and not only offshore but locally. Yes, it is as simple as it sounds, but it’s difficult in practice to find the “good” suppliers.
A good supplier is not just defined by the agreement you reach with the factory owner or manager. He or she may have the best of intentions but lack the control of their operations to ensure that their commitments are consistently delivered. Be sure to assess the entire operation in this context. Assume nothing about their control of the factory and assess their operations in detail, not just the commitment of your counterpart there. A factory audit is the only way to determine this. This context is often missed during the selection process.
Another area that’s often missed is to assess the supply chain that feeds inputs for your product to the factory that’s “your” supplier – the one who ships you the goods. Once again the factory manager at your source may have every good intention, but then one of the suppliers of inputs for your products cuts corners and your results will be failed product. I can’t count the cases where we’re booked to audit a supplier but when we recommend that we also audit their suppliers of key inputs, our client will balk at the expenditure (generally less than US$1,000.00) yet potentially face a multi-million dollar recall later on. This is the same for inspections, where buyers will schedule inspections of finished goods but often not consider inspections of the inputs that will become embedded in their products and unobservable, even though an inspection is generally below US$300.00.
In other words, don’t get so caught up in saving that last possible dime in China that you lose your clients or even go out of business. Many of our clients report that we save them a net 7-10% on their outsourcing after paying for our services, when applied correctly and as opposed to their costs when going it on their own. Whether it’s Pro QC or another third party quality provider (“3PQ”), controlling your quality as early in the process as possible is where the “last dime” cost savings really are found.
Consider the lead paint issues with the toy market recently. You may recall that at least one major toy company admitted that they relied on material certifications from the paint supplier – certs that anyone can print up from a computer – rather than on inspections of the paint before use in production. And once a defective input is embedded in a product, such as the paint being applied, the economic loss of corrective action increases dramatically along with the factory’s motivation to ignore or even hide the problem from you.
The last point on this is that the supplier has to be motivated. China is booming, trade flows are shifting rapidly, inflation is very high in some areas of the country (particularly the south and along the coast). If you’re too small a fish in their pond you’ll get pushed aside in quality and/or delivery. If you’re too big a fish in their pond you’ll be asked to take up their entire inflationary overhead burden in your prices, or corners will be cut in the manufacture of your product. You’ll want to be in the middle of their client base – big enough to have clout but small enough to be sharing only a portion of their overhead. Examine your supplier’s relationship with their suppliers as well, the same issues will apply.
If you have quality professionals on your staff you can navigate these issues as you audit the factory and its suppliers. If not you should use a competent 3PQ. They’ll take care of all the details.
--Accurately Transfer Your Specifications--
There’s a lot more to sourcing from China than simply hitting the metric key on AutoCad and generating metric drawings. If you mind the details you should be OK.
First, of course, is the metric/imperial issue if you’re in the U.K. or U.S. The dimensions themselves can be converted but the tolerances and tolerance stack up must be carefully adjusted. Your drawing might look good with the conversions going to the fourth decimal, but in the real world you’ll need dimension and tolerancing that can be consistently and economically held in manufacturing. This will often require new tolerancing as part of the conversion.
The greatest potential for failure, however, is in the translation of specifications, workmanship standards and bills of material into Chinese. English and Chinese do not translate directly, as do English and German or Spanish for example. English and Chinese are radically different language structures. To visualize this condition consider this; most of you will recall buying a Chinese product and getting a good laugh out of the instructions in the owner’s manual, while wondering what the heck they’re trying to tell you. Comedians have been using this sort of thing in their acts for years. Now consider that this is precisely how your work specifications and standards will look in Chinese if you’re not extremely careful with the translations (and your contract and purchase orders as well). Then even a good and motivated supplier will be tripped up and your product will fail.
While we’re talking about translations, note that many of our clients book our engineers to serve as their interpreter during factory visits. Sure, you can hire some kid from the hotel, but there’s no substitute for the interpreter knowing the processes, jargon and challenges involved with your product and negotiations or other discussions with a factory. Most 3PQs offer this service.
--Manage Your Quality Interests from Sampling through Production--
We won’t get into inspection and sampling plans or AQLs here, these will be managed by the QA professionals if you control the process either internally or with a 3PQ.
The major touch points for your QA professional are the vendor selection audit including key suppliers to your supplier, the first article inspection (possibly including witnessing the sampling itself), in-process inspection during the initial production run (this can be dropped subsequently if the process is under control), and then ongoing pre-shipment inspections before each shipment (this can also be reduced to “skip lot” inspections if the process is well controlled and no defects are found over a number of shipments).
--Hire the Right 3PQ--
If all you need is a simply inspection of appearance and packaging you can consider one of the lower cost 3PQs. They often dispatch a person with a clipboard and a camera, not an engineer, with instructions to report what they observe. For anything more sophisticated you should consider a 3PQ who only dispatches degreed engineers.
There are also 3PQs that are “real” companies with offices you can visit and employees you can meet, and there are “virtual” 3PQs using other 3PQs, franchisees and/or outside contractors as stringers. Note, however, that even the real 3PQs will use contractors in some locations and specialties, but this isn’t the same as the entire operation being outsourced. Take the time to visit the 3PQs and audit them to ensure that you select the right company.
Make sure they have resources in the correct locations and in your product category, and, lastly, make sure you’re the right size “fish” in their pond as well.
If you combine the information above with the careful selection of resources, you’ll achieve the lowest possible risk and cost levels in your outsourcing activities.