Evaluating a potential supplier – a tip

I had an email from a company yesterday detailing some of their problems in China. They have burned through three factories as follows:

Factory # 1 Good factory but bad management
Factory # 2 A rotten egg
Factory # 3 Internal communication problems so that QC issues are not passed on from management to workers.

This third scenario I have seen all too often in China. In China today factories that have traditionally been engaged in light industry ( esp high volume & low-cost handicraft product ) are actively looking for new ways to make money, the margins on their existing products being minimal. The owners of these factories are extremely entrepreneurial and it is not uncommon to meet someone who has three or four businesses going simultaneously. Unfortunately, this means that they often do not give your orders the priority you want them to, and in some cases ( what I suspect happened with the company above ) neglect to train the workers on your quality standards. They are simply too busy. Take “Mr. Huang”, for example. A company I was working for once had contracted Mr Huang to make baskets for them. But Mr. Huang was also making Christmas ornaments, picture frames and Chinese medicine. In fact, every time we visited his factory the first place he would take us would be to the section of the factory where he and his father had stored hundreds upon hundreds of medicinal roots. Mr. Huang was always trying to get us to invest in his new Chinese medicine venture, which he seemed generally excited about. I think baskets were the last thing on his mind, which was unfortunate for us because they were the first thing on our mind. We had a big order from an important customer.

A good lesson to be learned from this is that when evaluating a supplier, make sure to visit their showroom ( most factories have one). If there is a variety of product this means the owner is likely involved in several projects at the same time. Ask him about his other products and try to gauge his interest. If he shows more interest in a line of product other than your own he will probably be that way when production time comes.


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