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I got an interesting question from a reader. One aspect of the products he received from his Chinese supplier is not up to his quality standard, but his sales team insisted to place the goods on the market anyway. How to push the factory to improve product quality for upcoming repeat orders?
I don’t have any good response to your question. It happens all the time, and different purchasers resort to different strategies.
First, I should point out that an inspection during production (when only 10-20% of products are finished) on the next production run can tell you whether there is improvement. Then it is up to you to put pressure on your supplier to do what is necessary.
And, in case you catch a problem before shipment, you can ask the factory to sort and repair the goods. That’s only possible if you are not in a big hurry, though.
Second, here are a few reactions that I observed (in case the factory does not respect the buyer’s quality standard but production is accepted anyway), and what I think of them:
- Most purchasers complain a lot verbally and hope the supplier understands that it will impact the long-term business relationship. This is usually ineffective–of course the factory is not stupid, notices the double standard, and takes note.
- Some purchasers say “please send me a letter of guarantee, saying that you will compensate us entirely for any consequence of this mistake”. As there is no real legal applicability, this strategy only succeeds if the supplier really hopes for a long relationship. I would only use it with the best suppliers, who have already proved their reliability and good will.
- Yet other purchasers say “this is not acceptable, but this time we accept it. This is exceptional, as the product is less than desirable and we can’t do this over the long term. Next time we might (or might not) accept it, BUT a penalty of xx USD (or more if quality is lower) will be deducted from your final payment every time we notice it. Please confirm by return.” I think this is the best reaction in 90% of cases.
Keeping your quality standards up with a given factory is one of the hardest things in China. It might mean taking some hits in the short-term. But it is well worth it. A good factory that respects your requirements is very, very valuable. Switching suppliers regularly is actually quite costly…
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I would think option C should be put in place in the beginning rather than a reaction to unacceptable product.
Hi David, what you say makes sense in theory but is difficult in practice.
Before production is launched, it is important to define what is within the client’s specifications, and what to do if production is without. But if the factory makes a mistake somewhere and it does actually not matter that much (since you take the goods anyway), imposing penalties won’t change the result.
Once they know they make this mistake and they have to fix it “for next production run”, a penalty can impact their behavior. That’s my opinion anyway…
Yeah, the end result is the same. Good point. I guess I was thinking more along the lines of if the product isn’t good enough to put on the market, rather than your reader’s question. If you’re there on the factory floor before it ships then you can catch the mistakes and begin the solving the problem.
Hi David, I understand. My reader actually found this problem after production was done and ready to ship, so it was already too late.