Sunday, 12 November 2017

QUALITY CONTROL FOR IMPORTING FROM CHINA

When your business entails importing products from China, it’s vital to incorporate a quality control process at the factory you work with. Even the best managed factory might not always produce a perfect batch, so a robust quality control plan should be used to ensure your specifications and quality expectations are met within every order.

WHAT IS QUALITY CONTROL?

Quality control can focus on both product specifications and manufacturing process specifications for any type of goods and is especially important for importing from China. The goal is to identify any problems, defects, and non-conformities in the product that doesn’t follow required specifications from the buyer, or from general international standards. When caught early enough, these issues can easily be solved to fix the initial batch and avoid any future problems.

CHALLENGES FOR IMPORTING FROM CHINA

Import business owners face several specific challenges that can affect their return on investment as well as the delivery of goods. The first major issue to be aware of is that importers typically need to purchase goods in advance. Since payment is generally released to the manufacturer prior to the goods being shipped out, you run the risk of receiving low quality goods with few (and costly) options for sending them back or reworking the goods locally. Whether the factory’s mistakes are deliberate or not, the bottom line is that they impact your business. The expense for shipping and customs duties would be enormous, not to mention the amount of time it would take to send back products and receive a new batch. Since many smaller businesses don’t understand the intricacies of China’s legal system, it’s very unlikely a lawsuit would have any success. So, in this situation, the importer would take a financial loss if the goods’ quality was not at an acceptable level because there’s little to no recourse for the factory even if they don’t fix the problem. Even if the business decided to sell the product anyway, their brand image could be substantially damaged if customers viewed them as lower quality.
Quality control not only ensures the quality of the product, it can also monitor their timely delivery. Without a quality control plan in place, production schedules can fall behind and you might miss your sale season, resulting in low product turnover.
All and all, it is essential for an importer sourcing in China to check their goods before, during and after production. You should check your goods at pivotal points in the manufacturing process and communicate with the supplier to get any potential problems fixed before it’s too late. To do so, you can manage it all by yourself together with the factory or work with third parties.

WHO PERFORMS QUALITY CONTROL IN CHINA?

There are a few different options for quality control when importing from China. The first is the supplier’s in-house review of the manufacturing process. However, it’s obvious that solely relying on the manufacturer presents a conflict of interest. At the end of the day, they are likely to be more concerned with their own financial interests than the quality of your products. To get a better idea of how the supplier operates, consider performing a factory audit prior to the confirmation of your order. This will give you a clear idea of exactly how they control the quality within the factory. You might also check the factory’s licenses and certifications, along with their production capacity, human resources policies, and more.
Another way to perform quality control is through your trading or sourcing partner in China. You could consider requesting that they add a product inspection to their other duties; however, this also carries a high conflict of interest. Intermediates negotiating with suppliers need to keep good business relationships with them, sometimes it is difficult for them to provide a neutral opinion.
You could also decide to have your own quality team. This strategy requires intensive training on your products, plus local human resources management. Travel time and costs could quickly add up if your suppliers are located throughout the country. There are additional risks as well. Because quality teams have a limited number of human resources, the same quality inspector will regularly be in charge of verifying goods at the same suppliers’ site. There is a high chance that QC and suppliers develop a friendship that will end up with risk of corruption or at the very least influence his point of view on the goods’ quality.
As an alternative, there is a wide range of reputable third party inspection companies who advocate on your behalf in China. The company’s sole purpose is to protect you and your financial interests by verifying the goods based on your requirements. They have a neutral relationship with the supplier or trader; in fact, their business relationship is on one side only: the importer. They can provide several QCs to visit a unique supplier to keep the opinion the most neutral. They are able to provide services all over China. Plus, many importers are surprised at how affordable professional third party inspections are, especially compared to the potential for loss if a low-quality shipment makes it to your door.

WHAT DOES QUALITY CONTROL INCLUDE?

When you work with a third-party inspection company, the process is very detailed and specific to your products. You develop a detailed inspection protocol based on a checklist and your own product specifications and quality requirements. The inspection protocol sets up all the different verifications the QC may have to perform while controlling the goods on-site: it includes cosmetic verification, functional verifications as well as verifications to your requirements. It’s best to be as specific as possible to ensure every detail is controlled and evaluated as you want it. Provide clear details, otherwise the inspector and the manufacturer will use their common sense which may be different from yours. Also realize that your checklists should be constantly evolving as your own specifications change. You can even provide a reference sample to be used in conjunction with the specification sheet to get the best results.

Sourcing in China can be challenging, no matter how long you’ve been doing it. Quality controls are keys to protect your business. They are important for the first shipment concerned but also for the recurring orders. They can then help your factory prevents similar mistakes in the future while getting the current shipment out the door within an appropriate amount of time, and the guarantee that your goods are sellable. Thus, make sure to rely to the right quality control experts when performing product inspections. Having a third-party inspector is probably the most flexible and reliable option for small and medium companies, as they guarantee product expertise while sitting on your side to defend your interests. Not only that, they can quickly operate all over China, with a third-party inspection company, you keep control on your goods quality and benefit from their expertise regardless of location.

Wednesday, 27 September 2017

OUTSOURCING FROM CHINA IN RIGHT WAY

No business is completely self-sufficient. All companies require solutions and products from other vendors to better service their own customers. Outsourcing enables businesses to focus on developing its core competencies, while still benefiting from greater efficiencies and conveniences provided by their outsourced partners.  For example, a premium brand online selling business should spend more of its time developing new designs, working on promotions, or training customer service staff, while outsourcing products from China.

There are many suppliers that provide specialised solutions, and this can cause a huge headache for procurement departments. Furthermore, the range of options is getting more complex, with the availability of traditional services firms, freelancers found via word of mouth or from online platforms, purchased software with an upfront cost, cloud-based solutions on subscription basis and many more!
Unfortunately, for most companies, procurement policies are still stuck on a lowest cost bias. One might wonder why this is a problem, as lower costs are better, right? Not necessarily.
Just take a look at the recent Auditor’s General report, which revealed problems in the tendering and management of contracts. In some cases, the solutions procured were unused, possibly because when the lowest tender is chosen, it can lead to unsuitable vendors being awarded the contract and providing an incompatible solution.
It is far more important to take a holistic view and use a value-based procurement approach. Besides eliminating solutions that may simply be a waste of resources, looking at the total value add derived from each submitted quote creates an alignment with organisational goals and strategy and ensures integration with internal user needs. This enables organisations to reap more long-term benefits from their outsourced solutions that may require higher initial costs but result in much higher value add across its lifecycle.
Here are some tips on how organisations can implement a value-first thinking when it comes to outsourcing, especially from a remote area like China.

CONFIRM THE NEED
Assessment of projects should be done before it even reaches the procurement stage. Preliminary questions should be asked such as: Why do I need this new solution? What is the underlying problem? What will happen if I do not procure this new solution? Do I have the capabilities to do this in-house? What are our alternatives? Based on these questions, the team will have some idea of the expected results (not solutions). This sets the initial scope and budget for the project.
For example, a company found that its sales team was unable to cope and had trouble following up with clients. This may seem like an obvious lack of manpower, fixed by hiring more salespeople. However, a deeper investigation could reveal different underlying problems, such as salespeople spending too much time filling up the paperwork. This could be solved by an enterprise solution that speeds up administrative work, which is more cost effective than additional hires.
Talk to users and experts
In some cases, you may not know what is the underlying problem. The best way to discover this is to talk to stakeholders and users.
Businesses can enhance this conversation by using in-house experts or independent consultants, who are knowledgeable about the issues. Their expertise and knowledge of technology trends can result in new solutions to reach the expected results. They can also provide feedback on feasibility of the project or budget expectations.
When it comes to the procurement and assessment, remember to include these users in the decision-making process. This ensures that the project remains focused on the needs of stakeholders and ultimately benefits the organisation.
Be clear on the purpose of your requirements
Once you know what type of solution you want, generate the requirements for the project. Where possible, tag each requirement to a specific business purpose/need, so your vendor can understand how their features will be used to meet your goals. In some instances, they may be able to suggest superior alternatives that still meet the requirements. For example, an inventor wanted to create a complete new silicone wine glass. Once their Chinese vendor understood this was to build a stronger user friendly and cool looking, they did minor tweaks to the existing design, make the bottom and corner smaller & rounder to save material cost and easy to produce. This achieved the same objective in a significantly faster, cheaper and more effective manner.
Outsourced projects often fail, not because vendors were unable to meet the requirements, but because they could not meet the actual goal of the company. This is especially true when businesses select the lowest cost vendor, who may reduce their cost by matching their offering against the stated requirements, while disregarding what the client actually needs.
When initiating a new project, it is advisable to determine if the project is to be a standalone and solely developed by the vendor or requires integration into existing systems. This makes a huge difference especially to IT projects and can make or break large automation projects.
Have an open discussion
With these requirements in hand, invite interested vendors for an open discussion. This should be done before calling for tenders or quotes, so you can tap on their knowledge and refine the scope of your project. This also prevents blindsiding them with new requirements or getting unpleasant surprises when they inform you that the project cannot be integrated into your existing system.
Multiple quotes are a must
It is essential to ask for multiple quotes, and typically at least three bids are recommended. While it may take effort to get three vendors, it could save you significant time and money later. This is where online procuring platforms or sourcing agents can help in the sourcing and matching process. These act as one-stop centres for vendors to find procurement opportunities and make their bids in a transparent and fair manner. They also provide access to a broader range of previously-unknown vendors and suppliers.
Ultimately, these steps should culminate in a value-based approach when your business purchases outsourced solutions. Done effectively, your business can better assess who is the ideal vendor to solve your problems and meet your goals.

TALK TO USERS AND EXPERTS
In some cases, you may not know what is the underlying problem. The best way to discover this is to talk to stakeholders and users.
Businesses can enhance this conversation by using in-house experts or independent consultants, who are knowledgeable about the issues. Their expertise and knowledge of technology trends can result in new solutions to reach the expected results. They can also provide feedback on feasibility of the project or budget expectations.
When it comes to the procurement and assessment, remember to include these users in the decision-making process. This ensures that the project remains focused on the needs of stakeholders and ultimately benefits the organisation.

BE CLEAR ON THE PURPOSE OF YOUR REQUIREMENTS
Once you know what type of solution you want, generate the requirements for the project. Where possible, tag each requirement to a specific business purpose/need, so your vendor can understand how their features will be used to meet your goals. In some instances, they may be able to suggest superior alternatives that still meet the requirements. For example, an inventor wanted to create a complete new silicone wine glass. Once their Chinese vendor understood this was to build a stronger user friendly and cool looking, they did minor tweaks to the existing design, make the bottom and corner smaller & rounder to save material cost and easy to produce. This achieved the same objective in a significantly faster, cheaper and more effective manner.
Outsourced projects often fail, not because vendors were unable to meet the requirements, but because they could not meet the actual goal of the company. This is especially true when businesses select the lowest cost vendor, who may reduce their cost by matching their offering against the stated requirements, while disregarding what the client actually needs.
When initiating a new project, it is advisable to determine if the project is to be a standalone and solely developed by the vendor or requires integration into existing systems. This makes a huge difference especially to IT projects and can make or break large automation projects.

HAVE AN OPEN DISCUSSION
With these requirements in hand, invite interested vendors for an open discussion. This should be done before calling for tenders or quotes, so you can tap on their knowledge and refine the scope of your project. This also prevents blindsiding them with new requirements or getting unpleasant surprises when they inform you that the project cannot be integrated into your existing system.

MULTIPLE QUOTES ARE A MUST
It is essential to ask for multiple quotes, and typically at least three bids are recommended. While it may take effort to get three vendors, it could save you significant time and money later. This is where online procuring platforms or sourcing agents can help in the sourcing and matching process. These act as one-stop centres for vendors to find procurement opportunities and make their bids in a transparent and fair manner. They also provide access to a broader range of previously-unknown vendors and suppliers.
Ultimately, these steps should culminate in a value-based approach when your business purchases outsourced solutions. Done effectively, your business can better assess who is the ideal vendor to solve your problems and meet your goals.