Improving Factory Self Inspection

3 Ways to Grow your Sourcing Business by Improving Factory Self Inspection in China—and Around the World

According to the South China Morning Post, “The global economic recovery led by the United States and Europe will benefit Hong Kong’s import and export industry this year, spurring an expansion in the trade-oriented economy’s gross domestic product.” The article goes on to mention that overall export growth will improve 5.5% this year, 1.5% higher than last year’s growth.

Given this anticipation, and as demand naturally increases, competition among suppliers in China is expected to grow. As this growth occurs, suppliers will seek ways to improve the competitive nature of their business—and one area often overlooked is quality control at the source.

Let’s face it—it’s hard to get a new customer to trust the quality of your work—and the quality of product coming out of China is a well documented concern. According to the Journal of Commerce (JOC), “In 2015, one in three product inspections performed in China factories failed for exceeding the allowed level of defects.” This number was reported by Asia Inspection, who has 4,000 clients world-wide, many who source in Asia.

The recent manufacturing debacle with hoverboards catching fire (and in some cases burning homes around the world to the ground), has drawn a lot of attention to the lack of QC standards, control and transparency.

It’s not only Western countries that are seeking more competitiveness in China. In 2013, of 1,122 Hong-based manufacturers, a staggering 95% of them had manufacturing facilities in mainland China.

Why is Quality Control at the Source Important?

Quality control at the source is important because it directly impacts the profitability of your customer. If they have to spend extra money solving quality issues (or returning deficient product), their profitability decreases—directly impacting their bottom line.

In addition, an incident like hoverboards that burst into flames can do more than start a fire—it can cause permanent and irreparable damage to the brands involved. According to the UK’s National Trading Standards, since October, 15,000, or 88%, of the hoverboards are “unsafe.” This sort of quality issue isn’t just unsafe, it’s catastrophic.

This makes it a key area to look to improve—and also a critical area to help differentiate your manufacturing operations, plants and factories from others in the area. Many times, companies looking to source in China (and the rest of Asia) don’t have a resource on the ground to support them in QC.

What are Their Options for Getting Quality Control Data at the Source?

For a company looking to source manufacturing overseas, there are a number of ways they can choose to handle quality control.

First, they can trust the factory’s self inspection processes. Historically this has been a fast and relatively inexpensive option for companies sourcing manufacturing overseas. But given recent events (like the hoverboard fires), customers are feeling the pinch to have some sort of external validation completed.

Second, they can hire their own quality control team. Companies can hire their own inspection team, but finding the right talent, determining appropriate compensation structures, management and logistics can make this a challenging option. 

Third, they can hire a third-party inspection team. This can sometimes be a relatively cost-effective solution to implement, especially if the third-party has resources already geographically in place. The challenge here can be integrating them with your existing systems, response time on quick turnaround programs, and lack of control over a third-party. And frankly, many third-party inspections can be costly—both from a time and money perspective.

Lastly, they can rely on logistics systems (like SAP and Oracle). While these systems provide some level of QC utility, many companies don’t have the resources to implement and leverage them.

So, how can you improve your business by improving factory self inspection? Better yet, how can you help your customers avoid the added time and expense related to staffing their own quality control team, or—even worse—hiring a third-party inspection team?

How Can You Turn Factory Self Inspection into an Advantage?

Most overseas manufacturers (like those in China), have some form of plant or factory self inspection process. As with most aspects of a business—once everyone has something in place, it becomes less of a defining differentiator, and customers look to other attributes when deciding on who to work with for the first time.

Also, given the recent (and very public) quality challenges plants and factories are faced with, your customers may not necessarily trust self inspection from the source. You will need to provide them with some sort of “eyes on the ground” capability that puts their minds at rest, and gives them data that they can point to during a QC audit.

Getting new customers is very difficult. Keeping existing customers is easier. But how can you do this—while differentiating your plant from your competitors, if you’re struggling with quality control issues?

Here Are 3 Ways You Can Begin Improving Factory Self Inspection at Your Factory or Plant:

1. Improve communication channels between your plant and your customer

Aside from meeting the criteria to be considered a dependable supplier, your plant or factory can further differentiate itself from other sourcing operations by improving communication with customers. Language issues have been addressed by many manufacturers, but small details like accurately printed labels and other packaging can make a huge difference.

2. Digitize product quality data to reduce time and cost

You can have crystal clear communication, but the customer is still relying on your word and processes to make sure that the quality of the product manufactured is up to standard. When you meet with the customer—and you discuss process, checklists, and their requirements—they will, historically to some extent, need to trust your word on the quality you will produce. You used to have to rely on detailed checklists and samples. And at the end of the day, you’re still relying on paper (even if you scan to PDF), for validation. The information is hard to convert into usable data for business and logistics planning.

Self-inspection coupled with digitizing quality data will allow you (and your valued customer) time to detect and improve any quality issues that might arise. You not only build your reputation as a trusted partner, but you improve the value provided to your customers.

If you are digitizing the quality control data at the source (your factory), then you remove most of that initial hurdle (trust), give them piece of mind, and allow them to focus on what they really need—their business. The best news is, you can do this from day one. The client doesn’t have to worry through weeks or months of production time—you can put their quality control concerns to rest immediately.

In addition, you customer gets deep insight into quality, without having to incur the expense of a third-party inspection. Many customers just don’t have the time or the resources to bring in a third-party inspection company.

By digitizing your inspection, customers can practically inspect the products themselves—saving them time, money, and stress. Meanwhile, you’re able to guarantee that your shipments will meet the standards of even the most demanding customer.

3. Reduce repeat quality control issues

You can reduce repeated quality control issues. One source of frustration for customers is seeing the same quality issues over and over. It probably frustrates you as well. By digitizing product quality at the source during the manufacturing processes, your customer can personally, visually inspect products, and understand where potential issues in the process might be, helping you proactively solve the issues—in partnership with your customer.

The reality is that—while we’d love it if there were never any manufacturing problems—we all know they exist. By providing product inspection transparency to your customer, you not only build trust, but you establish your business as a confident and proactive partner that is willing to do anything to deliver the highest quality product, as quickly and professionally as you can.

This can help you gain new accounts, and improve your relationship with existing customers.

One Note on Quality Control Intelligence and Analytics

Buyers are becoming more sophisticated. As they start to better leverage their existing ERP solutions within SAP, Oracle and other platforms, and start looking at light weight business intelligence and analytics on suppliers, it will be more important than ever for factories, plants and suppliers to have a rock-solid and transparent source inspection process in place.

Do you currently leverage a cost effective platform to demonstrate and communicate accurate and reliable quality control data at the source? What are you leveraging? For a free demo on Pivot88’s easy to implement, cloud-based quality insight tools, contact us. Or, download our case study on how we helped increase inspection efficiency today.

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