“I had a talk with our Director. He said that as we have a long history of making business with this supplier, we don’t need to do any quality control this time.”
Many companies importing from Asia employ this strategy to reduce spending for repeat orders. However, the quality of repeat orders evolve within time, it usually goes down. In such situation, which strategy can save cost and minimize risk?
How does the quality of repeat orders evolve?
Evidence is mixed and some buyers report that over 20 years, they never needed any quality control, however they usually also mention that in case of quality issues the supplier is willing to offer discount. Conclusion: They do have quality problems. Here is how it usually goes:
– The first order is always scrupulously prepared: the factory is audited, the goods are inspected. The inspection result is generally a success: the quantity is right, the specifications are met and there are only few visual defects. Given this good result, importers are willing to reorder the same product.
– The second order is almost routine. The same PO is sent, there is less communication. At this stage, some importers decide to skip the inspection step. The quality result often is as good as in the first shipment.
– The third and other subsequent shipments are already a routine. Trust is set for the buyer on the manufacturer; the need of inspecting the goods is low. But for many reasons, the quality starts to deteriorate at this stage and the buyer only finds it out when receiving the goods -> material quality is poorer, product specifications are not conformed, major and minor defects are numerous, etc.
There is one big reason that explains the quality deterioration of repeat orders: the supplier (including workers) has less pressure to work properly as he won’t be inspected. He prefers offering discounts when defects are found as it costs less money than reworking goods and the seller has the leverage as payment has most likely been received.
How can retailers save costs and minimize the risk for repeat orders?
Even on regular orders, there is always a risk of bad quality. Independent quality control should not be considered as optional. In fact, even the ubiquitous inspection standard ISO 2859 (“AQL”) proposes several ways to deal with repeat orders.
In order to save costs and minimize risks for repeat orders the best is to switch to a lower sampling plan which reduces the time needed for inspection, thus the inspection cost. Most importers select AQL General inspection level II by default. If a supplier passes inspections with ease, then it may be good option to reduce the general inspection level to AQL level I.
How about you: How do you deal with the control of the quality of repeat orders?