Category: Quality Control

Written by: Jean Champlain, Supplier Development Manager

Just when you think you’ve made it through the most difficult challenges in the supply chain, another problem often catches people by surprise.  It’s product diversion.

Product diversion is when an unauthorized party sells a product outside of authorized distribution channels. It is an increasing practice and one that presents a serious hurdle to profits.

The way these unauthorized retailers and e-commerce sites obtain the products often involves reaching out to an authorized seller of the product. For example, many manufacturers have a signed contract with various salons or shops to exclusively sell their products. These salons, in turn, sell the products per their contract. However, there are salons who don’t respect the deal, that work within the “black market.” The salons or shops that are in the “black market” enter into deals with a third party that offers to buy the items in bulk. The third party then sells the item to an unauthorized seller. The unauthorized seller then sells the items on websites such as eBay and Amazon.

Apart from profit lost, the danger of diverted products going through these unauthorized channels is high for both the consumer and manufacturer. For example, products can be tampered with during the process and the quality level on those diverted products can change. It could cause serious health problems or high damage accidents in consumer hands.  In addition, the manufacturer can receive negative reviews from the public. For example, if a consumer, who has used Brand X cosmetic product for years bought from store at $10 per unit, and then suddenly found the same Brand X cosmetic product sold at $8 per unit on Amazon, cheaper than in store, and has a severe allergic reaction to it, he/she may be tempted to post a negative review.  The problem is that the blame is not on Brand X, but on whoever tampered with the product before it was sent to the consumer. Although the blame is on someone else, Brand X will receive the negative review that will discourage other consumers from purchasing the product. Because product diversion. The impact on the brand can be significant in many respects as it relates to product diversion.

How do you prevent product diversion?

Organizations seeking to stop and prevent product diversion should consider adopting zero tolerance policies within the organization and between several authorized sellers. In essence, a zero tolerance policy must be supported by actual financial consequences to mold authorized distributors’ behaviors.

This structure to ensure zero tolerance policies should start by identifying the potential risk of product diversion within its business distribution channel, and by an internal education within personnel to understand the impact or product diversion that will cause to their organization’s profit.

Another option is to use a tracking system on the packaging. That system consists of placing a discreet tracking sticker on the packaging. It will allow the organization to track what channels the product went through and where it ends up. This type of tracking can occur with just a simple connection to the Internet. A tracking sticker can also help to authenticate the product if the organization wants to conduct an investigation.  A more common method is to inform your consumers of the authorized resellers and to be aware of diverted products from unauthorized parties. The organization can do this by putting a list on its official website listing authorized sellers.

Regular one day on-site surveillance is recommended at the manufacturer to evaluate the level of prevention system established both by the manufacture and its various sellers and distributions. Assessment areas of focus include:

• ANTI-DIVERSION POLICY
• SELECTION OF SELLER / DISTRIBUTOR
• NON-DIVERSION AGREEMENT
• CONTROL OF AUTHORIZED SELLER / DISTRIBUTOR
• CONTROL OF UNAUTHORIZED SELLER

Pro QC International also provides on-site product diversion evaluations that can be customized to meet your objectives. Contact us for more information.

Written by: Stephen Moglia, Business Development Manager

Sustainability, green fashion, circular economy: we hear and see those words almost everywhere now. They multiply with the growing interest of consumers and companies for the environmental impacts of the industry. In fact, the textile industry has become the second most polluting industry in the world, right after oil, as stated at the sixth edition of the Copenhagen Fashion Summit last May. Globalised, complex, including a wide range of techniques, the textile industry affects the planet on many different levels, including very sensitive areas such as water, air pollution, chemicals, electricity consumption or waste. Being aware of the impacts of production processes has now become essential.

Moreover, damaging the environment also has an impact on humans, whether it is the workers, the consumers or people leaving nearby a factory. Cotton illustrates this in a tragic way. It is a very affordable fabric, widely used to make inexpensive clothes. To boost the production and fight the worms that attack the plants, a lot of farmers worldwide use pesticides. Those pesticides contain extremely toxic substances such as metals (aluminium, nickel, lead), barium or ethion that was banned in Europe. Farmers, in contact with those chemicals can get more cancer, liver and kidney diseases. The chemicals also cause freshwater pollution affecting a wider range of people. Hopefully more and more farmers are turning to organic cotton that is more respectful of the environment and uses no such pesticides. (Article Reference)

Another example is chrome tanning that was also banned from Europe for being too toxic. This tanning is faster, easier than other techniques. However, the leather is weaker and doesn’t last as long, thus creating more waste. Chrome is a heavy metal and damages the environment in the same kind of way pesticides do. It infiltrates the water and in contact with the skin can also have an impact on the consumer’s health. (Article Reference)

Brands, then, have a responsibility: choosing well where they source their materials and where they out-source the production. The consumer, getting information easily on internet is more and more aware of those issues, which reflects in its purchasing choices. Sustainability concerns have only been increasing since the 1990s and in 2015, 66% of global consumers were willing to pay more for environmentally sustainable products. It damages the image of brands to be involved in environmental or social scandals. On the contrary, sustainability can be a real marketing opportunity. Showing concern, sharing the origin of the materials, revealing « who made [the] clothes » attracts customers, reassured that the product they are buying is safe for themselves and the planet. It is part of the « look good, feel good » trend when buyers don’t want to feel guilty wearing their favourite sweater. (Article Reference)

Transparency is trendy, however it is not always easy for brands to control their supply chain. How can a company based in Europe, or North America be sure of the quality of the products they buy in Asia? How can it know in which conditions clothes were made and with which means? The information given by the factories can be altered or fake, a website, mails, phone calls, those are only words and chosen images. It is also tricky for brands to plan a visit of the factories of their suppliers and manufacturers. When knowing someone is coming to check on the working conditions or on quality, it happens often that companies adjust their installations only for a day, adding fake security signs, changing displayed products or hiring more people to show wealth.

This is when audits can be extremely useful. The information obtained is more accurate and real. For environmental responsibilities, audits are made according to the ISO 14000 environmental standard, covering energy usage, renewable energy, greenhouse gas emissions, materials and waste reduction, life cycle management, supplier’s supply chain activities and more. ISO 14000 audits can be combined with SA8000 for social responsibility for a more thorough inspection, helping brands to have a better control on their supply chain and with time, to select their most reliable partners.

These audits can be applied to various fields such as footwear, garments, accessories, textiles, bags, soft toys, electrical & lighting, gifts, home & garden, hardware, furniture, industrial & construction, sporting equipment & fitness, toys, assemblies & molds, maintenance solutions, automotive parts, and medical devices.

Review an example report ISO 14001 here.

How does your organization ensure sustainability and environmental stewardship?

(Image Source)

 

Is quality a sexy business?

We think so, and it turns out Ronald Kolb does as well.

In his book, In Search of Quality: Understanding a Sexy Business, Kolb makes a case for quality affecting everyone on the planet. And, we won’t disagree.

It might be that we’re biased in that the point of view here is similar to our own. Over the past 33+ years, Pro QC has experienced much of what Kolb describes. And, the perspective is refreshing and nostalgic at the same time. Kolb is sincere and passionate in his accounts.

The first part of the book takes you through the history from Kolb’s own experience with overseas sourcing. The second part focuses on challenges, from trade and transportation to NGOs and government.

The last page of this book contains a powerful message: “Maybe it will help develop a positive attitude towards quality, its people and its industries.” We think it does. This quick read is relevant for anyone in the industry and can be appreciated simply for its unique voice.

Quality is promising and sexy, indeed.

World Quality Day is approaching and is recognized on November 9th this year.  Throughout November, the international community recognizes the importance of quality.

“The purpose of World Quality Month is to promote the use of quality tools in businesses and communities. Quality tools, such as flowcharts and checklists, reduce mistakes and help produce superior products. Quality principles could reduce headline-making errors, like food safety, toy recalls, and financial disruptions. World Quality Month calls on people who use quality tools to share their knowledge by submitting their stories to illustrate the value of quality principles.” (ASQ)

“The purpose of World Quality Day is to promote awareness of quality around the world and encourage development and prosperity” (CQI)

Did you know?

• Japan has celebrated World Quality Month in November since 1960.
• China originally recognized World Quality Month in September starting in 1978.
• North America started raising awareness in 1988 and originally celebrated in October.
• First promulgated by the United Nations in 1990, World Quality Day aims to raise international awareness of the important role quality plays in ensuring nations’ prosperity. Now it is celebrated annually on the second Thursday of November.

This year, we’re sharing a few suggestions for contributing to awareness and continuous improvement throughout the month and beyond.

Week 1 – Spread awareness.

• If you work in quality, tell your friends, family and co-workers more about what you do and why you do it.  Ask them what they think quality is and open a discussion about its importance.
• Host a special team meeting (celebration) at work and recognize World Quality Month. Talk about what the organization has done throughout the year to support quality and what future goals/objectives include.
• If you are unable to host a special meeting for World Quality Month, add it to the agenda of a regularly scheduled meeting and encourage employees to submit quality improvement suggestions or learn more at links such as those provided at the end of this post.
• Send out an organization-wide email reinforcing the importance of quality and including additional references such as those listed below and other training opportunities that may be available.

Week 2 – Look inward.

• Brainstorm ideas for improving quality within the organization. Get everyone involved.  If you gave everyone an index card and asked them to write suggestions for improvement, imagine what the value of that information could turn into when you consider the potential cost savings and team support.
• Perform an internal systems evaluation/audit to identify areas of improvement.  Evaluate and plan for corrective action.  Communicate support.

Week 3 – Use the tools.

• Take the opportunity to incorporate a new quality tool into your regular mix.  You’ll likely see an ongoing issue in a new way.
• Setup training for staff that may not usually use quality tools and show them how they can be incorporated into the the efficiency of their work and personal lives.
• Purchase a copy of the Quality Toolbox for all managers.

Week 4 – Keep it going.

• Quality isn’t something we should only recognize for one month during the year. Continuous improvement is, in fact, the core of what quality means.
• Continue with regular training of all staff in various quality principles and keep everyone in the organization informed regarding quality initiatives and progress.
• Setup a World Quality Month planning committee to organize events for next year.

How will you help spread awareness? Share your ideas and suggestions.