We have been auditing factories in China and some other Asian countries for more than 15 years. There is a checklist, a grading system, some nuances… and in the end what the client really wants to know is ‘what kind of factory is it?’
And, really, there are a few typical situations that come back again and again and tend to cause the same challenges to quality auditors…and later, to customers.
I’ll list each of them along with the typical challenges both quality auditors and their customers will face and whether it’s possible to recognize them early on to help you make your selection…
The ‘big 4’ types of Chinese factories
I believe one can put 95% of factories in four different buckets. Let’s call them the big 4 types (should I write ‘stereotypes’?) of Chinese factories.
Here they are:
1. The small manufacturing company with an immature quality system
It is a small company, usually managed by the owners (often husband and wife). There are 2 subcategories here and they are rather different:
a) Sales background — the owner used to be a salesperson who diverted customers to his/her new company. All the focus is on getting new customers, and operations are rather non-technical.
b) Technical background — the owner used to be in a technical position. There is less focus on growing fast.
In both of these cases, the owner is the manager and tries to keep everything running. There are no other people active in ‘managing’ until they get to a certain size, and then they tend to become a “type 2” or “type 3” company (see their descriptions below).
Typical challenges for QMS auditors
Ask the auditee for a process map, a checklist, an investigation into a past issue… and they don’t know what you are asking for. A lot can be observed in their daily practices during the audit, but documents and records are often nonexistent.
Of course, it means the audit can be shorter, as some of the findings are obvious (“No documented standard and no checklist for incoming QC” etc.) and the activity tends to be simple. But, to get a good grasp over what they are really doing, more first-hand observation and more conversations may be needed.
Typical challenge for customers
Should those types of suppliers be eliminated swiftly with a low score (as they often are)?
Maybe. If you value a very consistent and predictable output, they may be a very bad fit.
Maybe not. If you want to place small orders, if you value flexibility and a low price, and if you are ready to inspect every production batch, this may be a great supplier.
Can you recognize this type of supplier early?
The situation tends to be obvious. Ask them for some of the usual QMS documents, and you won’t get anything. Ask about their size, with a few photos of their operations. Ask for a quick Wechat live video call. You will generally know.
2. A factory that uses a set of documents ‘just for ISO” to have their QMS certified, but don’t actually work systematically
What is the natural reaction of many suppliers, after a few audits that killed their chances of selling to potential customers? They go for the easy solution. They hire a consultant who sells them a package — a set of documents, some training on how to answer questions, a bit of coaching on how to and where to show records, and some assistance in picking a friendly certifying body.
Typical challenge for QMS auditors
The auditee can show an SOP for every requirement of ISO 9001 (or 13485 or whatever they pretend to comply with). Ticking boxes is easy — they have such SOP, such policy, etc.
But where are their nonconforming material reports? Where are their customer complaints? Everything is running perfectly, really?
Once an auditor feels that’s how the game is played, he/she can ask questions and observe actual practices, and it’s usually rather easy to find consistency issues. See 10 Signs of a Bad ISO 9001 Implementation.
Typical challenge for customers
Those suppliers are deceiving you. They pretend to have a nicely tuned system, but they never use it.
You need to look carefully at their processes, at the actual control points they have set up, at the general culture if possible. A typical QMS audit is not a great fit here.
Can you recognize this type of supplier early?
Yes. Ask for their manual and some of the usual SOPs. It will look very ‘boilerplate’. Pick a specific aspect of the manufacturing or testing process that is obviously critical to quality, ask for the related documentation, and you will see nothing tailored to the actual process.
3. A manufacturer that has taken the time to put in place a real management system
Some suppliers ‘get it’. They understand that their costs of poor quality dwarf the cost of taking preventive measures.
They know they need to do the hard work of implementing a good quality management system and maintaining it over time. Maybe a key customer pushed them gently in that direction, maybe a great quality manager has been at work for years.
What it means for QMS auditors
When the QMS has been implemented well, it is a nice symphony. Procedures and other key documents have been tailored to the processes. Extra bonus if they use what we call the 3 basic process improvement tools (flow chart, FMEA, control plan), as it makes the auditor’s work more efficient and it demonstrates a real desire to do a good job.
The risk is to fail to keep digging for inconsistencies and lapses. For example, the auditor may fail to take some examples and dig deep into the details. Every living system has… let’s say ‘imperfections’.
What it means for customers
This type of supplier is more likely to do what they say and to say what they do.
On the other hand, they might be picky about the customers they work with. They might already be very busy with their current customers. Make sure they want your business.
Can you recognize this type of supplier early?
Not with certainty, but their QMS documents won’t usually look ‘boilerplate’ and they will go into the details.
4. A big manufacturer with a quality system that evolved over time and was not well maintained
Let’s say a supplier becomes “type 3” and then the quality manager who was holding the whole system together leaves. Top management knows their success is in part owed to that nice system, so someone else is tasked with keeping it alive. Yet that ‘someone else’ doesn’t do a great job.
Long-term maintenance of a QMS is no easy task, especially if it was implemented by somebody else who has left. The intent behind the QMS might not be very clear. The customer expectations change, the environment and the obstacles also change. Adding extra work instructions is easy, but maintaining and updating the old ones is not.
Fast forward a few years and the QMS is bloated. Some information is repeated. It is contradictory in some places. Some parts are in serious need of an update. People no longer pay much attention to it.
Typical challenge for QMS auditors
The risk here is drowning in information without a high-level map.
Hopefully, they have some people on staff who know the system and are used to answering auditors’ questions. The flip side is, they might be good at pointing to areas of their system where they have done a good job and drowning you in details so you have no time to dig deep in other areas.
Typical challenge for customers
This type of supplier may have a lot of ‘trust factors’ such as certifications, famous customers, and so on. They look sleek.
And, once you start working with them, you start to realize that their operations are a mess. They keep making all sorts of little mistakes when they are not creating big issues.
Can you recognize this type of supplier early?
Distinguishing them from ‘type 3’ suppliers is tricky when reviewing a few high-level documents off-site. Going deeper into the daily work documents is important, but that takes much longer.
Fortunately, there are many more type-1, -2, and -3 in China. You will come across them from time to time, but they will probably be a small minority.
How can this typology be useful to you?
When you need a new supplier, think of what type of supplier would be a good fit. Once you have, say, 5 potential suppliers, work with your auditing firm so they take a first pass at looking at those suppliers’ QMS documents (without going on-site). They will probably be able to put each potential supplier in a certain bucket. That can save you a lot of time and aggravation down the road!
There is a lot of overlap between this list and what I called the 4 levels of Chinese factories a few years ago. I believe the list I outlined above is a bit more actionable, though.
You might also like to read…
- Quality Auditor vs Consultant For Suggesting Factory Improvements
- Remote Audit Of A Factory’s Quality System: It Can Work!
- The Importance Of On-Site Factory Quality Audits [Podcast]
- 3 Common Ways Factories Try to Cheat Inspectors/Auditors
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