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  • #991414
    perla
    Member
    • Total posts: 31

    Hi,

    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.

    #1181442
    bb1
    Participant
    • Total posts: 4,485
    perla, post: 211650 wrote:
    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. .

    So out of 500 you sampled 100 (20%), and found 10 (10% of sample faulty). If my maths is right you than have a further 40 Faulty units.

    perla, post: 211650 wrote:
    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? .

    Based on the above maths, if you want to meet your stated criteria of screening out those with major defects, you have answered your own question, you need to do a 100% inspection or else live with the fact that you may get a high number of major defects (40 based on statistics provided).

    Normally 100% inspection is OTT, but if you dont want major defects, plus the fact they are already over your stated AQL limits !!!!!

    perla, post: 211650 wrote:

    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? .

    First question is what does your contract say? If it says you can do you feel confident that they will comply?

    But more than that if you are sending 40 faulty units out to your clients, what is that doing to your business’s reputation. Forget that credit note, you have to think about any long term impact, a couple of faulty units you can explain away, but this is a lot of faulty units, that 40 unhappy clients, 40 refunds, I think you get where I am heading.

    Faulty units are a fact of life, but when you know it is above your stated AQL levels, And at such a high level, I would be concerned with sending them to my valued clients.

    #1181443
    bb1
    Participant
    • Total posts: 4,485

    Just another thought not knowing what type of product are you than liable for any adverse outcome to your clients for faulty units (ie. electrical or other). If you knowingly sell products which are faulty, you may have other legal implications.

    And as it is you know you have a 10% major fault rate,

    #1181444
    SourceSmart
    Member
    • Total posts: 64

    hello Perla,

    Agree with Bert that with out knowing the product it makes it hard to give a correct answer.

    If i were to do an inspection of 20% and found 10% faulty products, and was alot more than my acceptable acceptance rate then i would at least do another 20% to see how the numbers stack up. Then this may lead me to inspect the balance of the goods.

    It is alot cheaper also to sort out the faulty products while they are in China than to ship them over to Australia, send them to clients and then have to recall them back.

    Warren.

    #1181445
    Johny
    Member
    • Total posts: 840

    AQL standards were devised to set a quantifiable level of acceptable/unacceptable products within an order based on a percentage of the manufactured goods being inspected.

    If you have a 10% major defect rate you have a real problem. That rate should be no more than 1-2%. The goods inspected should have been selected at random so it is fair to assume that the problem of major defects is at least 10%across the board, with a probable amount of minor defects as well.

    And that is far too high.

    Yes it is probably OTT to have 100% of the goods inspected, but with that level of defects how are you going to be comfortable that the order you are paying for are going to be OK. What many companies do is pay the cost of the first inspection, but if another needs to be completed then the factory would be required to cover that cost. That of course needs to be established beforehand though.

    As others have said, it does depend on the goods as well. I for example have sat in a factory and inspected 8,000 bags a couple of times, but wouldn’t do it for an electronic product. It’s a right pain in the…, and expensive if you are paying for it, but sometimes just has to be done.

    The only real recourse you can have is a discussion with the manufacturer on the basis of how far they will go to fix the problem. I have had factories who have remade an entire order when there have been problems, to others that have told me to get stuffed, so it comes back to how good they want to be.

    I assume you haven’t made the final payment yet? If not, that provides some leverage for them to fix the problem. But don’t rely on their word that all will be OK, you have to verify whatever was agreed to.

    With regard to your comment about credit, this is an arrangement you would have to discuss with the factory. They may, they may not. Be careful though as if every new order is going to be defective do you want to keep dealing with them. Regrettably, even if it means a loss, there is a point where you have to consider walking away from this supplier.

    The first step is to discuss with the factory and see what they are going to do to fix the problem. Until you know what they will do, everything is speculation.

    #1181446
    perla
    Member
    • Total posts: 31

    Thanks all for the replies. The product are women handbags which we designed. Out of 125 bags inspected they found about 11 (8.8%) that have major defects which majority are seam slippages and loose bindings on the edges which are really not acceptable. The minor defect rate is 12% but most are loose/uncut threads which are not significant in my opinion. The factory said their QC will do another inspection and then will let us re-inspect but they are not very happy (of course) and do not want to do 100% inspection. I agree with Bert that we do not want to have to deal with refunds and ruin our reputation for sending sub-standard units to the customers. They seem to think that majority of the 3rd party inspection always have a ‘Failed’ result. Btw, we found this factory through a western-owned sourcing agent based over there.

    I know that we insist on doing 100% they will not be able to stop us from doing this and we are only talking about 500-600 bags here. However I also do not want to burn the bridges should we still want to continue doing business with them.

    We had the bags manufactured before with a factory in Thailand and out of 500 bags manufactured we ended up with may be 15-20 bags that were faulty but most defects are rather minor. We switched to Chinese factory because of the cost and the fact that all materials come from China anyway so we thought it’d be easier just to have them done in China. At that time we weren’t happy with the cost & the defects we got from the Thai factory (being our first run so we didn’t really know much….still don’t know much even now). We thought we’d paid higher cost for a better craftsmanship but since we ended up with defects we decided to give Chinese factory a try (thinking that if we end up with some defects anyway we might as well going with a factory that can offer a lower cost, which in this case 20% lower). Now I’m thinking may be we are making a bad move.

    #1181447
    SourceSmart
    Member
    • Total posts: 64

    hello Perla,

    I would think with the number of faults you have found, and even with the minor faults such as loose threads i think a 100% inspection is better in this case.

    I’m your they will be more carefull on the next order.

    If you were to sell this bag to someone and has a loose thread would it be acceptable or would they complain?

    I have had problems before with suppliers in the past and while at the time was a headache i still continued and the most of the factories got their act together and we are still doing business today. We are still doing business because when there was a problem they would work in with me to sort it out and not refuse or complain if i wanted to do a 100% inspection.

    Warren.

    #1181448
    bb1
    Participant
    • Total posts: 4,485
    perla, post: 211761 wrote:
    However I also do not want to burn the bridges should we still want to continue doing business with them.

    .

    Hey Perla, Personally if they are upset about you doing a 100% inspection, I wouldnt worry about burning the bridge. I would be the one burning the bridge. You don’t want to deal with a factory with such a high rate of defects.

    #1181449
    Johny
    Member
    • Total posts: 840

    The factory said their QC will do another inspection and then will let us re-inspect but they are not very happy (of course) and do not want to do 100% inspection.

    How very nice of them!! This isn’t about you meeting their terms, this is about them satisfying your need.

    They seem to think that majority of the 3rd party inspection always have a ‘Failed’ result. Btw, we found this factory through a western-owned sourcing agent based over there.

    I sometimes wonder the same thing about inspection companies. Having to reinspect is a good way for them to earn an extra dollar and I am sure it does happen. But what are you going to do, go against the inspection company when they should have provided details confirming the defects. I’d err on the side of the inspection company otherwise what’s the point of hiring them, provided you are confident in them.

    However I also do not want to burn the bridges should we still want to continue doing business with them.

    Agree with Bert. There are different ways to address this. If being firm and following through on what you want is burning a bridge then so be it.

    We had the bags manufactured before with a factory in Thailand and out of 500 bags manufactured we ended up with may be 15-20 bags that were faulty but most defects are rather minor.

    I bet those minor defects aren’t looking so bad now? That amount of minor defects is probably not too bad (maybe a little high) for a hand sewn product.

    At that time we weren’t happy with the cost & the defects we got from the Thai factory (being our first run so we didn’t really know much….

    Everytime you change a supplier looking for lower costs you have to be especially careful as lower costs often translates to lower quality regardless of country where the goods are made. it doesn’t have to be that way, but something to remember.

    On a positive note, a few years ago we did some orders for baby diaper/nappy bags. The first order was for 500 pcs. When the customer received them, over 160 of them had problems. The factory agreed to replace 200 bags in the end, more than what was defective in the first place. So there is potential for a good result. And we still use that factory.

    It involves communicating with the factory and discussing the issue. Perhaps even letting the trading company know the situation. They may help, being local, if they recommended the manufacturer.

    But by way of a caution, be a little careful if you get promises to “provide a few extra in the next order”. If they cannot resolve the problems you may not want to be doing future orders.

    #1181450
    IMEX Sourcing Services2
    Member
    • Total posts: 42
    perla, post: 211650 wrote:
    Hi,

    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.

    Hi,

    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.
    Ash

    #1181451
    perla
    Member
    • Total posts: 31

    Thank you everyone for your replies. Sorry I was MIA as we had visitors and I was away. I’m still in negotiation with the factory and yes we will not release the rest of the payment (70%) until we are happy with the goods. The factory just finished the 2nd round of QC and have also countered offer that we keep 10% of the payment and release that to them (minus defect found once goods are here) after 6 months when goods arriving here. That is only that we do not proceed with the reinspection as they are afraid that there is a good possibility of them not passing the 2nd inspection due to the strictness of the inspector. I do not think it is a good offer as I do not want to risk ruining the brand by sending our customers defects bags and that we should proceed with the 2nd inspection. I want to see what you all think of this.

    I have to add though that I don’t think the inspection team are as overly strict as the factory claimed. The details of defects found were clearly stated in a report with pictures. They would be the defects that we would have picked up if we were to send our own staff there to inspect the bags. I pointed this out to the factory many times.

    Johnny, when did you do the nappy/baby bags order, did you do an inspection on the lot? 160 pcs defect out of 500 pcs was a lot!

    #1181452
    Johny
    Member
    • Total posts: 840

    In my way of thinking if you are going to have someone inspect the goods, then that’s their job. Why do it otherwise. If it were me, I’d be erring on the side of the inspector.

    It’s a bag. How hard should it be to get it to an acceptable standard.

    Yes, 160 out of 500 was a large number. Our original confirmations were based on just product sampling. Actually there was nothing wrong with the bags themselves, just that a large number of the brand labels had been attached poorly. But after this first hurdle, everything done afterwards was satisfactory. But we did go and visit the factory and do a thorough inspection ourselves after that first problem.

    #1181453
    Peter Wang
    Member
    • Total posts: 19

    Hi:

    Do the check and fixed the problems at the first place will cost you the least of money. Normally the inspection companies should followed their productions aside to make sure everything is okay and on schedule. It definantly your inspection company haven’t doing well. Also for the suppliers, do not do busniess with them anymore, and do not trust what they have told you, the quality problems will not be solved by giving you a credit. They are saying that give you credit for next order, just want to make you give them more orders.
    By the way, I am not sure what kind of inspection companies you were using, if the inspection company owned by Chinese, then it could be a trade company, this means they are getting commisions from the middle, so they also have to responsible for this.
    For your next order, I suggest you go to China do inspection by yourself, or find a real trade company but not a inspection company and sign up contract with them, If possible, the payment term you can use L/C, and list the qualtiy requirment on the L/C.

    Your sincerely

    Peter Wang

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