I just found a good article on the China Works Blog, about the risks of asking the factory to shorten lead times. It seems to be a beginner’s mistake, because importers quickly learn that pushing for faster production is not compatible with high product quality. But this is a good reminder for experienced buyers:
In our experience shortening production times is the primary cause of project failure, potentially resulting in corners cut and worse still giving the factory a comeback if the goods aren’t up to scratch – “you asked us to get these done in 2 weeks, instead of the 4 weeks we originally asked for….”
There are two ways a buyer can make this mistake:
1. Push the factory to reduce their normal production cycle time
Here is the way it usually happens:
Buyer: if you can make this product and ship it in 25 days, we can give you this order. You have already produced it, so there is no development work.
Supplier: 2 weeks only? OK, we’ll do what we can, but we are not 100% sure we can do a good job.
Buyer: if you really try and if you give me the priority, I am sure you can. If not, it’s fine, forget about this order.
Supplier: OK, OK. We’ll do it.
Buyer: so, you are getting nearly ready to ship, right?
Supplier: well, we are still waiting for some materials, and we’ll start production as soon as we get them. Don’t worry, it will be fast.
Buyer: so, production is already done, right?
Supplier: we are still waiting for 1 component, but we have reserved 2 production lines for you, don’t worry. By the way, I am afraid we won’t have time to send you production samples and wait for your approval. It would delay shipment.
Buyer: hmmm… it’s OK, please ship ASAP.
Buyer: you are getting late! what happens?
Supplier: we are rushing to get is all done by tomorrow night, and then we’ll ship it out. By the way, I am afraid we won’t have time for the final inspection that you usually ask for.
Buyer: hmmm… it’s OK, please ship ASAP.
Buyer: hey, what is that crap that you shipped to me???? I can’t deliver it to my customer, who will be really pissed off by the last-minute cancellation!
Supplier: but we managed to produce it much faster than usual, that’s what you asked for, right?
Buyer: of course I wanted the same quality, or I can’t do anything with it!! What were you thinking? Now please re-produce it nicely at your costs.
Supplier: look, we gave priority to your production, and we had to rush because you were in such a hurry. In these conditions, quality always suffers. You should know that. You even accepted to forget about production samples and QC inspections, so we thought the only thing that mattered was speed.
Pushing the factory to rush production just does not work… The operators are less precise, quality control is barely done and there is not time to re-work defective goods. The workmanship is always worse in such cases.
2. Accept the shipment date proposed by the factory, and give no flexibility
Many experienced buyers keep about 2 weeks of flexibility in their schedule. Problems often emerge during production, but over-optimistic Chinese factories never include them in their planning. The bottom line is, delays happen–there is no way to prevent them all the time.
But some importers are not flexible at all, and it creates all sorts of problems. Here is an example:
Before PO issuance:
Buyer: if I give you the order before the weekend, when can you ship out?
Supplier: ETD (shipment date) can be on or before 15 Sept.
Buyer: all right.
ETD – 5 weeks:
Buyer: please hurry up to get a perfect sample approved, the shipment date is coming up soon!
Supplier: We are sending it at the end of the week. You changed some specs, so it takes us longer.
ETD – 4 weeks:
Buyer: sample is OK, please produce!
Supplier: thanks, we’ll try our best to produce and ship in time but the material suppliers tell me they are very busy.
Buyer: look, you committed to an ETD on 15 Sept., so now please deliver on time. If not, you’ll have to pay air freight.
ETD – 2 weeks:
Buyer: production is nearly done, right?
Supplier: no, we are very busy, and also the materials are arriving late. I am afraid the ETD will have to be 1 week later.
Buyer: no way, you promised to ship on 15 Sept., and you knew I was in a hurry.
ETD – 1 week:
Supplier: we will ship out in 10 days, but it really cannot be any earlier. Please help us, thanks for your kind understanding!
Buyer: I am afraid I don’t understand. If you don’t catch the boat for an ETD on or before 15 Sept., you ship the whole quantity by plane.
Supplier: I talked with my manager, Mr. Zhou, who thinks it is not reasonable. You cannot ask us to pay for air freight because we are only 1 week late. Please negotiate with your customer, thank you for your kind help!
Buyer: my customer will not accept the goods if they are 1 day late. They were pretty clear about it. I can’t push the date back.
Supplier: but you should have told us about it at the beginning! We cannot work under these conditions, all our other customers are more flexible.
Buyer: you promised a date to me… How can I know that you don’t respect the dates you promise?? Now you have to bear the consequences of your poor organization.
Supplier: we wasted 10 days in development because you changed your requirements and we had to make another sample. Now we ask for 1 week of extension. Isn’t it reasonable?
Buyer: at that time, you should have warned me that ETD would be pushed back by 1 week. Now is definitely too late.
Original ETD date:
Buyer: hello! Is someone responding to me?? Are you going to ship by plane?
Supplier: no. If you keep asking for it, we prefer to cancel your order.
Buyer: what??? In that case, please wire my deposit back. And you are not allowed to sell these products to anybody else!
Supplier: we are sorry, but the deposit was already spent to purchase the materials. And don’t worry about the products, we won’t sell them on your market.
In this case, the factory might have done a good job and refused to cut corners. But in the end the purchaser is also dissatisfied.
The key is in managing the expectations of the final buyer:
- If they want a product made and delivered in their warehouse in 3 weeks, they can’t get the China price. It is just not compatible.
- If they purchase from China, they have to build some flexibility in their supply chain, or it will continuously be disrupted.