Category: Supplier

The Value of Expediting in Supplier Development

It’s not uncommon for us to receive calls and emails related to issues organizations are having with expediting orders, either from new or existing suppliers.

By expediting, the assumption is that a delivery date or other expectation has been provided, but is not being met. Reasons for delays in production might include:

  • New sub supplier
  • Equipment issues
  • Key staff turnover or other lack of resources
  • Packaging issues
  • Larger orders from other clients taking a priority

Whatever the reason(s) might be, communication can quickly become an additional layer of complexity as the supplier continues to assure the buyer that all is well and on schedule.  No fun for anyone involved here.

A quality solutions company, such as Pro QC, can recognize when product quality control might not be the issue.  In some cases, the supplier just needs support to address the root cause issues.

Having a local quality professional assist in expediting adds value:

  • Local follow-up can include regular calls and/or on-site visits as required. Accountability is increased. Any potential language and/or cultural issues are addressed.
  • On-site evaluation of issues noted can be evaluated. Corrective actions are developed and implemented.
  • If the supplier lacks internal resources, a company like Pro QC can allocate internal experts to the team to assist as necessary.
  • Weekly reporting (or other frequency as needed) reports progress and provides advance notice of potential delays or new issues. No more surprises.
  • Regular calls between the supplier, Pro QC and buyer presents opportunity for discussion of various perspectives and options as necessary or required.
  • Professionals on-site are able to evaluate the issues and current situation. A non-biased recommendation can be made to identify new suppliers depending on the conditions or other at the supplier location.

Supplier development solutions are customized depending on needs and the priority of those needs.  Development activities can incorporate a range of services and resources, from product testing to compliance auditing. Whether it’s expediting, inspecting, auditing or testing, an organization with experience and a global presence can find the right mix of resources to address and solve problems. Contact us for additional information.

Preventing Product Diversion

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.

Managing Supplier Compliance Requirements

A recent article posted to Supply Chain Digital “raises the point that all companies need to see evidence of suppliers’ own manufacturing and sourcing practices, particularly in health and safety, quality assurance and ethics.”

Due to the risks involved, retailers, associations and others are increasingly refining supplier requirements. Organizations wanting to sell products to these companies must ensure their suppliers meet code of conduct or other specific standards. Walmart is certainly one of the largest companies that comes to mind here and has changed the landscape of supplier compliance in many ways.  When qualifying suppliers to Walmart sourcing standards, audits are performed that address global security, social responsibility and general quality management systems.

Verifying Suppliers… What You Want To Know

Verify-SuppliersAs a follow-up to an an article we posted in March, we wanted to go into more specifics regarding on-site supplier verification.

As noted, it’s not always cost effective to do a comprehensive ISO based or general QMS audit for each supplier you’re considering working with. But, there are basic questions looming that you need to make the right decisions…

One option for supplier verification is a basic on-site check.

What you find out:

  • Factory information
    • Type of ownership, address & contact information
  • Production Capacity (Annual Basis)
    • Category, total capacity, units shipped & % capacity
  • Export Markets
    • U.S., EU, South America, etc. & % volume
  • Key Clients (Past Year)

Supplier Selection & Management: What You Need To Know

Our latest quarterly newsletter Feature Article discussed strategic supplier selection. Due to the response we’ve had, we wanted to follow-up on our blog.

We were surprised to discover many of our newsletter subscribers didn’t know a variety of options existed for gaining additional assurances when going through the supplier selection process.

Determining which option you leverage involves the level of risk you’re willing to take in the process.

What are the options?

Legal Verification

The most basic information that you will want to have verified by an external source includes legal verification. Is the supplier legally able to partner and produce products for you? It becomes less clear how to do that when you’re looking at potential suppliers abroad. Using a 3rd party with local access is often preferred due to the cost and time required to execute internally.

Credit Standing

Another indicator of performance is generally an organization’s credit rating.