Have you heard of that new factory in Shenzhen that produces perfect products 100 percent of the time with no defects?
Neither have I.
Unfortunately, no factory’s production is perfect, as defects are common in manufacturing. They can come in all shapes and sizes. And they’re a problem that can significantly affect you, as an importer, and your bottom line.
So how can you handle defective products?
The goal here is to get your supplier's factory to reduce the frequency of unacceptable product defects and be accountable for those that still appear in the finished goods. Let's discover three ways to handle defective products.
1. Manage expectations for allowable defects
When talking with a new supplier, or trying to encourage improvement in an established relationship, it's important to manage expectations. Part of this means stating clearly to your supplier the types and quantities of defects that may be acceptable
Outline how to classify product defects
If you’re importing plastic-beaded necklaces that are handed out for free at the Mardi Gras festival, you probably aren’t terribly concerned about scratches in the paint on the beads. On the other hand, if you’re importing sterling silver bangles, you’re probably going to be VERY sensitive to scratches or oxidation on the item's surface. Clearly, the value of the product is relevant to how you might classify product defects.
When you're deciding how to handle defective products, the value of the product is just as important as the type of defect found. And while the factory producing your item may classify one particular defect as "minor", you may be less tolerant and prefer to classify it as “major”. That’s why it’s important to make this clear with your supplier in advance before you even pay a deposit.
When classifying defects, be sure to:
Include a list of acceptable and unacceptable quality defects directly in the PO issued to the supplier and
Send a detailed QC checklist to the supplier that shows a breakdown of possible product defects and how they should be classified (e.g. major, minor and critical). It’s also helpful to include photos, if possible, to help distinguish between defects that vary in type and severity.
And for products where dimensions are important, specify the margin of error that you'll allow for measurements. This is especially important for garment products that are hand-sewn and more susceptible to human error.
Set AQL for your order
Many importers mistakenly overlook AQL when talking with a supplier. But actually, setting AQL, a quality standard used by QC professionals worldwide, is an important step toward clarifying your expectations. AQL establishes a limit to the acceptable number of defects found in a random sampling of an order. And it helps you decide whether to accept or reject an order based on the number of defects found.
You may choose to rely solely on the QC controls of the factory itself or opt to hire your own third-party inspector. Either way, AQL helps you handle defective product by setting expectations for how many defects are allowed. And if you find the standard to be too strict or lenient following the first order or inspection, you can always alter it later to fit your requirements.
Define penalties for excessive defect rate
This last step can be effective, but you should use caution and consider the relationship you have with your supplier before introducing penalties for high defect rates.
Holding a supplier accountable by charging back for defective product over a certain quantity can be an effective incentive for maintaining a certain quality standard during production. Likewise, if you hire a third-party to carry out pre-shipment inspection and the result is FAIL, charging the supplier for subsequent re-inspections often compels the factory to improve quality.
Again, just be sure to consider the potential response from your supplier in advance. A supplier that values you as a customer is more likely to respond favorably. But if you’re imposing penalties on a new supplier or one that views you as a “small fish” in a large pond of customers, you’re more likely to face resistance or outright refusal to comply.
2. Identify and address issues with product inspection
A great way to handle defective products is to catch quality issues early, before they make their way into the finished goods. Identifying issues before shipping helps you avoid making assumptions about product quality—assumptions that can cause supply chain disruptions and cost you money if you find a significant portion of the goods you receive is unsellable. There are different stages during the production process where inspection can be performed to show you the current state of your order.
Raw material inspection
Performing inspections of raw materials and components before production begins can potentially reveal pressing quality issues. For example, let’s say you’re manufacturing leather bags and want to hold your supplier to certain standards when it comes to choosing a quality leather hide for production. One of the best ways to do this is by actually checking the incoming raw materials before the factory begins production.
Without this added oversight, you might find out months later that inferior materials were used and be forced to either:
Accept the bags as they are, even though they don’t meet the expectations of you and your customers, or Start over by manufacturing an entirely new order (and possibly need to find a new supplier)
Save yourself the nightmare of frantic backpedaling by catching any quality issues related to raw materials and components early.
A during production (DUPRO) inspection can help you find issues appearing in the middle of production just as inspection of raw materials reveals any problems at the very beginning. An inspector can pull samples from different stages of production to identify issues occurring during specific processes.
DUPRO inspection is especially helpful if you’re dealing with:
Shipments of large quantities of goods with ongoing production
Goods that involve numerous production stages; and
Products that are susceptible to defects and other issues that can't be reworked or fixed later.
Wood molding is typically manufactured in larger quantities with a lengthy production timeline. A consumer electronics item, such as a professional SLR camera, involves many different production processes and components. And many of the defects that might occur during production of a plastic, injection-molded display case are not possible to correct with rework. All of these are examples where a DUPRO inspection is ideal.
Final inspection typically occurs when 80 to 100 percent of an order is finished and packaged. For many importers, final inspection is the bare minimum quality oversight they want for an order. Like other types of pre-shipment inspection, final inspection typically involves pulling a random sample of goods and looking for quality defects, non-conformities and other issues.
An advantage final inspection has over earlier inspection is that it offers insight into the way the goods will actually leave the factory, including verifying packaging.
Aside from personally visiting the factory, there is perhaps no better way to get an accurate look at an order before it ships than with final inspection.
3. Accepting any defects that remain in finished goods
Sometimes you may find defects on an item, such as small black dots or scratches, which are minor enough that you can accept, especially if the product is relatively inexpensive. Other times you may find defects you don’t want to accept but reworking costs are too high. And then there are times when you feel the best way to handle defective products is through rework.
Accounting for defective products with extra inventory
Some defective product is usually present in any order of manufactured goods. After all, the widely recognized AQL standard accounts for a certain number of defects in a sample size.
Still, you may decide to ask your supplier to ship an extra 5 percent of the total order quantity to account for retail returns. This strategy is more popular among importers of lower-value products. This can be a cheaper and less time-consuming safeguard in lieu of asking that defective products be reworked prior to shipping.
Reworking defective products
It’s common for importers to ask the supplier to rework or repair defective products in quantities exceeding expectations. This request can be useful when the defects are easily fixed. But keep in mind that product rework means additional handling, which can potentially add more defects than it helps to remove.
Take flash, excess material commonly found on molded products, for example. Reworking this defect typically requires a worker to use a knife to manually cut away the excess material. This may be effective at removing the flash but could also cause scratches or other damage in the process.
Another factor you should consider before requesting rework is the time that will be required. Will the factory still meet your shipping deadline? When are your customers expecting to receive the goods? If you desperately need to ship the order, it may not be worth reworking defective products at the expense of delaying shipping.
Re-working defects is a good way to hold the factory accountable and address quality issues. But always take into account the order’s value, meeting deadlines and the potential consequences of added handling.
As much as we strive to produce a perfect product, defects are a fact of life—an unavoidable consequence of combining great ideas with materials to manufacture the products we love.
Whether they’re minor defects, major issues or critical to your customer’s safety, it’s important to manage any problems directly and openly with your factory. Knowing how to handle defective products can save you time, money and your company's reputation.
Remember the words of the late Vince Lombardi: “Perfection is not attainable, but if we chase perfection we can catch excellence.”Back