Supply Excellence — Are You Taking a Gamble on China Quality?

Are You Taking a Gamble on China Quality?

December 13th, 2007 · by Tim Minahan · No Comments · LCCS and trade, supply management, supply risk

Last weekend, I supported a Toys-for-Tots drive at my alma mater, Boston College. The organizers needed extra hands this year to inspect toys made in China to ensure they weren’t tainted with lead or other hazardous substances.

With precautions like this, you’d expect that manufacturers and importers would be stepping up their diligence and auditing of Chinese suppliers. You’d be wrong.

A new study from Smart Cube found that 78% of supply chain executives at consumer product manufacturers feel no need to revisit their vendor selection and inspection procedures. Only 12% of study respondents saw the need for on-site inspections.

What?!? Mattel’s recent quality challenge should have taught us all a valuable lesson not only about the importance of strong supplier and quality controls but also about the importance of using demonstrable and documented supply management procedures to calm nervous customers and revitalize brand equity.

I’d like to think that every supply chain manager has thoroughly vetted each Chinese supplier with which they do business. I’d also like to think that they have formal procedures for quality and performance measurement. But industry research and my own experience suggest that this isn’t unilaterally the case.

Yet, study respondents said the recent spotlight on Chinese product quality will not slow plans to increase their sourcing from the region. Most respondents felt the recent quality glitches were isolated incidents rather than a widespread epidemic. And, while feeling that supply chain managers were responsible for their own fates when it comes to product quality, many respondents were hopeful that recent moves by the Chinese government to step up quality standards and supplier site inspections would help root out any remaining problems.

Considering the rising concern from parents, politicians, and consumer groups over the China quality issue, companies would be wise to demonstrate and document stepped up vetting and inspections of Chinese suppliers – even if such efforts are viewed as redundant. Heck, a smart buyer could probably figure out a way to have marketing fund the additional inspections. And for those of you that already have these procedures in place, be sure to document these efforts and share them with your finance and risk officers to demonstrate how you’re contributing more than cost reductions to the company.

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