Trust (And Test And Inspect)

Related entries: Business Issues, General, Risk & Law, Services, Trading

Given the spate of recent horror stories on dangerous Chinese products, many have been reminded of the value of factory audits, quality testing, and pre-shipment inspections. China Success Stories has a timely article (courtesy of Nicholas Binse from Cotecna) on this subject. Key points include:

    • Use a professional: “By experience they know what to look for specifically in toys, IT equipment, raw materials, textiles and automotive parts, for examples.”

    • Have a testing plan: This should be relevant to your product (and risk profile): “A typical testing plan includes several cosmetic and functional items to check, with pass and fail criteria. Most of them will be based on visual checks or basic instrument measurements (ruler, caliper, weighing scale, etc.).”

    • Buy confidence: You can buy as much confidence as you want using the AQL (Acceptable Quality Level) approach: “An AQL level of 0.4 means you accept to receive a shipment with potentially up to 0.4% defects (that means 99.6% good). 100% confidence can only be achieved by 100% testing, the AQL approach greatly reducing the number of units to be tested (to around 5% to 10%) and the associated costs.”

    • Select the location: “Unless specific reasons dictate, inspections should take place at the supplier’s site, after production is finished and before products leave the factory. That is where you can get the highest benefits in terms of reaction time and cost.” It can also be useful to do in-process inspections to check (and remedy) problems early on, and / or at the time of shipment to ensure that you are getting exactly what you ordered.

    • Do it in time: Get the testing and reporting done at a time that allows for remedies or negotiations to take place before shipment is due. Digital photos, and initial reports, can often be sent direct from the site.

As I have mentioned before, as well as protecting a business or a brand from quality and safety issues (my company has been involved in several cases where problems were identified – and resolved – prior to delivery), it can also protect against payment risks (for example linking stage payment to successful inspections). It can also help filter out bad suppliers who refuse to allow inspections at all, or whose deliveries do not live up to their samples.

Using third-party inspectors also helps protect personal and corporate relationships with suppliers – as no direct criticisms need to be made, and as the whole process can be blamed on “those damn bean-counters at head office”. And even those same bean-counters will be happy – as the costs are very low, while the identifiable payback can be huge.

Trust is great. But testing and inspecting is better.

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