Quality control moves to the forefront in wake of product recalls
Buyers simply need to be more vigilant with suppliers in China
By Wayne Forrest -- Purchasing, 8/20/2007 6:52:00 AM
The recent recall of products manufactured in China is putting many—if not, all—U.S. companies on quality control alert.
The current case of Mattel having to recall nearly 10 million Chinese-made toys with small magnets that might be ingested by young children and another 265,000 toy cars due to lead paint concerns has domestic manufacturers reviewing their own safety and quality control processes with foreign suppliers. Needless to say, it is easier said that done.
"There are no perfect contracts," says Sergio Chayet, assistant professor of operations and manufacturing management at the Olin School of Business at Washington University in St. Louis. "You may inspect (the product) and think everything is perfect. Then (the supplier) subcontracts to someone else, and that is where the problem is."
But subcontracting in China is not necessarily a negative thing, especially if buyer maintain strong relationships with trusted first-tier suppliers in China. John Vitkus, vice president of purchasing at Powerbrace Corp. in Kenosha, Wis., says his suppliers in China inspect all subcontactors’ product before assembling the end product, which is then inspected prior to shipping. While this may seem extremely labor-intensive in the U.S. market, “Because of the low labor cost in China they can afford to 100% inspect product to insure quality,” Vitkus says. “My experience is if they have a quality program in place and follow the inspection procedures any quality issues on our end are minimal. When they deviate from their procedures to rush shipments or make late deliveries, that’s when problems can occur.”
The more successful companies are more selective with their suppliers. Chayet adds buyers may have to pay more for product quality and consumer peace of mind, "but if you do the math, you come out ahead in the long term."
He recommends that companies test incoming and outgoing products, as well as perform quality control evaluations during the manufacturing process to uncover potential flaws and inadequate production. The key is to identify problems before there are adverse effects on customers.
Christopher Devereaux, managing director of China Savvy, a western-owned and managed outsourcing company, is on the ground in China and sees the lack of qualified middle management as the biggest problem in China today. While there are many good people at the executive level and a dedicated workforce, the shortage of trained middle management can result in miscommunication between buyers and suppliers.
Even though China graduates literally millions of citizens from its universities annually, Devereaux tells Purchasing they "don't have either the experience or the training for middle management." Hence, lower-level employees are promoted to middle management without the necessary qualifications and experience.
Another pitfall for quality control is U.S.-based companies that enter China with the misconception that all they have to do is place an order and expect the process and results to be just like the U.S. "Apart from the communication problem, you need to have on-the-ground quality control in China," Devereaux says. "A lot of U.S. companies have not understood that they cannot simply just get a sample of exactly what they want and expect 10 or 20 containers to arrive within a certain period of time."
To further ensure against recalls, Devereaux advises a medium to large U.S. company would be well advised to set up its own quality control operation in the country from which is sources. One person cannot handle that function alone.
"There are some very good suppliers in China and very good quality control procedures," he adds, "but the more you go down into the more medium and small suppliers—and that accounts for about 80% of all manufacturing in China—you have to make sure you have some sort of quality control procedure in place."
But Larry Gursky, purchasing manager at The Shredder Co. in Texas says the “certified” product he bought from a metal supplier recently was tested and found not to be in spec. The U.S.-based supplier of the product went back to its Chinese manufacturer and is testing all product from that supplier. In this case, having a middle man handle the issue, was a big help for Gursky.
| How to avoid a recall 1) Development of original specifications. Make sure they are in detail in the native language of the supplier and have technical drawings available in both the foreign language and English to lessen the possibility of misinterpretation. 2) Outline the quality control process. Use illustrations, if possible, to guide the foreign step-by-step. 3) Insist on independent periodic tests of component and ingredients, such as paint. 4) Find out if the supplier is subcontracting. If they are, the buyer needs to have the same quality controls in place for the subcontractor. Foreign suppliers will subcontract for parts, if it is not their manufacturing expertise, just as a company would in the U.S. Source: Christopher Devereaux, China Savvy. |
The recent recall of products from China will foster a change in supply chain strategies, says Lowell Hoffman, principle at Global Sourcing Solutions in Chapel Hill, N.C. "If I were involved in any of those consumer brands, it is not a time for administrative response, but a time for forceful, visible actions," he says. "My own suggestion would be to publicly fire the supplier."
Having personnel on-site to monitor quality control may not be enough to avoid recalls, even with good quality control measures in place, Hoffman adds. He paraphrased the concept that "a good process is not an objective; the process is a means to an objective."
How long can the effect of a recall linger? Depending on the product or the commodity, the negative perception with the public can last for years and take a company as long to restore it reputation. "Whether it is (a company's) overt fault or an error of omission," Hoffman says, "there are penalties."
In the wake of a recall, Hoffman recommends that buyers insist on visiting a supplier's subcontractors and approving every subcontract related to the buyer's product.
Buyers also will need to refigure the cost of their total supply chain, as it is bound to increase with greater emphasis on quality control and safety measures. In the long run, Hoffman believes it is money well invested, even if companies are, to a degree, forced to do so. "They have no choice but to make the investment, but they can weigh the alternates about China's costs with Guatemala, Mexico or the Czech Republic."
Based purely on economics, China Savvy's Devereaux believes China would win that battle hands down. "The costs coming out of China are too low in comparison to other areas," says Devereaux. "There is nothing you cannot source in China at prices where (other suppliers) can even begin to get close to. The lesson that must be learned (from the recent recalls) is that quality control systems must be such that you can't let them slip through the net."
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Disappointed in China sourcing, two U.S. companies become more cautious |
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