Breaking up with suppliers is easy?

A recent blog post caught our attention.

Is breaking up with suppliers easier than we think, even if it’s done “with tact, sensitivity and an appropriate level of empathy?”

Our answer is no. It’s not easy at all.

Is it necessary? Sometimes.

According to the article, little value is placed on the supplier relationship and the assumption is that price rules all.  Is it all about price though… or, cost?

With that logic, an alternate idea is suggested…

Prior to breaking up with the supplier, evaluate how much you’re willing to invest in improving their performance vs. the associated switching costs. Identifying a solid supplier is more than a Google search.  Assuming everything they say on the website is true, it’s still recommended to verify if they exist, if they have that capacity you need, what their current on-time delivery is, what equipment is really on-site, how they’re managing in-house QC, etc. And, the qualification process often identifies investments required for the new supplier to meet expectations. Then, there’s the costs associated with updating logistics, etc. It all adds up and takes longer than people think.

Before switching, consider developing.

Many times, a supplier isn’t meeting expectations because they simply don’t have the resources to improve themselves. They need help.

Organizations that partner with suppliers and assist to provide development resources have a win-win situation. They’re investing less than it would cost to switch suppliers (generally speaking) and the suppliers see an overall improvement that results in better products/service for all customers.

Two examples:

You just scored a big deal with Walmart (or Lowe’s, Home Depot, Dick’s Sporting Goods, etc.) and now have to make sure you’re working with a compliant supplier.

  1. You immediately start looking for a new supplier that’s already working with Walmart. How long does that process take? And, how long does the transition take? Will it work within Walmart’s schedule? It usually doesn’t.  And, the cost involved is generally much more than investing in compliance with the existing supplier (assuming no other issues are noted).
  2. You need to find out how compliant your existing supplier is. If they haven’t worked with Walmart previously, a gap analysis is helpful. It identifies non-conformaties and estimates the cost involved in obtaining and maintaining what’s required.

You’ve received three late shipments, and your warehouse has identified similar paint issues during the incoming inspections. Rework is required, and you’re facing back orders and returns.

  1. You panic and are tired of emailing the supplier and hearing that everything is being taken care of. You can’t risk another shipment with issues and decide to switch. That process won’t be quick, or cheap. And, you’re not guaranteed to have any less issues.
  2. You leverage a local quality professional and assess the root cause of the paint issue and shipment delays.  The quality professional identifies corrective actions and then assists the supplier with implementation and ongoing management as required.

As a side note, switching suppliers because you want to diversify or expand your supply base isn’t questioned here. Strategic plans generally make sense and are vetted more thoroughly.

Contact us for help with your suppliers, or for additional information. We have more examples throughout our 35 years of experience to share. We provide solutions in 88 countries.

The Value of Expediting in Supplier Development

It’s not uncommon for us to receive calls and emails related to issues organizations are having with expediting orders, either from new or existing suppliers.

By expediting, the assumption is that a delivery date or other expectation has been provided, but is not being met. Reasons for delays in production might include:

  • New sub supplier
  • Equipment issues
  • Key staff turnover or other lack of resources
  • Packaging issues
  • Larger orders from other clients taking a priority

Whatever the reason(s) might be, communication can quickly become an additional layer of complexity as the supplier continues to assure the buyer that all is well and on schedule.  No fun for anyone involved here.

A quality solutions company, such as Pro QC, can recognize when product quality control might not be the issue.  In some cases, the supplier just needs support to address the root cause issues.

Having a local quality professional assist in expediting adds value:

  • Local follow-up can include regular calls and/or on-site visits as required. Accountability is increased. Any potential language and/or cultural issues are addressed.
  • On-site evaluation of issues noted can be evaluated. Corrective actions are developed and implemented.
  • If the supplier lacks internal resources, a company like Pro QC can allocate internal experts to the team to assist as necessary.
  • Weekly reporting (or other frequency as needed) reports progress and provides advance notice of potential delays or new issues. No more surprises.
  • Regular calls between the supplier, Pro QC and buyer presents opportunity for discussion of various perspectives and options as necessary or required.
  • Professionals on-site are able to evaluate the issues and current situation. A non-biased recommendation can be made to identify new suppliers depending on the conditions or other at the supplier location.

Supplier development solutions are customized depending on needs and the priority of those needs.  Development activities can incorporate a range of services and resources, from product testing to compliance auditing. Whether it’s expediting, inspecting, auditing or testing, an organization with experience and a global presence can find the right mix of resources to address and solve problems. Contact us for additional information.

The U.S. – China Trade War Creates Demand for Sourcing Diversification

Written by: Alexander Parker, Account Manager (Tampa, FL)

Pro QC International works with businesses to develop and maintain their quality programs. Many of these clients have their primary suppliers based in China. Due to recent trade escalations between the world’s two largest economies, the United States and China, U.S. corporations are finding ways to adapt and avoid extra costs as the tensions continue to escalate.

Some prominent U.S. companies have already directly indicated that the U.S.-implemented tariffs will force them to pass down higher costs to customers and revise their earnings forecast downward. However, there is an alternate solution to pushing costs onto customers.

Large U.S. companies, like Honeywell, Hasbro, and Boston Scientific, have indicated that they will increase the use of supply chain sources from non-China countries to counter growing costs related to the rising tariffs. Compal, a Taiwanese contract manufacturer of electronics, has mentioned that while “assembling notebooks outside of China could cost at least 3 percent more per unit, the possibility of U.S. tariffs could wipe out its gross profit margin of slightly above 3 percent last quarter.” (Wu, 2018) (“Factbox – Impact of U.S.-China trade tariffs on U.S. companies”, 2018).

This is in fact one of the purposes of these U.S.-tariffs, to protect domestic industries and to make goods produced in an outside country less enticing. The goal is to eliminate the cost benefit that leads to companies purchasing from a country in the first place.

Despite some larger companies having opportunities to appeal to the U.S. government for exemptions from tariffs that would directly affect them, most companies do not have the resources or power to make such an impact on the U.S. movement. Being that these tariffs are out of their control, many companies, some of which include Pro QC’s own partners, have begun to diversify their supply chains to prevent and avoid major business disruptions. With tensions escalating and potentially further tariffs to be added in the upcoming months, companies are rapidly looking into this option before costs in China become too high.

For example, we have had clients cancel Initial Supplier Evaluations in fear that the tariffs will no longer make the potential new Chinese supplier a more affordable option than suppliers elsewhere. This uncertainty leads to a risk that is not worth taking.

Diversification to suppliers from various countries will lead to a more robust supply chain that allows for resilience in times of uncertainty like now. However, companies that have limited resources or time to find new suppliers may find it very difficult to locate and transition to these new facilities.

Pro QC can assist during this time with services like supplier selection and identification, supplier development, and inspection services to get new suppliers up to speed and ensure their products are meeting a company’s quality standards. If it is desired to replace an existing supplier, we provide help in identifying or transitioning to suppliers in countries that will not be affected in these trade disputes.

As written about in a separate Pro QC blog post “China Sourcing Alternatives: Thailand,” other reliable manufacturing nations, notably Thailand, as well as Vietnam, India, and Mexico, also offer affordable costs and business environments. With local Pro QC teams in each of these locations and services in a total of 88 countries, our quality professionals will assist in executing any range of solutions required.

It is important to remember that despite China potentially losing some market share to other countries, they will still account for a major portion of trade in the world. For example, China still accounted for 35 percent of global clothing exports last year. Rather than China backing down during this time of intense pressure, the Chinese government and factories are going to respond by searching for methods to increase competitiveness by finding alternative markets, increasing factory automation, and creating more value-added products. Factory owners are not going to be willing to give up and shut down their businesses, but will become increasingly more innovative. (McDonald, 2018)

This trade war will ultimately resolve itself, but when this will happen is unknown. China will remain a prominent player in the manufacturing arena, and removing all connection to the country may be impossible or too inconvenient for many companies. However, diversifying a supply chain can help create a buffer during times like these. Whether it’s needed to maintain relationships within China, or find a way to diversify, Pro QC is here to assist you create dynamic and innovative solutions.

The Importance of Vision & Values to Quality

Within the body of knowledge of many quality and other industry certifications, such as ASQ’s Manager of Quality/Organizational Excellence, there is a focus on strategic planning and the successful creation and integration of a unified vision and values.

Per ASQ:

The vision statement is future focused and paints a vivid picture of where you would like the organization to be or what you would like it to accomplish in the long term. Values reflect core behaviors or guiding principles that guide the actions of employees as they execute plans to achieve the mission and vision.

Benefits: A clear vision helps in aligning everyone towards the same future state or objective, providing a basis for goal congruence. Values make clear behaviors that are expected of everyone.

Forbes Insights issued a report after a global study of more than 2200 senior executives and quality professionals. The report indicates that a “clearly stated quality vision and values, and unequivocal leadership are key components to a successful culture of quality that can help organizations drive results.”

Read the full report here: “Culture of Quality: Accelerating Growth and Performance in the Enterprise

With this, Pro QC has recently completed regular strategic planning activities that resulted in a refresh of the vision and values of the organization.

We are proud to announce our vision:

“To nurture the trust of our customers and our team through dynamic interactions, creative supply chain solutions, and integrated partnership.”

In addition, we have committed to the following defining values:

Excellence 

  • Client satisfaction is our priority.
  • We work as a team.
  • We have pride and ensure quality in everything we do.

Trustworthiness

  • We hold ourselves to a high standard.
  • We are reliable and demonstrate strong ethics.
  • We earn trust by acting with integrity and dependability.

Passion

  • We are proactive.
  • We offer support.

We’re interested in hearing from others. Share your vision and values, or comment regarding ours.

Environmental Impacts & Solutions Within the Textile & Garment Industry

Written by: Stephen Moglia, Business Development Manager

Sustainability, green fashion, circular economy: we hear and see those words almost everywhere now. They multiply with the growing interest of consumers and companies for the environmental impacts of the industry. In fact, the textile industry has become the second most polluting industry in the world, right after oil, as stated at the sixth edition of the Copenhagen Fashion Summit last May. Globalised, complex, including a wide range of techniques, the textile industry affects the planet on many different levels, including very sensitive areas such as water, air pollution, chemicals, electricity consumption or waste. Being aware of the impacts of production processes has now become essential.

Moreover, damaging the environment also has an impact on humans, whether it is the workers, the consumers or people leaving nearby a factory. Cotton illustrates this in a tragic way. It is a very affordable fabric, widely used to make inexpensive clothes. To boost the production and fight the worms that attack the plants, a lot of farmers worldwide use pesticides. Those pesticides contain extremely toxic substances such as metals (aluminium, nickel, lead), barium or ethion that was banned in Europe. Farmers, in contact with those chemicals can get more cancer, liver and kidney diseases. The chemicals also cause freshwater pollution affecting a wider range of people. Hopefully more and more farmers are turning to organic cotton that is more respectful of the environment and uses no such pesticides. (Article Reference)

Another example is chrome tanning that was also banned from Europe for being too toxic. This tanning is faster, easier than other techniques. However, the leather is weaker and doesn’t last as long, thus creating more waste. Chrome is a heavy metal and damages the environment in the same kind of way pesticides do. It infiltrates the water and in contact with the skin can also have an impact on the consumer’s health. (Article Reference)

Brands, then, have a responsibility: choosing well where they source their materials and where they out-source the production. The consumer, getting information easily on internet is more and more aware of those issues, which reflects in its purchasing choices. Sustainability concerns have only been increasing since the 1990s and in 2015, 66% of global consumers were willing to pay more for environmentally sustainable products. It damages the image of brands to be involved in environmental or social scandals. On the contrary, sustainability can be a real marketing opportunity. Showing concern, sharing the origin of the materials, revealing « who made [the] clothes » attracts customers, reassured that the product they are buying is safe for themselves and the planet. It is part of the « look good, feel good » trend when buyers don’t want to feel guilty wearing their favourite sweater. (Article Reference)

Transparency is trendy, however it is not always easy for brands to control their supply chain. How can a company based in Europe, or North America be sure of the quality of the products they buy in Asia? How can it know in which conditions clothes were made and with which means? The information given by the factories can be altered or fake, a website, mails, phone calls, those are only words and chosen images. It is also tricky for brands to plan a visit of the factories of their suppliers and manufacturers. When knowing someone is coming to check on the working conditions or on quality, it happens often that companies adjust their installations only for a day, adding fake security signs, changing displayed products or hiring more people to show wealth.

This is when audits can be extremely useful. The information obtained is more accurate and real. For environmental responsibilities, audits are made according to the ISO 14000 environmental standard, covering energy usage, renewable energy, greenhouse gas emissions, materials and waste reduction, life cycle management, supplier’s supply chain activities and more. ISO 14000 audits can be combined with SA8000 for social responsibility for a more thorough inspection, helping brands to have a better control on their supply chain and with time, to select their most reliable partners.

These audits can be applied to various fields such as footwear, garments, accessories, textiles, bags, soft toys, electrical & lighting, gifts, home & garden, hardware, furniture, industrial & construction, sporting equipment & fitness, toys, assemblies & molds, maintenance solutions, automotive parts, and medical devices.

Review an example report ISO 14001 here.

How does your organization ensure sustainability and environmental stewardship?

(Image Source)