Subcontracting by suppliers: Buyer beware!

Quality Control, with David B. Fisher

When looking for suppliers in Asia, a high percentage of the vendors that you may look at are likely middlemen, with no actual facility, connecting the buyer to the factory. Of course, it is best to avoid this situation and many clients will perform audits before ordering to ensure that they are indeed working with the factory directly. Once you ensure this much, you are in the clear, right?

Unfortunately not- a large majority of factories actually subcontract certain things to other manufacturers who can make the pieces more cheaply. It makes sense from the factory’s side. For example, say a factory specializes in knit undergarments, and then all of a sudden needs to produce woven pants. The factory probably does not have the know how to do this, but wants this client. It is likely the factory can find a sub-supplier who can provide whatever they need at even lower prices than they could. While, if you are lucky, some of this savings could hit you, the client, there should be serious concerns. Additionally, a factory may simply decide to outsource some of production on larger orders. In some cases, a factory cannot actually manage an entire order and, rather than losing face (and possibly a client) by telling you this, they will find another factory who can manage part of the process.

But what exactly is the problem with your factory using a subsupplier?

  • The factory doesn’t do QC on the subcontracted parts
  • While your factory may comply to certain rigorous standards you have, their sub-suppliers may not!
  • This all means that even if your factory does their job to a 100%, which by the way is very unlikely, there could still be problems with your products!

Make sure that if you are vehemently against your factory subcontracting, it is written into the contract; otherwise you can bet that your factory will cut any corners possible in order to gain a bit of profit. Making sure to check your QC at least pre-shipment is also an important step in ensuring conformity from your factory!

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