We have QA reports done on all our orders currently but as can often be the case things slip through. I am not talking about the 1-2% errors but times when a whole shipment is compromised. While some factories give product guarantees, getting them to meet these can sometime be challenging. As we are about to start looking at doing some larger orders operating as an agent we are wondering if there are any companies that do the inspections that guarantee the work or if there are other ways we can protect ourselves if a product has faults that aren’t identified in the QA process?
Let me answer each part of your question one by one.
First, you asked:
…we have QA reports done on all our orders currently but as can often be the case things slip through. I am not talking about the 1-2% errors but times when a whole shipment is compromised.
You mentioned you have QA reports done yet defects are slipping through. That is a giant red flag. I assume you mean that the factory is doing internal QA reports rather than a 3rd party coming in and doing an inspection. Even if the factory knows they have some defects, it is not uncommon for factories to give a positive QC report because they don’t get paid until it ships and shipping depends on presentation of this report. So they tell the client what they want the client to hear rather than real situation. Reports for the client may get even further from reality when the factory knows that the client or client’s representatives will not be on site to validate the QC report or do an independent report.
1. Your contracts with the supplier should have penalties if defects ship.
2. Use a 3rd party to come in and do an inspection before shipment/final payment if you can’t visit yourself.
While some factories give product guarantees, getting them to meet these can sometime be challenging.
Yes, it is particularly hard to enforce a guarantee if you have already made final payment before problems are found, if you don’t have leverage in the form of future orders and/or if you orders are small in the eyes of the supplier. That is why is it essential to have a QC check done by an independent party before shipment/final payment.
As we are about to start looking at doing some larger orders operating as agent we are wondering if there are any companies that do the inspection that guarantee the work or if there are other ways we can protect ourselves if a product has faults that aren’t identified in the QA process?
When you engage an inspection agent for 3PQC (3rd party quality control) like Asia Quality Focus for example, you can rest assured they will follow the inspection instructions. If they do not follow the agreed inspection standards, then you have a legitimate claim and their warranty applies which would be payment equal to some multiple of the amount you paid for the inspection service. But keep in mind that you have to state clearly your standards to your inspection partner. For example, if color confirmation is essential, it is important that your inspection agent knows this. Before the inspection takes place, to be safe, you can ask your inspection partner to show you their inspection instructions that will be followed by their inspectors. This should be clear about what is to be inspected, how it is inspected and what is the standard. For example, let’s take “color”. Say you want it “Red”. Then the inspector may be tasked with doing a visual inspection at arm’s length in natural light against a set of counter samples that define the lightest and darkest red acceptable. Unprofessional inspection agents will use instructions that are too loose, like “check the color”, but not state the details about acceptable variance and methods.
Pick an inspection agent that has a track record in your product category and that has clear terms about their guarantee. Feel free to ask them for client references too. That doesn’t cost you any money, but really gives you some insight into their business. Stay away from the small “one man band” inspection agents.
Now here is the scary part. 3PQC involves doing a random sample on a statistically reliable sample size. Imagine if the supplier was really tricky and stuck all the defects into one particular master pack. If there were 100 master packs, it would be statistically unlikely that 3PQC would catch the defects if all the defects were stuffed into just 1 of the 100 master packs. So it is essential to have penalty terms in place with your supplier as a passing 3PQC does not release the supplier from their warranty. If possible, it is also wise to stretch out payment terms as long as possible so that you can make the final payment after goods have been received. This works well if you are doing some kind of 100% inspection in your inbound warehouse back home before you send off to your buyers. But there are still solution. For example, at PassageMaker, on computer carry case project, they have clients who buy in large volume from very tricky (yet low cost) suppliers and the client sells to strict buyers like the major laptop brands and it would destroy the buyer’s margins if the goods had to be 100% inspected by the client or a 3PQC. So in this case, they hired PassageMaker to send multiple staff to each of the dozen of suppliers so that a trusted party was on site full time. The 3rd party team is inspecting product at IQC, IPQC, FQC and again at containerization. Perhaps the biggest benefit of having full time staff on the ground at the supplier is that supplier sees that the client is serious about QC. Plus the supplier can’t fudge the QA reports if the 3rd party is standing over the data at the factory in real time!