Many productions have been transferred to China over the past 25 years. Some are getting transferred out of China to places like Vietnam or Thailand these days.
And, of course, not all Chinese factories are doing a great job, so there is a great deal of switching from one to the next.
The problem is, some transfers are quite complex. There is the supplier management aspect (which I will cover in an upcoming article), and there are all the technical details to get right. I have put together a checklist that will help you think of those technical details.
The 7-part checklist you can follow if you’re transferring production to a new factory
Here is the 7-part checklist including 45 points that will help you have the smoothest possible transition between factories:
1. Initial planning
- Can the product design remain exactly the same?
- If the design has to evolve, what are the consequences?
- Will new component suppliers need to be found and qualified?
- Will new certifications be needed?
- What about a new set of performance tests and reliability tests?
- What business terms have to be agreed as early as possible with the new manufacturer? (Since the longer you wait, the harder it will be to negotiate good terms.)
- Have you signed a manufacturing agreement with the new manufacturer?
- If you don’t have your own template, maybe they have theirs and they can submit it for your review? This is an important document, and a lawyer who will review it can help you a lot. Don’t try to make it too one-sided.
2. Gathering information (from the current manufacturer)
- Can the new supplier learn about the current manufacturing process?
- Maybe you mention that a factory audit is required by a potential new customer, and you send one of the new supplier’s engineers as “technical expert” to assist the auditor?
- Ideally, you also shoot videos about all the special/complex operations. That will be quite useful.
- What information do you have about the tooling to transfer?
- Do you have a list of assets (tools, fixtures, gauges, special testing stations…) currently used for the manufacturing of your product?
- Where are they? Some may be in sub-suppliers’ facilities, and retrieving them might be quite a challenge.
- What is their remaining lifetime (based on the number of shots already done, on the way they have been maintained…)?
3. Gathering information (from your side)
- Will assembly lines and other equipment need to be dedicated to your productions? For example, you may have strict requirements when it comes to IP protection, and you are willing to pay a bit more and have an area “reserved” to your products.
- Take the opportunity to pause and reflect, and to analyze the past issues you have experienced. Should you express specific needs? For example, if your electronic products need to be ‘burn-in tested’, the new factory will need to have the right testing equipment. And, if that requirement is too specific, you will probably have to pay for it.
- Can the new supplier get examples of “good” and “not good” samples, as well as a list of the most common past issues on that product, from the start?
- What is very important for you? If, for example, you are afraid the factory’s measurement system is not great, you might have to require gauge repeatability & reproducibility studies.
4. What is the gap (what is missing)?
- Does some sourcing work need to get done?
- In particular, for custom components, what needs to be done and how long will it take?
- Based on past issues, should some component suppliers be replaced? What about their proximity to the current manufacturer, should this be considered?
- What is the gap, when it comes to staff competence?
- How many production operators will need to be trained?
- Should specific profiles of engineers or technicians be hired from outside?
- Will they need a lot of help and information from your side?
- What amount of process engineering work is needed, to make production possible?
- Will you require a process control plan, and assembly & testing work instructions?
5. Preparing for the move
- Were some long-lead-time parts purchased by the current supplier? It might be necessary for the new supplier to purchase them, and payment after inspection might be a good idea.
- Ask the new manufacturer for timelines.
- When will they be ready to manufacture?
- When can the testing stations be operational?
- How long will it take them to ship the first order, realistically?
6. Ensuring good preparation before production starts
- How will the new manufacturer validate the tooling they will receive from the previous manufacturer?
- How will the components be checked (incoming QC)?
- When will checklists and approved samples be ready, at least for critical parts?
- Are special testing stations (e.g. for functional testing of PCBAs) needed?
- Will new contracts be set with the suppliers, to deal with the case where defective parts are received and sent back?
- How will they validate that everything is ready? With a pilot run, on how many pieces?
- What if serious issues are detected at that time, will other pilot runs be performed?
- Should compliance and/or reliability testing be planned on the pieces coming out of the pilot run?
7. Setting the bases for good management of the new manufacturer
- What performance indicators will you gather? Based on what data sources?
- How often will you give feedback to them?
- Have you promised certain order quantities in the future? Follow up on that.
- Are you planning to develop your product’s next version, or your next product, with them? Be clear about your timing, and about the reasons behind your future decision.
Have I forgotten something? What was most important when you transferred production from one factory to another? Let me know by commenting, please.
Next, read these blog posts for further information around switching suppliers…
Start with ‘7 Tips to Manage the Transfer of Production To Another Chinese Factory‘ which is a natural progression from this one.
If you’re unsure about your supplier’s performance, read this post: 7 Reasons to Switch to a New Chinese Manufacturer
Are you dissatisfied with your current Chinese supplier?
I know it’s a big decision to switch to a new supplier, so to make it easier I’ve created an assessment over at our Contract Manufacturing subsidiary, Agilian Technology, where you answer a series of 8 simple questions about your relationship and results from your current supplier and will be provided with a tailored response from us about if you truly should consider switching supplier right now.
It’s free and there’s no download required. Hit the image below to take the assessment: