Quality control is a valuable part of any supply chain process and will give you visibility of the product quality prior to shipment. There are some common pitfalls to avoid though and navigating these should save both time and money.

Quality Control (QC) is a process that considers all aspects of manufacturing a product. This includes aspects such as vendor capability, management, and, of course, product quality. Preventing mistakes and product defects at the source provides the customer with reassurance that their shipments are to the requisite quality level. The last thing that anyone wants is to be shipping a quality problem. This will inevitably be costly and difficult to correct once the ship leaves the Port!

QC is a useful tool to manage product quality on-site at a factory.  Certainly, it is important to make sure it is done correctly. With so many companies leveraging the benefits of Asian supply chains, having this visibility ensures that the risk of quality defects is mitigated. However, there are some common areas where companies make simple mistakes.

Quality Control: 5 mistakes you should really avoid

Below is a short summary of 5 common mistakes that can lead to quality issues:

1. Skipping the Samples Approval

Part of benefiting from upstream quality control is about the ‘set-up’. For example, clearifying what the quality level is and being able to reference this during any QC process is paramount. Before mass production, it is therefore imperative that you check the product you have required. When manufacturing products in Asia, you should always implement a “gold seal sample” process.

This means having identical development or pre-production samples made, and signed by all parties (factory, client and agent) and then retained by each respective party for reference as and when required.
This sample is the result of an approval process and is essentially the “go-ahead” signal for production. This is particularly important for any quality control inspector to be able to check the bulk pieces against. The ‘Gold Seal sample’ represents a perfectly made product that is in full alignment with your product quality standards.

2. Providing inaccurate Product Specifications

Similarly, it is important to set out as much detail with the product specification. Even with a gold seal sample in place, having documented and signed off (by all parties) the product specifications will provide evidence of dimensions, function, any printing and packaging some of which may not be covered by the Gold Seal sample.

When it comes to dealing with your manufacturers, specificity is key. This is particularly important where language and culture need to be bridged. For example, ‘This Way Up’ printed on a box for a fragile item is obvious for English language speakers. However, where English is not widely spoken, don’t be surprised if it isn’t printed the right way around. It is therefore important to reduce the margin of uncertainty and be clear and never assume anything.

Even for repeat orders, a specification sheet can clearly detail the materials used which will prevent cheaper substitutes. It is the base documentation for your product, so the more detail the better. The product specification should also include certain physical or chemical standards required which may require a testing house to do some lab tests.

By defining every detail in an official document, no excuses can be made when a shipment does not meet your standards.

Specifications should cover dimensions, product images, material used, components, function, colours and pantone references, packaging details, print artwork, certifications, standards, labelling and packaging way. Once all aspects of your product are documented and you have a gold seal sample, the subsequent quality control process can be overlaid much more effectively.

3. Not identifying the Quality Risk Areas

Understand your product and the potential quality issues. This may be based on past experience or just recent results with an incumbent supplier. Taking into account the quality risk, it is possible to target specific areas of the manufacturing process to proactively eliminate issues as they occur at earlier stages of the production. Of course, the financial and commercial risk of quality issues arising will need to be taken into account at the same time. For example, you may have just landed a large new client account and the quality needs perfect.

At each step, the workflows and the purpose of quality control are quite different. Here are the main QC services that you can consider:

1. Factory Evaluation
2. Sample Development Consulting
3. Product Standard Consulting
4. During Production Inspection (DUPRO)
5. Pre-shipment Inspection (AQL test) (PSI)
6. Pre-shipment Inspection (piece by piece checking)
7. Loading Inspection (LI)
8. Product Checking List Development.

Certainly, they are all important and, as your company needs might vary, some quality checks are even more important than others. A quality risk assessment will allow you to select which quality control audits are implemented.

For example, the factory evaluation will identify potential issues with the supplier that may in fact stop any further work or product development. Or implementing a pre-shipment inspection will help catch any issues before it is too late, saving you time and money.

4. The QC Inspector as the ‘Policeman’

Quality needs to be about collaboration. There needs to be a move away from the quality inspector as a ‘policeman’ who comes in and performs a tick the box exercise. Certainly, factories might tell you that they have internal QC methods and procedures that result in very low defect rates. Clearly, an independent pair of eyes would still be beneficial and add a level of objectivity. But, the more the factory can understand the quality requirements and the more the inspector can understand the manufacturing process, the better placed all parties are to identify quality issues and correct them.

This works back up the manufacturing process and should encourage continuous improvement methodologies to address a process/machine/employee that is causing a defect and make the necessary changes or adjustments.

This collaboration is very much distinct from the inspector being too close to the factory managers. To this extent, the objectivity has to be maintained so as not to create any conflicts of interest. Also, often third-party inspectors bring with them experience across different product categories, which provides additional added value when it comes to potential product-specific quality issues.

5. Ignoring the Data

Often the quality control piece is seen as transactional; the goods have passed and the focus shifts to the next production run. Rather companies need to take the time to step back and look at the data. For one supplier, looking across multiple shipments over a period of time may identify one particular quality defect that is an issue. It should then be possible to speak to the factory and through a root cause analysis identify what is driving this particular issue and implement a corrective action plan to address it.

For example, if loose threads are commonly featuring on your pre-shipment QC reports for some cotton upper shoes, then working with the factory to remove this quality issue will save time and cost. Additional checks could be implemented during the sewing stage to reiterate to the workers that the threads should be properly trimmed. Likewise, you could implement internal QC on the production line as the shoes move down the conveyor belt to cut any loose threads still showing.

Looking for third-party quality control services?

Finding a trustworthy third-party quality control service will provide a significant benefit to your business. We at ET2C International understand the necessity for transparency and accountability because they are core to what we do each day.

With our own dedicated quality team across Asia, we look to deliver the visibility you need to sign off shipments. We are already investing in technology to enhance the service we provide our clients in this arena. For more information, please contact us at contact@et2cint.com.

Sourcing Market Insight: Inflationary pressures are feeding into global supply chains but what does this mean for sourcing strategies?

Sourcing Market Insight – Overview

The global trade equilibrium is no longer balanced. The Pandemic initially plunged the world economy into cardiac arrest. Then, as individual markets applied their own Covid recovery plans, trade certainly picked up. But it is the disjointed nature of this recovery that is now driving supply and demand imbalance and leading to challenges in sourcing markets.

Inflationary pressures

Sourcing markets were already in flux, with strategic shifts occurring as companies looked to ‘de-risk’ their global supply chains and enhance supply chain resilience by looking at complimentary sourcing markets for their factories. The recovery in certain markets combined with devastating second, third and fourth Covid waves in others, is pointing to demand outstripping supply across multiple sectors. The result is inflationary pressures feeding into the supply chain; whether it is freight rates, commodities, labour costs or operating costs, prices are likely going in one direction for the foreseeable future, and that’s up!

In this week’s article, we are looking at what this will likely mean for sourcing markets, and whether this will accelerate the current shift away from a ‘China plus one’ sourcing strategy.

Global Commodities

Given any product cost is heavily correlated to a commodity price, it is a good place to start. Whether it is cotton through to copper, raw materials are on the rise as any Asian factory will readily tell you. Broadly, this upward pressure is likely to be for a sustained period. This is due to a combination of factors, both structural and due to short term supply constraints. The recent Producer Price Index (‘PPI’) data pointed to factory gate prices increasing 6.8% in the year to April, according to China’s National Bureau of Statistics. This increase is largely driven by rising commodity prices, with the raw materials component of PPI up 15.2% over the same period.

Although some of this rise is linked to the recovery of the global economy, some is more centred on shifts in demand oversupply. To take copper as an example, the metal has some industry analysts and CEOs pointing to a 50% rise in copper prices to $15,000 per tonne by 2025. Copper is a particularly good conductor and is therefore used in electrical wiring. With economies like China committing to build millions of new homes, there is heightened demand. In addition, many Governments around the world are committing to greener energy alternatives, and this will require more copper for the infrastructure. This at a time when copper prices post 2008 have been low and not allowed mining companies to invest the capex required to bridge the long-term supply gap of 8.2M tonnes by 2030. Demand is outstripping supply. The same is true of other metals, such as aluminium and iron ore (China is reducing output due to the removal of polluting industries). Such commodities may therefore have some time to go before prices begin to subside.

Freight Rates

On sea routes out of Asia, there is a continued expectation that rates will hold at high prices, albeit not quite as high as pre-CNY when there was significant demand for space. This is due to container equipment shortages continuing to be a problem, which is leading to space shortages as companies look to ship transpacific or to Europe. The fallout from the Evergiven Container ship in the Suez Canal will continue into May and June and is only exacerbating the capacity constraints.

Sustained high freight rates will inevitably impact landed cost, and for larger items – such as furniture – this can become prohibitive after a sustained period. We are already seeing some retailers deciding to hold shipments until rates subside to make the landed cost workable. Looking at the current market, this may be some wait, and it may be a better option to look at alternate ways of shipping the goods (such as overland by train), which take longer but are more palatable from a cost perspective.

Global Sourcing Sentiment

It, therefore, appears that inflationary pressures are here to stay over the medium term at least and these collective higher costs are already filtering through to shelves in the West. So, what does this mean for the Sourcing market?

QIMA, the Quality compliance provider, has recently conducted a survey across 700+ businesses on what global sourcing looks like in 2021 (“After the Storm: A Look at Global Sourcing in 2021”, March 2021), which draws out some valuable insight. These can be summarised as follows:

Pre-pandemic sourcing trends are still in effect.

Global buyers are continuing their move to more regionalized sourcing strategies increasingly across China, India and Vietnam.

Vietnam & India dominate China’s regional competition.

Both markets have gain popularity with Vietnam featuring particularly higher when ranked against China for US respondents (for example 33% of US Furniture is now coming from Vietnam).

Buyers reluctant to significantly cut ties with China.

China still retains its positions as the most important manufacturing partner for many of the businesses surveyed.

EU Brands are stepping up Near Shoring again.

This is a trend particularly relevant for the EU with a focus on Turkey. US businesses seem more reluctant to move away from Far East Sourcing.

Two-thirds of buyers globally are eager to continue sourcing diversification to mitigate risks in 2021.

Broadening the supply base is seen as a way of mitigating market risk and disruption.

Although this survey was conducted in March, we anticipate little change to these trends. In fact, we have been pointing to companies looking to reduce reliance on any one market where possible for the past 8 months and see little reason to change our opinion.

We would, however, anticipate broad price increases to the consumer which will help offset the freight and other commodity price rises. Even though wage inflation has generally been stagnant over the past couple of years, it remains the case that one result of the Pandemic is that savings rates in the UK, US and EU have increased dramatically. For example, the population in the UK is sitting on an estimated £180 Billion of savings since the start of the Pandemic with £3 in every £10 saved. There is, therefore, scope currently for retailers and brands to push prices to the consumer, and as the savings are spent this is likely to the case. There appears little scope for suppliers to absorb further cost increases, as they have done over the past couple of years.

Summary

Although price increases are already feeding into global supply chains, we generally expect these to be passed onto the consumer across categories. We do not, therefore, see any wholesale change to longer-term sourcing strategies. We continue to see companies embedding greater resilience into their supply chains by market diversification.

At ET2C, we look to provide our clients with sourcing market insights across our manufacturing bases. With offices in China, Vietnam, India and Turkey, we are well placed to deliver sourcing solutions to meet your needs. For more information. please contact us at contact@et2cint.com.