Global Trading Tips: 7 Factory and Product Check-ups That Can Save You Money

Stand by your beds! The snap inspection is an everyday part of life in the armed forces, the gruff drill sergeant storming into the barracks to check that everything is shipshape and ready for action. You may be just importing from China, rather than invading Russia, but you still want the production and delivery of your goods to be conducted with military precision—which is where factory and product inspections come in.

Global Trading Tips: 7 Factory and Product Check ups That Can Save You Money image clipboarddude4© CoraMax/Shutterstock.comIn this case you’re not looking to catch a supplier on the hop so much as avoid any nasty surprises. Audits and inspections can ensure your manufacturing partner is up to the job before you begin working with them, keep production runs on schedule and ensure faults, fakes or fudged packaging don’t ruin your brand before it even gets established. Here are seven essential inspections you should consider ordering:

1. FACTORY AUDIT

Factory audits are an everyday occurrence in China, and any genuine company will be happy for you to send a third party inspector to give them the once over. There are many things on the auditor’s checklist, but number one is finding the factory. Small and medium sized buyers are prime targets for scam artists who might run a “briefcase company” where all the trappings of a real company are visible, but there’s no factory behind the front and the entire operation can be packed into an attaché case in seconds flat. Assuming your inspector finds the factory present and correct, they can go on to verify the production facilities and capacity match what you’re being sold and are suitable for producing your goods.

Depending on which inspectors you use—and how much you pay—they can also check into quality control processes, give their HR department the once over to ensure labour practices are up to scratch. “It’s a good overall service that large and small companies can consider,” says Andrew Reich, founder of Shenzhen-based InTouch Services, a provider of inspection services for overseas buyers, and the author of the Qualitywars blog. Audits can be conducted for as little as a couple of hundred dollars, but before going to low, you may want to inspect the inspector: “I’m personally wary of the lower budget services,” says Reich. “You don’t really know who you’re working with and they use outsourced contractors.”

2. SOCIAL COMPLIANCE AUDIT

A factory audit might make a cursory check of working conditions, and ensure the factory has an explicit policy against using child or forced labor, but is no replacement for a separate social compliance audit if you’re concerned about ethical sourcing. According to Reich, 95% of social compliance audits carried out in China are conducted on behalf of big retail brands worried about their image. “If it’s found that 12 year old girls are working making Martha Stewart’s cookware, it’s highly damaging for her reputation,” he says. The other 5% might not be under the same level of scrutiny, they just want to do the right thing.

3. FINAL INSPECTION

When it comes to inspecting the goods the factory is making for you, companies often start at the end with a final inspection. “The reason for that is cost effectiveness,” says Riech. “The final inspection gives the buyer the ability to look at all the goods, once they’re completely finished, in one shot, at a relatively low cost.” It also fits neatly with a common clause in contracts that demands 30% deposit with the balance to be paid upon a satisfactory pre-shipment inspection. In other words, this is the check you make before you legally take possession of—and fully pay for—the goods. If you don’t have that clause in your contract, or don’t bother with a final inspection and pay for your shipment sight unseen, then you’ll be left holding the bag if the goods you receive aren’t what you expected.

A final random inspection should use the statistical approach known as AQL (Acceptable Quality Level) developed during World War II by the U.S. military. The inspector will select random units to test, checking for everything from critical flaws to lousy packaging to ensure the goods are what you ordered and meet the standards your customers will expect. AQL allows them to be 99.75% sure of the cargo by testing just 5% of the shipment.

4. PRE-PRODUCTION INSPECTION

A final inspection may seem like the cheapest option, but if you have tight deadlines, and a marketing and advertising blitz paid for and ready to roll, finding out your goods failed an 11th-hour check will have an expensive knock-on effect. If a smooth production cycle is vital you can begin inspections before the machines are even turned on. A pre-production inspection checks that the factory’s ingredients are up to scratch, so your finished product isn’t marred by cut-price components or shoddy raw materials.

5. DUPRO INSPECTION Shorthand for “during production” this is also known as an in-line inspection and is typically conducted when 20% to 60% of the run has been completed. That’s late enough to be sure the goods accurately represent the finished article but early enough to spot and address any problems. DUPRO inspections are suited to large production runs where you might reasonably expect some swings in quality from beginning to end, and can highlight bottlenecks or workflow problems that could be addressed to improve quality and efficiency.

6. CONTAINER LOADING CHECK

While it’s as close to a definition of pre-shipment inspection as you can get, a container loading check differs from a final inspection and is a lot less common. It involves monitoring the loading of your goods and is used when dealing with extremely fragile or high value goods, or in special cases where you’re worried the factory might not load the correct cargo, or the shipment is going directly to your client and you can’t afford any slip ups.

7. PRODUCT TESTING

Your goods might look, feel and work well enough to pass a final inspection, but you won’t know how safe they really are unless they’ve undergone product testing. Chinese factories don’t always have the best record on product safety (lead in children’s toys, anyone?) and tests carried out by third party companies can be vital in ensuring your products meet legal and safety requirements in your target markets. Inspectors can verify the factory’s CE, FCC, FDA and other certifications are legitimate and conduct category specific checks related to product safety and performance.

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