Had an interesting conversation yesterday with a local company. The guy I spoke with detailed some of the problems they have had with one of their major suppliers. Apparently, the supplier consistently struggles to meet shipping deadlines because they do not have the capacity to handle the increasing order QTYs and they have to subcontract a lot of production. It turns out that this supplier was selected without a qualifying audit. And this is one of the perils of giving an order to a vendor whose facility you have never visited. In other words they may not be who they say they are. A GOLDEN RULE of China sourcing is this: never give an order to a vendor you have not yet qualified. And by qualified I mean visited with a checklist in hand.
When you do an audit you should have a checklist of things to look for. Some of the following come to mind:
- In the office: Make sure the vendor has an organized office. If they are as busy as they say they are they should have several computers. If you go into an office and just see just one terminal and a fax machine that is not a good sign. What if that computer breaks down ? You may not be able to get an answer to a question for several days. Ask to see your company file with a record of all sample orders, revisions etc etc. Ask to see counter samples which you have approved, as all should be clearly labelled and dated. All this tells you if the vendor is on top of things. If you have concerns about order capacity, then ask the vendor to show you invoices from completed orders of other customers. Are the QTYs big ? Are there multiple invoices from the same customer indicating repeat orders and customer satisfaction ? These are things the vendor should be more than willing to show you. In short, a quick tour of the office will show you how organized the vendor is. And believe me you do not want to work with an unorganized China vendor, all the more so if you have a design driven product when record-tracking of details is very important.
- Subcontractors: Since so many vendors in China use subcontractors it is vital to make sure those subcontractors have themselves been qualified by your vendor. Ask your vendor what procedures they have in place to qualify subcontractors. In fact any visit to a factory in China will usually include a visit to that factory’s subcontractors. If your vendor does not volunteer to do this then you should suggest it. If they balk at the suggestion, then that means their subcontractors are scattered and probably not at a convenient distance to the factory, which is not good for you.
- In the workshop. Are areas well lit? Are instructions to the workers posted? Are QC and Production areas clean? Does the factory look busy? Is there any evidence the factory uses child labor ? Is the person showing you around knowledgeable about the orders? I remember qualifying a vendor a few years back. I went to the factory and I discovered that the person showing me around, who told me he owned the factory, knew nothing about any of the orders on the workshop floor. And I mean nothing. He was either a very hands-off manager or was simply a Trading Company Manager posing as a FTY manager (plenty of those in China). But in either case it was a warning that I delivered to my customer. And there are just so many more questions to ask when you are thinking about giving a vendor an order.