Sourcing in China: 9 Key Objectives for Initial Factory Reviews

05/02/2013

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If you are visiting China to look for new suppliers chances are that your time will be very limited, you will arrive feeling tired and more than a little bit lost!

You want to maximise your time by checking out a wide range of suppliers to get as clear a picture as possible of what the factory is really like.

One option is to engage the services of a specialist inspection or consulting company such as Senlinx Consulting, who can help you to review potential suppliers without having to make the long trek to China.

However, there are also many reasons why it is a good idea to see the factories with your own eyes, and for those wishing to embark on a sourcing trip we have created a simple checklist of what you should look for:

9 Key Objectives for Initial Factory Reviews

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1. Check the cleanliness and orderliness of both the factory and the office

2. Check how they identify, maintain and keep track of materials

3. Observe the production equipment, their condition and output capacity (calculate: can they really produce as much as they claim?)

4. Take a look at product samples and compare with the quality you see on the production line

5. Observe what in-process checks are being carried out during production

6. Figure out what testing or final inspection processes are occurring. Are they meaningful or just for show?
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7. Take a look in the warehouse and identify where else they are selling products to (local or overseas? to developed or developing economies?)

8. Get copies of the company's business licence, ISO certification and relevant product reports etc.

9. Take photos!
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Senlinx active in AustCham SEC Committee

19/12/2012

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Being an Australian-owned and managed business based in Shanghai, China, Senlinx is an active member of AustCham Shanghai and has recently taken part in a range of informative Servcorp SEC (Shanghai Enterprise Collective) events.

We would like to take this opportunity to thank TXM Lean Solutions for hosting the event on Lean Manufacturing in China and Bureau Veritas for their presentation on Business Certification to name just a few.

Informative events like these help to further broaden our team’s manufacturing and business knowledge, make great new contacts and learn about China’s business trends.

Since introducing market reforms under Deng Xiaoping, China’s manufacturing industry has developed a dominant position in the global market; however over recent years the outlook has darkened somewhat.

"create a culture of sustainability, continuous improvement and innovation"

China is currently experiencing a transformative period featuring fierce competition and a turbulent global economy environment, with many issues and challenges which shouldn’t be overlooked, such as:
  • Inexperience in internal management systems
  • Spiraling costs, particularly the cost of labour
  • Poor development of intellectual property and branding

It is becoming essential for Chinese manufacturers to create a culture of sustainability, continuous improvement and innovation not just for their success, but for their very survival.
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Restaurant Marketing: Rest Assured We Use Oil From Metro!

06/11/2012

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Xinjiang, located in the far northwest of China, is an intriguing place renowned for its spectacular scenery, cultural diversity and delicious cuisine.

With the spread of migration across Mainland China, Xinjiang restaurants have become very popular and are found in cities throughout the country.

A new restaurant offering Xinjiang cuisine has recently opened in Shanghai's Caojiadu area. Nicely decorated and centrally located, this restaurant is aimed at Shanghai's middle classes and this is reflected in their pricing.

Each table is adorned with the richly colourful pattern of an Uygur tablecloth and, under a layer of glass, the notice to the left.

One would usually expect in these confines to encounter something like a menu, a restaurant introduction or maybe even some literature introducing the culture and beauty of the region.

However, the notice in fact carries the following rather depressing message:
This shops uses oil from Metro, please consume rest assured!!
 
Below it is a photocopy of an invoice from the German wholesale retailer Metro with the purchase of 50 drums of 20-litre cooking oil - underlined twice, in bold! 

That a restaurant such as this feels it necessary to display such information so prominently is symptomatic of a general trend in society. After numerous food scandals affecting foodstuffs as diverse as milk, rice, pork, dumplings and bean sprouts the public has lost their faith in the ability of the authorities to regulate the food industry.

This notice has been prompted by another infamous practice, the use of "gutter oil", where recycled waste oil is illegally resold to consumers. 

It is significant that this invoice is from a foreign retailer, who are seen as more trustworthy, and highlights China's crisis of confidence in the industry.
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Making sense of an ISO9001 certificate

25/07/2011

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When looking for a reliable supplier, whether in China or elsewhere, one sensible measure is to enquire whether or not their quality management system is certified to ISO9001.

In China, ISO9001 certification is commonly found across all industries but unfortunately for many businesses it is seen as little more than a paper you need to get new business.

Many local certification bodies offer “certification-in-a-box” where all of the necessary paperwork to be ISO9001 certified is prepared using standard templates.

Indeed, it is often the case that upon asking to see a company’s quality manual the call “quick, get the ISO9001 documentation” is heard, followed by a rush to the filing cabinet to pull out the otherwise unused documents.

The good news is that in almost all cases, an English copy of the certificate is provided to the factory, which you will be able to use to gleam some useful information from.

Here are some basic checks which can be made to learn more about the business and the value of their ISO9001 certification:
  1. Check that the name on the certificate is the same as the factory
    - if not, is the company a parent company, a trading company?
  2. Is the certificate the 2000 or 2008 edition of the standard?
    - it is now 2011, has the business upgraded their certification?
  3. Check the scope of the certificate
    - if there isn’t a scope it isn’t a valid certificate
    - does it cover the products you wish to purchase?
  4. Check the expiry date
    - if the certificate has expired, why has this been allowed to occur?
  5. Does the certification body have international accreditation?
    - the more reputable certification bodies will be accredited to international schemes such as UKAS or IAF
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Ask to see the Test Lab

12/06/2011

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Your potential supplier will be more than willing to show you their ISO9001 certificate, but a better option to gauge their attitude to quality may be to take a look at their testing facilities.

Many factories in China - especially in state promoted industries - have well equipped modern testing facilities, containing test equipment which companies are mandated to purchase.

Visiting the factory for the first time, it is easy to be blinded by this expensive array of equipment. However, of more pressing concern are the following issues:

- does the test lab actually get used?
- are the equipments calibrated?
- are tests carried out to a formal procedure?
- are tests results analyzed against relevant standards and set criteria?
- how are test results recorded?
- does the test lab employ technicians, or are tests carried out by the Quality Manager (a sure sign of trouble!)

To ensure their products are as good as they claim to be, all factories should have suitable means to check their production.

Usually this doesn’t require state of the art equipment; it requires appropriate testing to be carried out at regular intervals in a methodical manner, using calibrated machines to set procedures.
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