Tag: quality

Despite recent threats of tariffs related to current immigration issues in the U.S., Mexico remains a solid contender for global organizations looking to mitigate tariffs in China, or simply diversify their supply chain.

According to Inbound Logistics, “Mexico is becoming an increasingly popular option for any and all manufacturing industries that want to mitigate costs without compromising quality.”

As a result, U.S. imports of Mexican goods rose 5.4% in the quarter from the year-earlier period, while imports of Chinese goods were down nearly 15%, according to U.S. Census Bureau data.

Traditionally known for automotive, aerospace and electronics, more recently, manufacturing and assembly of office furniture, stamping and metal mechanics, and textiles (industrial applications) has emerged.

Examples of market movement include:

Companies like China’s Hisense, one of the world’s largest television manufacturers, is bringing more suppliers to Mexico as it aims to switch production of all U.S.-bound flat screen TVs to its largest plant outside of China.

GoPro wants all of its U.S.-bound cameras to be in production in Guadalajara, Mexico, in the second half of the year as it seeks to insulate the firm against possible tariffs.

Cosmetic Colors, a thriving Mexican producer of eyeliners and other cosmetic products, recently got a €7 million ($7.8 million) order from a European cosmetic giant for items that were previously made in China and faced a 25% tariff. The company’s high-end plant in the city of Toluca exports 85% of its products to the U.S. for the world’s top cosmetic brands.

(Source)

The advantages of considering Mexico vs. China include:

• Mexico follows similar Intellectual Protection laws as the U.S. and Canada
• Logistics advantages
• More compatible time zones for U.S. and Canada
• Lower travel costs
• Skilled workforce
• Reasonable labor costs
• Mexico’s exports on average contain about 35% or more U.S. parts, whereas Chinese exports contain far less, at about 4%. (WSJ 6/2/19)

So, why wouldn’t organizations want to manufacture in Mexico?

• Identifying new suppliers can be a slow process. Organizations wanting to quickly hedge tariff implications will likely encounter slower response times in communications.
• In many cases, the costs remain higher than if sourced in China or SE Asia.
• Government regulations, including labor requirements, can be challenging to work through.

Pro QC assists organizations in identifying new suppliers in markets around the world. Within Mexico, Pro QC has an ISO certified testing laboratory in Monterrey and a network of sourcing and quality professionals throughout the country. Contact us for additional information.

 

Additional Resource:

Why Manufacturing Industries are Nearshoring to Mexico

https://www.manufacturingglobal.com/leadership/why-more-manufacturing-industries-are-nearshoring-mexico

 

 

 

Quality control inspections started out as a relatively primitive process, as a way of catching variance in newly developed production systems. The demand likely evolved as it does with many of Pro QC’s new clients. Someone got product from a supplier that didn’t meet their expectations. And, that meant increased costs, delays, impact on branding, etc. It’s a timeless tale.

Using Statistical Quality Control (SQC) starting in the 30s, the QC inspection introduced a reliable way of evaluating a randomly selected production lot. Inspections were conducted at different stages throughout the production process, with the most common being the pre-shipment inspection.

Historically, inspections were conducted and the result would be a go/no-go on the shipment. Sorting and rework were often the default way of handling issues, and the buyer felt assured of the quality and could rest easy knowing that the risk and cost were reduced for that particular order.

But, quality control has evolved into something bigger, more impactful than a singular check of product at a moment in time. For many companies, it has developed into a program of supplier development.

When Pro QC started, fax machines were the primary way of communicating inspection results and other details. There weren’t any online reports, videos, or digital photos. Imagine that.

Fast forward a few decades, and we now leverage our own supply chain management system that offers an in-depth look at the performance of suppliers using the data we capture while on-site.

What data do our clients find useful?

A product defectives analysis can include various details:

* Appearance attributes
* Functional attributes
* Labels and artwork
* Packaging and labeling
* Manufacturing
* Location
* Suppliers
* Product categories
* 80/20 – Top defects

In addition, product conformance analytics can be evaluated in a number of ways:

* Suppliers
* Location
* Product categories
* Quantity check
* Master packing
* Specifications
* Tests & measurements
* Workmanship
* 80/20 – Top non-conformance issues

As Deming reminds us, “In God we Trust, all others bring data.”

So, what’s the big picture?

Many clients meet regularly (often quarterly) with Pro QC and their suppliers to review performance. It’s an ideal time to discuss improvements, opportunities for cost reduction, etc.

A few actions resulting from this type of data analysis includes:

* Ability to identify when an issue is persistent and requires root cause investigation and corrective actions

* Data to indicate a new supplier or additional suppliers needs to be identified

* Additional support to use during negotiations with suppliers

Contact us for additional information, or to see a demonstration of our system that’s changing the way quality is integrated into business.

(This article originally appeared in the Pro QC International quarterly newsletter, March 2019) 

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.

Written by: Alexander Parker, Account Manager (Tampa, FL)

Pro QC International works with businesses to develop and maintain their quality programs. Many of these clients have their primary suppliers based in China. Due to recent trade escalations between the world’s two largest economies, the United States and China, U.S. corporations are finding ways to adapt and avoid extra costs as the tensions continue to escalate.

Some prominent U.S. companies have already directly indicated that the U.S.-implemented tariffs will force them to pass down higher costs to customers and revise their earnings forecast downward. However, there is an alternate solution to pushing costs onto customers.

Large U.S. companies, like Honeywell, Hasbro, and Boston Scientific, have indicated that they will increase the use of supply chain sources from non-China countries to counter growing costs related to the rising tariffs. Compal, a Taiwanese contract manufacturer of electronics, has mentioned that while “assembling notebooks outside of China could cost at least 3 percent more per unit, the possibility of U.S. tariffs could wipe out its gross profit margin of slightly above 3 percent last quarter.” (Wu, 2018) (“Factbox – Impact of U.S.-China trade tariffs on U.S. companies”, 2018).

This is in fact one of the purposes of these U.S.-tariffs, to protect domestic industries and to make goods produced in an outside country less enticing. The goal is to eliminate the cost benefit that leads to companies purchasing from a country in the first place.

Despite some larger companies having opportunities to appeal to the U.S. government for exemptions from tariffs that would directly affect them, most companies do not have the resources or power to make such an impact on the U.S. movement. Being that these tariffs are out of their control, many companies, some of which include Pro QC’s own partners, have begun to diversify their supply chains to prevent and avoid major business disruptions. With tensions escalating and potentially further tariffs to be added in the upcoming months, companies are rapidly looking into this option before costs in China become too high.

For example, we have had clients cancel Initial Supplier Evaluations in fear that the tariffs will no longer make the potential new Chinese supplier a more affordable option than suppliers elsewhere. This uncertainty leads to a risk that is not worth taking.

Diversification to suppliers from various countries will lead to a more robust supply chain that allows for resilience in times of uncertainty like now. However, companies that have limited resources or time to find new suppliers may find it very difficult to locate and transition to these new facilities.

Pro QC can assist during this time with services like supplier selection and identification, supplier development, and inspection services to get new suppliers up to speed and ensure their products are meeting a company’s quality standards. If it is desired to replace an existing supplier, we provide help in identifying or transitioning to suppliers in countries that will not be affected in these trade disputes.

As written about in a separate Pro QC blog post “China Sourcing Alternatives: Thailand,” other reliable manufacturing nations, notably Thailand, as well as Vietnam, India, and Mexico, also offer affordable costs and business environments. With local Pro QC teams in each of these locations and services in a total of 88 countries, our quality professionals will assist in executing any range of solutions required.

It is important to remember that despite China potentially losing some market share to other countries, they will still account for a major portion of trade in the world. For example, China still accounted for 35 percent of global clothing exports last year. Rather than China backing down during this time of intense pressure, the Chinese government and factories are going to respond by searching for methods to increase competitiveness by finding alternative markets, increasing factory automation, and creating more value-added products. Factory owners are not going to be willing to give up and shut down their businesses, but will become increasingly more innovative. (McDonald, 2018)

This trade war will ultimately resolve itself, but when this will happen is unknown. China will remain a prominent player in the manufacturing arena, and removing all connection to the country may be impossible or too inconvenient for many companies. However, diversifying a supply chain can help create a buffer during times like these. Whether it’s needed to maintain relationships within China, or find a way to diversify, Pro QC is here to assist you create dynamic and innovative solutions.