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IMEX Sourcing Services2
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perla, post: 211650 wrote:

I am after some advices on how to go at having 3rd inspection on the products manufactured in China. We have a small batch of products manufactured. We have been working with the factory for many months and have had a good relationship with them. Goods were finished and we hired a 3rd party company to do a random inspection. 20% sampling size and they found 10% units with major defects which is beyond the max AQL limits. The defect units were set aside and repaired but we do now know how many defects would the rest (80%) will have. Should we do the 2nd inspection? Am I correct to assume that 100% inspection would be over the top? We are not looking to get 100% perfect units as I know it is impossible but we just want to make sure we screen out those with major defects? We are looking at only 500-700 units here so technically the inspection can be done in 2 days.

Also, Is it a normal practice that, say if we find defect units once goods are in Australia, we could get a credit note for future orders? Any advices, especially from those who have experienced in having their goods manufactured in China, would be greatly appreciated. Thanks.


I think the key here is that once you found through your initial pre-shipment inspection that 10% of the units had major defects, you should have negotiated with the factory to do a re-check of the entire shipment and fix defects in the entire shipment. This is the standard QC process we follow with all factories we work with on behalf of our clients. If you have a contract with the factory, this can also be added as a clause in there for future shipments.

Secondly, once the factory has confirmed that all issues have been fixed another PSI is a must. I do not think that a 100% inspection is feasible here and it sends a wrong precedent. A normal inspection with same inspection standards can be carried out on the “whole shipment” based on random selection basis. If the supplier has assured the whole shipment has been fixed, the major defects rate should then fall under acceptable limits. If not, you should negotiate with the supplier before ordering the inspection to bear the cost of the additional inspection.

If you haven’t paid the balance to the factory yet, you might still have some leverage in terms of negotiating the above terms. I recently made a post on my blog talking about this issue here: http://www.thesourcingblog.com/minimizing-risk-through-payment-terms-negotiation-with-chinese-suppliers/

Good luck with this.