A client sent one of my law firm’s international manufacturing lawyers an article and asked if it was accurate. It is and I discuss it below because it should prove helpful to anyone that has its products manufactured overseas, especially in Asia. The article is entitled, “Seven Keys to Quality when Working with Foreign Product Suppliers” [link no longer exists] and it sets forth the following:
1. Good Manufacturer. Choose the right manufacturer. Good manufacturers make good products. Bad manufacturers do not. Do your due diligence.
2. Detailed Documents. “The number one key to quality when working with factories in a foreign country is to have the right documentation. Having bilingual, detailed, factory agreed upon checklists in place that document an item’s specifications and the criteria for inspecting the product before shipment is essential to controlling product quality. One cannot say for sure, but I would be willing to bet that the factories responsible for products recently recalled for lead paint did not have bilingual documentation on hand from their customer stating the type of paints that could and could not be used. Sure, this type of documentation takes time and hard work to create, but putting such processes in place is the first and most important step in avoiding quality issues.”
Your QC Checklists should describe in detail the following:
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- Item Packaging
- Item Defect Classification (what is considered an defect and at what severity)
- Item Size and Other Specifications
- Item Functionality and How it is Checked
Most importantly, these checklists should be agreed to and then memoralized in a country-specific manufacturing contract.
3. Factory Presence. Having a presence at your overseas factory helps ensure that both factory staff and management know who you are. Either through a third party QC company or your own staff, ensure that you are being represented at the factoryon a regular basis and that your factory connects your presence there with your production.
4. Inspection. Perform regular product inspections (either with your staff or a via a third party), not only on the final product shipment, but also during production (otherwise known as DUPRO). Ensure that these inspections are consistent and based on clear inspection criteria. Always review the inspection results with factory management and their own QC team.
5. Approved Samples. Some say that a picture is worth a thousand words. I say that a sample is worth a thousand headaches! Items often get revised and modified several times in the sourcing process, and then again after production begins. Keeping an approved sample in your office and another one in the factory that can be used to verify the product by the QC team is essential.
6. Responsibility. Nothing will alienate your foreign product suppliers more than a mistake on your side for which you take no responsibility. I’ve seen hard-headed buyers make this mistake more than once, to the demise of their hard earned factory relationships. So, make sure you have all the facts before you start to blame. Recognize when it’s your team that caused the production issue. Take responsibility when this happens, even if it means a financial loss. If you are working with the factory on a long term basis, the credibility you will gain will outweigh what you have given up.
7. Manufacturing Contract. Good contracts can by themselves help maintain quality. Overseas manufacturers, like companies everywhere, do not like getting sued. A good contract incorporates your key quality requirements and sets up your foreign company supplier for liability if it fails to meet those requirements.
Our international manufacturing lawyers typically put a provision in our manufacturing agreements mandating that the foreign manufacturer cannot subcontract out the manufacturing. We have been doing this for years and, as far as we know, no manufacturer has ever violated this provision.
Let’s say your foreign product manufacturer has 18 customers for whom it manufacturers product and only four of them have a no subcontracting provision. Your manufacturer gets really busy and has to subcontract out some of its manufacturing. It can subcontract out the product manufacturing of any of its 18 customers, so why would it choose to subcontract out the product for the four customers with a contract provision prohibiting subcontracting?
Your no-subcontract provision operates like a good bike lock. The thief can still steal the bike that has a good bike lock, but why do so when there are so many easier targets out there?
What do you think?
