Tips for Selecting Chinese Suppliers of Injection Molded Products

As I wrote before, the China sourcing process of two importing companies can be very different, while still making sense in each buyer’s context.

When it comes to purchasing injection or rubber injection-molded products, buyers generally want to qualify potential suppliers before sharing confidential information and requesting quotations.

Here is what the sourcing process typically looks like in this case.

  1. Search potential suppliers on websites like Global Sources.
  2. Review the websites. Look for what equipment they have for making the tools. Check if the equipment is capable of doing the job (an engineer with tool making experience can usually do this.)
  3. Look at the products they make. Are they similar and of the same size as what needs to be produced?
  4. Make initial contact. Get them on Skype or on the phone, and have a good chat. Ask lots of questions to see if communication will be easy. Do not engage in a technical project with a supplier that communicates poorly.
  5. Discuss the project without giving up too much detail; see if they are interested in the RFQ (Request For Quotation) process.
  6. Send out the RFQ. You might want them to sign an NNN agreement first.
  7. Check how much detail is included in the quotation. Ask for any missing information. Here are a few points for the molds: what tool steel is used, what is the hardness, how many shots (life expectancy)? And here are a few points for the molded parts: weight, material, number of cavities.
  8. Plug the details into a spreadsheet and see what the prices are like.
  9. If a potential supplier is price-competitive and is good at communication, ask for a few customer references (if they accept to share some) and send an auditor for checking their facilities.

And then starts the next phase: the development of the mold, the inspection of that mold, the setup for sampling and then for mass production…

Did I forget anything important?

 

 

 

Difficulties of Relocating Production in the US

Best Quality & Sourcing ArticlesHere are some interesting or useful articles that I found recently.

Walmart’s ‘Made in USA’ push exposes strains of manufacturing rebirth

In January 2013, Walmart promised to favor US-made products. But those companies trying to “reshore” production face many obstacles. Rebuilding manufacturing capabilities and a network of component suppliers will take many years.

Certain parts still need to be imported from China (e.g. small motors, plastic injection molding equipment, computerized cut-and-sew tools). But there are already a few success stories.

China biggest robot market in 2013

It is now official. Based on recent statistics, robot sales in China are the highest in the world. Only a quarter of these robots were made in China, but local production is picking up fast.

Robot sales are rising in many Asian countries (Korea, Taiwan, India…), in the US and Canada, Mexico, Eastern and Western Europe, etc.

Dongguan to Accelerate Replacement of Factory Workers with Robots

After Guangzhou, Dongguan city has planned a big push in favor of industrial robots. This initiative includes the creation of several “robot industry parks” and the acceleration of robot adoption by local manufacturers.

Mainland industries bribing their way to quality-control certification: Xinhua

An undercover report by Chinese state media (Xinhua) reveals how common it is for Chinese manufacturers to obtain certifications (from ISO 9001 to organic food) without complying to standards.

I guess this won’t be a surprise to long-time readers of this blog. I have written about China’s deep-rooted bribing habits many times.

Inside Shenzhen: China’s Silicon Valley

This Guardian article focuses on hardware startups that are locating en masse in Shenzhen city. It makes sense since many components are made locally and there are good assembly factories. There are already accelerators/incubators, as well as a high number of startups. And the city is moving in the right direction.

Why Suppliers in China Quote Incorrectly

Jacob Yount explains why Chinese suppliers (especially small suppliers) don’t spend much time and energy on quotations. A first quote is only a rough indication of the price. This article is a good overview of communication disconnects between manufacturers and importers.

How To Manufacture In AND Sell In China Without A WFOE

After registering certain IP rights and with a solid contract in place, a foreign company can put a Chinese manufacturer and a Chinese distributor in direct contact, while keeping control of the process and earning a profit.

However, I can imagine why importers would have hesitations. With this setup, Chinese companies can guess the foreign company’s profit and be strongly tempted to circumvent the contract…

Fashion: A better business model

This article, originally published in the Financial Times (behind a paywall), describes the business model of Zara, the largest fashion retailer in the world. They have managed to compress the design & production cycle from 18 months to a few weeks!

Meet ‘Crazy Jack,’ China’s E-commerce Titan

See how an American early employee of Alibaba did his best to describe Jack Ma (the company’s founder) in a positive light. It makes for an interesting glimpse inside the Alibaba Group’s culture.

Scio Pocket Molecular Scanner Is a Google-like Device for Physical Objects

A new company has designed a device performing chemical analysis on the fly… and on the cheap!

Unfortunately, they are starting with applications for food only. In a few years, if it really works, this device will probably be part of every inspector’s toolkit.

Why you Need a Backup Factory for your China Production

In this article I want to give advice to importers of custom products (i.e. not “off the shelf”) who just spent many months getting a new product development right and that are ready to launch manufacturing in China.

Chances are, they did not work with a big factory on this. Bigger factories tend to be less flexible, more expensive, and less interested in unproven product concepts.

However, there are two problems with relatively small manufacturers in China.

1. An immature quality system

The biggest risk is that they show their inability to manufacture at the right quality standard. Good communication and development skills DO NOT correlate with good manufacturing skills.

The very worst situation goes something like this:

  • The buyer does no inspection in the factory before shipment,
  • The factory sends a few well-chosen samples taken out of production, which reassures the buyer,
  • Upon arrival, the buyer finds that most products are defective,
  • All the supplier offers is a discount on the next order, as well as profuse apologies (or excuses),
  • The second shipment is bad too (there is an 80% chance that the second shipment is no better than the first one).

Why does this happen? Here are the main reasons:

  • The customer did not audit the supplier’s manufacturing facilities,
  • The customer did not send any inspector to check product quality,
  • After the complaints, the factory sees this customer as a troublesome customer who actually cares about quality (and who might leave at any time),
  • The discount means factory managers don’t care about the second order (no profit, no attention).

2. The factory can’t ramp up production volume quickly enough

In case the product sells well, can the original manufacturer follow this growth?

In the consumer electronics business, volumes can be multiplied by 10 over a 6 months period, and production delays are very, very painful.

Unfortunately, most factories are unwilling to invest in new equipment and to hire tens of new people without clear long-term visibility. What if your version 1 is successful but your version 2 is a flop?

If capacity is insufficient and orders shoot up, subcontracting will be necessary. And guess what… the subcontractor will have to learn how to make the product, and will have to be checked too! If you don’t do it, you are counting on your supplier and that’s usually not very wise.

The sad reality of getting a new factory started

Onboarding a new Chinese manufacturer to make a complex customized product can take as long as it took to onboard the first one… And there is always a chance that they give up if the boss’ priorities shift in the meantime.

The key is to get as much done as possible during the first 2 months, while they are still excited. After that period, everything takes longer. So the buyer needs to have a process for getting all the information to the right people in the factory (not the salespeople) in a short time period.

This is hard work. Engineering firms that are based in China can help, fortunately, but few people think of this option.

Conclusion

First, one thing should be pretty obvious by now: be pessimistic and don’t believe what you are told without asking at least a few questions.

Second, don’t get locked in one relationship. The last thing you want is to start looking for a new supplier while all the product information is in your head. It is extremely time consuming and your current suppliers know this. Not to mention, the re-order deadline might be coming up fast.

There are ways to avoid it. Prepare engineering designs, specification sheets, and even a few rough samples on your own if you can. It makes onboarding a backup factory faster and easier.

7 Mistakes Chinese Factories Make in Production Planning

Anybody who has imported products from China can attest that the planning process of most manufacturers is not exactly under control. The sad reality is, buyers are often happy when a shipment is “only” 10 days behind the promised date.

But where does this lack of precision come from? Is it the result of over-enthusiastic salespeople? Not only.

In this article I listed the 7 most serious issues I have noticed in many Chinese factories.

1. Lack of stability

There are always urgencies — customers screaming louder than the others, that is. So the boss puts their orders on top of the priority list. As a result, production people are constantly told to “expedite this one”, and then “oh actually this one is even more urgent”, and so on.

Why is it a problem? Because it causes a severe loss of efficiency in production.

A stable planning, on the contrary, allows the factory to minimize the number of changeovers, to keep staff fully utilized, to minimize confusion, etc. In the end, it means lower costs.

2. No standard timing for recurring operations

How does a serious manufacturer quote a new product? By checking the cost of the bill of material, and by estimating the time one piece will spend at each process. This process can be relatively precise by tracking the time it takes to make samples and by applying a few rules of thumb.

Once a production runs regularly, it is also good to have an industrial engineer perform simple time & motion studies. The main purpose should not be to refine the amount the workers should get paid, but to allow for a finer planning process. (And it also allows the production department to calculate their efficiencies.)

But what about the vast majority of Chinese factories that don’t make the effort to forecast process times in a scientific manner? They are easily 20% off on any given operation — and sometimes more than 100% off! (Ever wondered why prices go up so often after production has started?)

3. Excessive batch sizes

Chinese factory owners are obsessed with paying the absolute lowest price they can for components, and it often pushes them to purchase large quantities at a time — sometimes we see 6 or 8 months of inventory for certain components or accessories.

Unfortunately, these larger batches often take longer to make. So a few days (or weeks) are wasted right here. And then, what happens internally after the components are in stock? The factory tries to gain production efficiency by making batches that are larger than orders on hand. Same logic.

Not only does it NOT save them money, but it means production takes even longer.

4. No understanding of the whole system

If you want to see if a production manager is smart, ask him if he has identified any bottlenecks (there is always at least one), and what actions he has taken to elevate their capacity.

Similarly, production managers typically have no understanding of the impact of WIP (Work In Process) inventory on production timing. A mathematical relationship dictates that more WIP means longer lead times.

Finally, there is sometimes no buffer. Many factories add 4 to 8 days in the planning, because they know “shit happens”, but some unsophisticated manufacturers don’t even think of this.

5. Lack of follow up

Good factories run, at the very least, a weekly review of all orders due for shipment in the coming days. The idea is to review their status and to take appropriate actions if delays are probable. But many factories have no regular meeting. That’s a mistake.

Actually, I have found that people love meetings. Unstructured meetings called ad hoc to discuss a burning issue, that is. But regular meetings to discuss the situation based on data? That’s another story. It is often necessary for the general manager to force it into his staff’s schedule.

6. Sequential preparation by different individuals/departments

I recently reviewed the planning process of a factory that takes 7 days between receipt of a customer’s PO and confirmation of order by suppliers. The sales team needed one day to prepare the information in the right format, then the planning & purchasing teams needed several days to prepare the bill of materials, check the stock, inform suppliers, etc.

7 days preparation

Not only do their internal processes need a solid dose of simplification and standardization, but each service waits until the previous one has completed its job. Part of the solution is concurrent processing, as illustrated below.

2_days_planning_ppreparation

7. No coordination with the HR manager

If orders pick up noticeably, it is good to start hiring more production operators a few weeks before. This is common sense, but apparently common sense is missing in many organizations. The HR manager should get a summary of upcoming orders at least once a week, to adjust the headcount.

Maybe some readers have observed other severe issues around production planning?

The Value of Worker Interviews during Social Compliance Audits

Worker interviews is a typical part of social compliance audits. This is something auditors arrange in a closed room, one on one. They ask about the pay, the working time, the working conditions, the accidents, and so on. It gives them another perspective, in addition to management’s claims.

There are obvious limits to this method, though.

Typically, all workers are briefed by their management before an auditor arrives. In some cases, they are promised a bonus and they are told they need to “support the factory to get more business so that everybody makes more money in the long run”…

That’s why a client asked me this question yesterday:

The interviews are in the working place.. so isn’t it difficult for workers to speak out about any problems? Are there alternatives to on-site interviews?

The sad reality is that auditors do what they can. In China, written records and managers can’t be trusted. So any extra source of information is welcome.

Another potential source of information would be off-site interviews. But how can the auditor be sure the so-called employees of factory XYZ really work there? This is what I’d call an investigation, not an audit.

What is the purpose of an audit? Is it to find evidence that the auditee is doing something bad?

No! Auditors are not policemen.

The purpose is to collect evidence (in an impartial way) to get to a conclusion (“here is what the factory does well and what they do not-so-well”).

And, to be fair, an experienced auditor can “feel” when managers and workers are putting up a show. It is up to the auditor to think “there are probably dead bodies, so where are they?” and to find them without antagonizing the manufacturer. This is a big part of the art of auditing!