China Sourcing: The Future Ain't What it Used to Be (Post 5)
What's Going on With China Quality (if Anything)?
Like everyone else in the US who has been reading the newspaper headlines of late, I've been bombarded with stories about Chinese product quality and safety horror stories. What's got more bacteria in it than washing your toothbrush in sewage? You guessed it, Chinese toothpaste. What is more likely than a Ford Explorer running on old stock tires to flip over? You got it, one running on Chinese made replacements. And what's the fastest way to poison your sister's nasty little pooch ... if you guessed Chinese-made pet food, you’d be right again.
Personally, the more stories I hear along these lines, the more I feel that there's a smear campaign against Chinese made goods going on. Sure, China does not always turn out perfect products. Far from it. But in own experience, I've found Chinese manufacturers to be very receptive to quality improvement initiatives and more than willing to go the extra mile to please the needs of Western customers. Obviously, China's probably not the place to go if you're buying one container of marketing crap in the "trinkets and trash" category if you want stellar quality. But for everything else, if you're willing to spend time developing and working with your supply base, there's no reason that Chinese quality cannot match -- and even beat -- that of the West (just as GM has found, in fact).
But don't take my word for it. Last week, I asked two of my old colleagues from Ariba for their perspective.
Pat Furey, Senior Manager, Category Management, had this to say: "I don't necessarily see this as being a China problem. Companies that source raw materials and manufactured goods throughout the globe need to have sound supply chain practices in place to insure that quality levels are maintained. These practices should include:
- A detailed supplier selection process that screens supplier manufacturing capabilities and quality systems
- A robust on-site audit process to verify supplier systems and standards
- A system whereby suppliers document product compliance and guarantee traceability with every shipment
- An audit system to periodically check shipment compliance
- A supplier scorecard that measures performance and compliance, and a corrective action system to drive continuous improvement
These steps should occur if you are sourcing from China, India, Mexico, or the supplier up the street. So the recent incidents should not be causing companies to reconsider sourcing from China -- they should be causing companies to examine their supply chain management practices more closely to insure that they have quality systems in place no matter where their suppliers are located."
David Morgenstern, Managing Director, Ariba Spend Management Services, had this to say: "Supply chains that are on the other side of the world need to be managed differently than supply chains down the road. It's easy to fall into the complacency trap and it takes a few shocks like this to remind people of the risks that need to be mitigated in a global sourcing strategy.
A critical area for companies to invest as they globalize their sourcing efforts is in-house supplier quality teams to work with suppliers, perform regular and unscheduled quality tests and trouble shoot problems on the ground in Asia, before they become significant issues in North America. Problems that include the severe such as the recent contamination related deaths due to raw material inputs, to the inconvenient yet costly, such as customs delays due to improperly labeled goods, or manufacturing foul ups due to inadequate testing and measurement of components, or even packaging of these materials to ensure easy transition from loading dock to manufacturing lines."
I'd like to thank Pat and David for passing along their suggestions (which I concur with 100%). But I'd also like to suggest to Spend Matters readers to look beyond the headlines in evaluating China quality. Granted, the rising China price might deter many from giving the region the same level of sourcing investment that it had the past, but from a quality perspective, there's no reason to run for the next container ship from Shanghai. That is, provided you've got the proper quality and supplier development programs in place that should be prerequisite for any type of global sourcing effort to begin with.
- Jason Busch
Like everyone else in the US who has been reading the newspaper headlines of late, I've been bombarded with stories about Chinese product quality and safety horror stories. What's got more bacteria in it than washing your toothbrush in sewage? You guessed it, Chinese toothpaste. What is more likely than a Ford Explorer running on old stock tires to flip over? You got it, one running on Chinese made replacements. And what's the fastest way to poison your sister's nasty little pooch ... if you guessed Chinese-made pet food, you’d be right again.
Personally, the more stories I hear along these lines, the more I feel that there's a smear campaign against Chinese made goods going on. Sure, China does not always turn out perfect products. Far from it. But in own experience, I've found Chinese manufacturers to be very receptive to quality improvement initiatives and more than willing to go the extra mile to please the needs of Western customers. Obviously, China's probably not the place to go if you're buying one container of marketing crap in the "trinkets and trash" category if you want stellar quality. But for everything else, if you're willing to spend time developing and working with your supply base, there's no reason that Chinese quality cannot match -- and even beat -- that of the West (just as GM has found, in fact).
But don't take my word for it. Last week, I asked two of my old colleagues from Ariba for their perspective.
Pat Furey, Senior Manager, Category Management, had this to say: "I don't necessarily see this as being a China problem. Companies that source raw materials and manufactured goods throughout the globe need to have sound supply chain practices in place to insure that quality levels are maintained. These practices should include:
- A detailed supplier selection process that screens supplier manufacturing capabilities and quality systems
- A robust on-site audit process to verify supplier systems and standards
- A system whereby suppliers document product compliance and guarantee traceability with every shipment
- An audit system to periodically check shipment compliance
- A supplier scorecard that measures performance and compliance, and a corrective action system to drive continuous improvement
These steps should occur if you are sourcing from China, India, Mexico, or the supplier up the street. So the recent incidents should not be causing companies to reconsider sourcing from China -- they should be causing companies to examine their supply chain management practices more closely to insure that they have quality systems in place no matter where their suppliers are located."
David Morgenstern, Managing Director, Ariba Spend Management Services, had this to say: "Supply chains that are on the other side of the world need to be managed differently than supply chains down the road. It's easy to fall into the complacency trap and it takes a few shocks like this to remind people of the risks that need to be mitigated in a global sourcing strategy.
A critical area for companies to invest as they globalize their sourcing efforts is in-house supplier quality teams to work with suppliers, perform regular and unscheduled quality tests and trouble shoot problems on the ground in Asia, before they become significant issues in North America. Problems that include the severe such as the recent contamination related deaths due to raw material inputs, to the inconvenient yet costly, such as customs delays due to improperly labeled goods, or manufacturing foul ups due to inadequate testing and measurement of components, or even packaging of these materials to ensure easy transition from loading dock to manufacturing lines."
I'd like to thank Pat and David for passing along their suggestions (which I concur with 100%). But I'd also like to suggest to Spend Matters readers to look beyond the headlines in evaluating China quality. Granted, the rising China price might deter many from giving the region the same level of sourcing investment that it had the past, but from a quality perspective, there's no reason to run for the next container ship from Shanghai. That is, provided you've got the proper quality and supplier development programs in place that should be prerequisite for any type of global sourcing effort to begin with.
- Jason Busch
I think the core issue is that we have slowly found ourselves moving to an "all China all the time" sourcing strategy. This is unwise on a lot of levels and is a mantra I've been chanting for a long time.
For one, we are very vulnerable to supply chain shocks. I view the current media focus on China quality as another supply chain shock - because, by definition, it was unexpected and unplanned for.
The discussion about intellectual property, and losing control of that has been covered elsewhere, but is another reason for caution.
Finally (and perhaps this goes against conventional wisdom) it's just not healthy to become a nation of consumers. In dark times, I think of veal calves....consuming and consuming and consuming. We know what happens to veal calves. Somehow we comfort ourselves by thinking our most important product is our ideas and our ingenuity. I think that might be the height of hubris.
If we are to be consumers, however, the least we can do is hedge our bets. Inspect, certainly. But source from other parts of the world.
Some of these thoughts might not be popular, but I remain concerned about an odd combination of hubris and naivitee. The world really isn't flat.
Ironically, given your comments, we're probably most guilty of global consumption when it comes to retail! That is, unless you want to support American Apparel (but personally, I don't like paying 35 bucks for a t-shirt).
I believe that globalization can be a good thing -- and it can be a bad thing. But we ought not to restrict it from a trade standpoint. Interesting side note: HBR had a short article this month that ranked countries by competitiveness and sustainability (sustainability from an investment perspective, deferred gratification, infrastructure, trade, etc.) ... the US was fairly high, but Singapore and the Nordic countries were highest as I recall. Russia was dead last.
At least, unlike Russia, we’re not sucking high end vodka from the teet with every dollar we make (and blowing the rest on night clubs and Hermes hand bags) ... personally, the future of Russia scares me (and it's not just Putin). I think there's a scenario where in the next 10 years, Russia destabilizes world trade and security far more than China. Food for thought. BTW ... I agree with you, but I don't think we're as bad in the US regarding just being consumers as some in the world.