Manufacturing Sourcing

Shipment is one of the final steps of overseas sourcing and likely the most important. Everyone wants to avoid nasty surprises when they receive their goods so it is important to have some way to inspect them before they are shipped. There are different ways to do this. However, in most situations, a third party quality inspection is the best course of action.

The importance of inspection
One should never underestimate the importance of proper inspection before shipment. The chance for error is always present when making any kind of order. With overseas sourcing, the distances as well as shipping times, different legal systems and other factors complicate the process of replacing any defective products. Furthermore, payments are often made in advance and some suppliers may be reluctant to replace goods after they are shipped.

Even though most manufacturers will send replacements without issue, there is still the possibility of extra shipping and other costs, not to mention the lost time and angry customers.

Finally, sometimes improper loading or defective containers can ruin products that were manufactured to specifications.

Ways to pre-inspect goods

The factory agent
Many develop close working relationships with their factory agents and sometimes rely on them for inspection. This can be fraught with dangers though with conflicting interests being a major concern. Agents work for the factory and want to get the goods shipped. They are not likely to make any demands that might delay the shipment or increase costs, even if such steps would be the better long-term course of action.

Even with the best of intentions, the factory agent may not have the time and expertise to properly inspect the shipment. The agents are primarily chosen for the language and other skills so many simply do not have the knowledge needed to insure a shipment is ok.

Personal visits
While it is possible to send someone directly from the company placing the order to check the shipment, this is often not a very practical solution. There are the obvious time and monetary costs of sending someone. Since production and loading takes time, multiple trips may be needed, particularly when there is more than one order or supplier. Finally, specialized knowledge in loading and other aspects of shipping are required for a good inspection in many cases.

Third party quality inspections
There are many companies that specialize in third party quality inspections. A good company will send qualified engineers and others with specialized knowledge of product inspection, loading and shipping. They can witness the actual handling and loading of the cargo, verify container markings, photograph, check documentation and send a report to the purchaser. If there are any issues, they can hold the shipment until they are resolved.

Any business using third party quality inspections should ensure it is a reputable company with good personal near the factory. It is also important to make sure the inspection company does not have any relation with the manufacturer that would represent a conflict of interest. Considering the costs of mishaps, purchasers should be wary of cutting corners, but the fees charged by these inspection companies are usually quite reasonable.

It is not advisable to entirely entrust in a third party quality inspection. Make sure the contract with the manufacturer states inspection by a third party does not release them from their responsibility to replace any goods that are found defective upon arrival.

While it is sometimes possible to do business without inspection before shipment, it is not a good idea in most cases. If carried out by a good company, a third party quality inspection is often the best choice.

Ensuring quality control is a critical issue when sourcing from China and other developing countries. There is no simple solution to this problem and addressing it takes multiple strategies.

The quality of Chinese and other Asian goods has improved in recent years as these firms gain more experience and move up the manufacturing food chain to higher value products. However, serious differences remain in how quality is perceived. Developing countries, many of which have a legacy of planned, isolated economies, generally do not have the same ideas about quality that are taken for granted in richer nations.

Therefore, it is critical not to assume an Asian manufacturer shares the same views on what comprises good quality and it is advisable to take steps to assure quality control.

Any strategy to avoid quality problems begins when selecting a factory. When choosing a manufacturer, consider the following questions:
1. How much experience does the factory have in exporting overseas? Examine their product lines and ask for references.
2. Does the factory have representatives with a good command of English? While it is not reasonable to expect fluent speakers, a very low level of English proficiency is a sign the manufacturer is inexperienced in overseas markets.
3. Where is the factory headquartered? A factory operating from a more developed country such as Hong Kong or Taiwan, with more exposure to western markets, is much more likely to produce quality goods even if their manufacturing takes place in less developed countries such as China.
4. Where is the factory located? For example, different areas of China tend to specialize in different products. Producing the product in an area that specializes in that product is best. Check the address and avoid areas known for cheap products such as Yiwi in Zhejian province in China.
5. Did one quote come in much lower than the others? The old “buyer beware” adage should be kept in mind. If the quote sounds too good to be true, there is a high likelihood the manufacturer produces inferior goods.

Once a factory has been selected, insist on an exact sample before going into production (see sampling).

Be sure the order confirmation and any other contracts clearly state that products not made to specifications will be replaced and shipped at the manufacturer’s expense within an explicit time frame.

No matter how competent the factory may seem, it is advisable to inspect the goods before shipment, especially the initial order. This can be done in different ways.

The most obvious way is a direct visit to the factory by the purchaser. If the travel and other costs of sending someone are manageable, this is the best method of ensuring the goods have been made to the required specifications.

There are also a number of companies that will inspect goods on the importer’s behalf before they leave the country of manufacture. The costs of using these services are much lower than a direct visit. However, one needs to keep in mind that the person doing the inspections for these companies is almost always from the country that manufactured the product, and therefore might not understand the quality requirements.

Some factories may try to deny they are responsible for defective goods if they were missed by a pre-shipment inspection. Therefore, be sure the contract clearly states inspections by the purchaser or third parties do not release the manufacturer from either their responsibility to ensure quality or their responsibility to replace defective goods.

Once the goods are received, inspect them as carefully as possible for quality. Any defective goods should be reported immediately. In this case, it may be necessary to return the goods, or the factory may agree to replace them without the need to return them.

Before placing an order, factor in that a 3%-5% rejection rate is common.

While ensuring quality control is a challenge, major problems can be avoided with careful factory selection, taking steps to verify quality, and making sure contracts clearly state the manufacturer must replace goods not made to standards.