Editor’s Note: Today’s blog is from one of our favorite authors, Chuck Intrieri. Chuck is a legend in our industry and is helping us figure out how to deal with product quality issues when dealing with international suppliers.
How much money do you lose on each product shipment due to customer returns?
How much time do you waste fixing defective goods to make them ready for distribution? And how many suppliers have you worked with that you wish would take serious steps to reduce or prevent the quality defects that are hurting your bottom line?
It’s obvious to most of us in the fields of manufacturing, importing and Supply Chain Management the headaches that quality defects can bring.
But how can you, as an importer, address product quality issues with your supplier directly? How can you get the factory to truly change their processes to make a better product? And how can you accomplish this in a way that improves your relationship with your supplier, instead of hurting it?
Here are three keys to addressing product quality issues with your supplier:
1. Be specific in addressing product quality issues:
Most importers mistakenly think that being “specific” about product quality simply means telling their supplier which defects are not acceptable. But Addressing Product Quality Issues actually, being specific extends beyond the problem to proposing potential solutions.
Let’s say you’re importing earbuds that have an injection-molded, rubber outer coating. The finished goods you receive have a number of defects related to the molding process, namely excess material, or flash. If you’re not happy with the number of defective pieces in the shipment, you might tell the supplier to fix the molding issues in the next shipment.
Your supplier might proactively investigate the cause of the quality issues and alter their processes to fix them. But in too many cases won’t. It’s more likely that you’ll see many of the same problems with your product recurring in the next shipment.
A better response is to first determine the potential causes for the defects you’re seeing in the finished goods. If you’re not an expert in the product you’re importing, talk to someone who is. Do a bit of research to find out why these product quality issues tend to happen in similar products. Learn the specifics.
For defects related to injection molding, it doesn’t take long to discover the following possible root causes:
- Inadequate ventilation
- Flow restrictions
- Insufficient clamp force
- Poor mold design
Even fixes that strike you as a “no brainer” might not have been considered by the factory. This is especially true for a factory that is less-established and hasn’t yet developed effective quality management systems.
You may feel like it’s not your responsibility to address product quality issues at the factory. But it never hurts to go a step further in providing helpful and actionable feedback to your supplier. And always remember to be specific.
2. Be realistic about addressing product quality issues:
This is one point that many buyers don’t realize and even fewer really appreciate.
The first aspect of being realistic relates to expectations. Regardless of who is manufacturing your products and where, you may have never received a shipment that was 100 percent flawless. Quality issues in some quantity of goods may be acceptable and, in fact, expected. The concept of Accepted Quality Levels (AQL) sampling allows for some defective product.
Secondly, suppliers, especially trading companies, often earn only a slim margin when fulfilling your order. Let’s look at an example from Mattel toys and their suppliers in China, the makers of products like Barbie dolls and Matchbox cars. “A single toy typically brings it a profit of around US$3.60, out of which the Chinese manufacturer earns about 1.5 cents.”
Any investments in new tools, equipment or processes will cut into that margin. So when you’re considering possible remedies for the product defects you’re seeing, you should consider the cost to the supplier.
If you’re asking your supplier to make a change that will cost them time and/or money, you’re far less likely to see that change happen. Understand the impact that your corrective or preventative action will have on the supplier’s bottom line.
3. Hold your supplier accountable for addressing product quality issues:
One way to hold the supplier accountable is to charge them back for the defective product. This approach can be effective only you and your supplier agree in advance. It’s also a less-than-ideal approach since the issue isn’t addressing Product Quality Issues until you actually receive the finished goods – by which time, you have outlaid significant funds for shipping, duty & tax, and giving you little time to resolve the issue before fulfilling sales orders. You may be happy to get a refund on the unsellable product, but you’re still unable to fulfill customers’ orders – leading to customer dissatisfaction, potential fines/penalties and lost orders.
A better approach is to hold the supplier accountable before shipping, so there’s an opportunity to resolve product quality issues. By carrying out pre-shipment inspections, you’ll get a timely look at your order which shows whether or not your specifications and quality expectations are being met.
Do you have an international quality representative in the country of origin who knows your specifications, and can check pre-shipment quality before the production lot is shipped If not, it takes due diligence, investigation and negotiation of rates for checking quality on your behalf.
Another way to ensure good quality is for your company in the USA to obtain six (6) pre-shipment samples, and ensure they meet your specifications before the production lot is shipped.
Then, based on the findings of the inspection, you can communicate your suggested corrective actions with factory personnel. Once the supplier agrees to a solution, you can re-inspect the goods. If the goods fail inspection repeatedly, you can begin charging back the supplier for failed inspections.
In this way, the supplier is directly held accountable for addressing quality issues and has additional incentive to “get it right” the first time. You also have the added benefit of deciding whether or not to ship the finished goods based on the quality level you see from inspection. Once you see a consistent improvement in product quality, you can consider scaling down inspection frequency.
No one likes product defects, including your supplier. But it’s important to understand that suppliers are constantly balancing cost with technical ability and other factors to meet buyer expectations for both product quality and shipping deadlines.
The next time you receive a shipment of product that doesn’t meet your standards, consider the relationship you have with your supplier. Investigate quality defects and suggest possible solutions. Be reasonable in asking your supplier to change what they’re doing to address quality issues. Hold your supplier accountable by coming to an agreement and routinely checking the product before it leaves the factory.
Most importantly, continue to communicate openly with your supplier. Work with them to improve product quality. Continuous Improvement is built, not on confrontation, but partnership, cooperation, and collaboration.
Never assume that when an International Suppler has production quality issues, and parts are rejected by them, that they will ship replacements free of charge. Ensure that this transaction and statement is very clear in your terms and conditions.