This article is a wrap-up of the series of articles that we have published over the past few months, on the topic of the verification & qualification of Chinese suppliers. Here is the list of articles: Background Checks Questions to Ask Before a Visit Evaluating Engineering Capability On-site, subjective evaluations On-Site Factory Quality Audits On-Site Social Compliance Audits Factory Process & System Audit Factory Testing Facilities In-Depth Due … [Read more...]
China Supplier Vetting Part 10: Pricing, Negotiation, Contracts
This is the 10th part in our China supplier vetting series. We’ll cover requests for quotations, negotiations, and contracts. By now we covered pretty much all sorts of due diligence a paranoid importer might go through! And yet it’s not over. While I am no expert in this stage of the buying process, there are a few important considerations that I want to address. Organized RFQ (Request For Quotation) One thing you want to check is whether the supplier you end up working with is … [Read more...]
China Supplier Vetting Part 9: In-Depth Due Diligence
If you are about to select one Chinese supplier, and you know you will be tied to them for the foreseeable future, it is in your interest to spend some time and money to vet them. Here are a couple of examples: A company is about to work with a manufacturer on a complex, custom-developed, product. If things go well, production will start in 4-6 months. Finding out many issues later will mean very serious delays. An end customer has to approve the facility or it has to be certified to a … [Read more...]
China Supplier Vetting Part 8: Factory Testing Facilities
If you have conducted inspections at your suppliers' facilities in China, you have probably found that many of the testing equipment necessary to check your product's quality is not available on site. The question, of course, is 'how can they be sure production is good, if they are unable to check it?' The reality is simple. A factory that is missing the necessary testing facilities does NOT have the capability of producing consistent quality products. That's why an important aspect of … [Read more...]
China Supplier Vetting Part 7: Factory Process & System Audit
In a previous article I described why and how a factory’s quality system can be audited. However, if you want to confirm a factory's reliability with high certainly, you might have to dig deeper. A quality audit will only focus on the quality systems. And chances are, the auditor is not familiar with the factory's production processes, so he won't look at the process controls that really matter. I wrote about it in this article before. The key here is to evaluate the maturity of the … [Read more...]
China Supplier Vetting, Part 6: On-Site Social Compliance Audits
This is another article in our "supplier vetting" series. So you vetted a potential supplier through background checks and a factory quality audit. Great. You might also have to check their social & environmental policies if you are in one of these cases: One of your customers require you to work with responsible manufacturers; Your brand might be tarnished if a negative story comes up in the press; Your brand promises certain things that are not to be taken for granted (e.g. … [Read more...]
China Supplier Vetting, Part 5: On-Site Factory Quality Audits
This is another article in our "supplier vetting" series. So you asked potential suppliers a number of questions, then you visited them and noted your subjective evaluations... If you want to move further in the direction of working with them, the next step is generally a factory quality audit. Working with a manufacturer that has a strong quality system ensures that 'very bad surprises in production' are less likely to come up than with an average factory. I am going to explain why … [Read more...]
China Supplier Vetting, Part 4: On-site, subjective evaluations
So you have identified a potential supplier, you vetted their reputation & legitimacy, you asked them questions before a visit... and now is time to pay them a visit in China. I will cover the different aspects of the factory that you can audit in future articles. Today I am writing about your subjective impressions, and they are just as important! Are they a good fit for your company? I mentioned the importance of a good "fit" between the manufacturer and the buyer before, but now is a … [Read more...]
China Supplier Vetting, Part 3: Evaluating Engineering Capability
If you want to work with a Chinese manufacturer to develop a new product, you need to evaluate their engineering capability. (If you only buy off-the-shelf products, this article won't be useful.) In addition to the questions a purchaser can ask prior to a visit, there are 5 key attributes you really need to check. Those 5 attributes will move your new product through the product development phases and into production more or less quickly. Typically, one of your designers/engineers … [Read more...]
China Supplier Vetting, Part 2: Questions to Ask Before a Visit
Let's say you found a potential supplier, you communicated a bit with them, you vetted their company's legitimacy and reputation, and you want to move forward. Generally, the next step is to ask them a number of questions that will disqualify them if they are a poor fit for your needs -- and that will warn you if you are a poor fit for them. I'll assume you already asked about their minimum order quantity, lead times, port of loading and distance from that port, payment terms, and maybe an … [Read more...]