Challenges in the due diligence process about suppliers in China

Sunchine Inspection, a professional one-stop international inspection provider, focus on providing more flexible and humanized inspection serviceto clients from all over the world.

Sunchine Inspection, Thinking for you and doing for you!

China Office

Room 2203, 22/F, Building 03, Zhongtai

International Plaza, 311, Middle Jiangdong

Road, 210019 - Nanjing - R.P.China

Tel: 0086-25-6809 3658

Fax: 0086-25- 8609 3678

E-mail: francois.shi@sunchineconsulting.com

Contact: Mr. Francois SHI

Managing Director in China Office

Mob: 0086-18951633559

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BY RENAUD ANJORAN

Here are some interesting or useful articles that I found recently.

In China, the Dangers of Due Diligence

Checking Chinese suppliers or partners carefully before starting a business relationship is extremely important.

Yet China is making it pretty clear that background checks on companies or individuals (without their consent) are not welcome. They are, in many cases, illegal!

Fast and Flawed Inspections of Factories Abroad

Another interesting article from the New York Times, about the difficulty of auditors to find the real in factories.

The inspections are often so superficial that they omit the most fundamental workplace safeguards like fire escapes. And even when inspectors are tough, factory managers find ways to trick them and hide serious violations, like child labor or locked exit doors. Dangerous conditions cited in the audits frequently take months to correct, often with little enforcement or follow-through to guarantee compliance.

And what is the root cause? First, the type of audits:

Dara O’Rourke, a global supply chain expert at the University of California, Berkeley, said little had improved in 20 years of factory monitoring, especially with increased use of the cheaper “check the box” inspections at thousands of factories.

And second, the bad habit of subcontracting the work:

Unauthorized subcontracting, or farming work out, to an unapproved factory (as was the case for the Quaker Pet Group order in China), is very common.

So what is the solution, according to experts?

You can never visit facilities often enough to make sure they stay compliant — you’ll never have enough inspectors to do that. What really keeps factories compliant is when workers have a voice and they can speak out when something isn’t right.

The Problem With Auditing Factories in China 

Andrew Reich doesn’t seem to agree with the above article.

Retailers, brands and importers are more concerned with CYA (covering their asses) then in making real improvements and protecting workers. This is the ROOT of the problem, and we all know if your root is rotten you ain’t going to grow a very nice tree.

He goes on to describe the perverse incentives that social compliance audits have created in the supply chain.

Insist on a Bank Account When Paying a First Sample Charge 

Callum Makkai gives two GREAT tips to improve the supplier verification process:

• If you need to pay for the initial sample charge, insist to wire money on their company bank account. If they can’t give you that information, they are probably not a serious supplier.
• If you need to pay the courier fee for sending the samples, don’t just give your account number to the supplier — instead, ask your courier to pick the samples up. This way, you know the supplier’s address, and you can compare it to the address on the business registration.

How to Stay Organized While Sourcing

Liz Long gives small buyers a few tips on how to organize their China sourcing activity.

Here are a few of her suggestions:

• Keep all contacts in Excel, with comments etc.;
• Set up the quoting process so that you compare apples to apples;
• Using a CRM software to keep track of all interactions with suppliers.

3 tips for your China price requests

Etienne Charlier gives us three tips on how to request quotations from Chinese suppliers, based on actual examples.

The naughty vendor checklist

Stephen Ashcroft, a “purchasing and proposals coach”, came up with a list of behaviors observed in suppliers who tried to take advantage of the buyer.

Here are a few good ones:

• Shift responsibility to sub-contractors to avoid accountability.
• Blame pressure put on price by the buyer at the time of contract for performance shortfalls, and then try to renegotiate the price.
• Escalate minor difficulties to prevent them being raised in the future.
• Exaggerate costs of variations and changes to enhance profit.

Article Source: qualityinspection

laboratory inspection service

Sunchine Inspection, a professional one-stop international inspection provider, focus on providing more flexible and humanized inspection serviceto clients from all over the world.

Sunchine Inspection, Thinking for you and doing for you!

China Office

Room 2203, 22/F, Building 03, Zhongtai

International Plaza, 311, Middle Jiangdong

Road, 210019 - Nanjing - R.P.China

Tel: 0086-25-6809 3658

Fax: 0086-25- 8609 3678

E-mail: francois.shi@sunchineconsulting.com

Contact: Mr. Francois SHI

Managing Director in China Office

Mob: 0086-18951633559

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BY RENAUD ANJORAN

Sometimes I visit a buying office with a dozen people, and most of them have “manager” somewhere in their title.

The heads of functions (purchasing, QC, accounting…) are “managers”, even though their teams are quite small. Then there are “project managers”, and a “general manager”.

The truth is, one manager is enough in that case.

The importance of the title in China and in Hong Kong

When I started working in Hong Kong, I noticed that any salesperson was an “executive”, and that many people had “general manager” somewhere near the end of their title.

My assistant at the time told me “this is Hong Kong… titles don’t mean anything”.

Actually they do mean quite a lot to those employees. A grand title looks nice on a resume, so it helps attract lots of candidates for a job opening. (Similarly, it means you are attracting those already thinking of their next job — not necessarily the right crowd).

Pompous titles also give face. And that’s another danger right here… These so-called managers think their job is simply to do emails, attend meetings, and tell their staff what to do. A manager doesn’t do any work by himself, or so they think.

What is a good manager supposed to do?

A good manager achieves more with fewer resources. Doing email, running meetings, and having tea with the boss is not, in itself, real work.

A good manager focuses on these tasks:

• Standardize the work, to free up some of his employees’ time;
• Stabilize internal processes;
• Make management more visual, for better communication and coordination;
• Train the staff, coach the staff, lead by example, maintain discipline;
• Spend time where work is performed (not always in an air-conditioned office), observe processes, notice problems;
• Get to the root cause of problems, and solve them once and for all.

(If you need more details on how to implement these objectives, get yourself a copy of Lean Office and Service Simplified.)

And let’s not forget, a real manager is ready to take a lot of pressure from his boss when something goes wrong. It is part of the job.

How to reward good employees?

Unfortunately, good individual contributors don’t necessarily make for good managers. A good purchaser might not be a good purchasing manager. The job content is not the same (I described the manager’s job content above).

So, how to recognize the achievements of a good individual contributor? Offer her a career path where she remains an individual contributor, but makes more money and gets more respect.

For example, Google has “distinguished engineers”, “Google fellows”, and so on. These titles mean a lot inside the company.

Rand Fishkin proposes two separate tracks for good employees (in the context of a high-tech company):

Naturally, salaries need to progress as well. Giving a rise or a promotion (alternatively?) at least once a year is good practice in China.

Do you agree with this? Do you think it is applicable here?

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PS: if you want Inspection Servic. Just click here. Thanks!

Article Source: qualityinspection

machinery inspection

Sunchine Inspection, a professional one-stop international inspection provider, focus on providing more flexible and humanized inspection serviceto clients from all over the world.

Sunchine Inspection, Thinking for you and doing for you!

China Office

Room 2203, 22/F, Building 03, Zhongtai

International Plaza, 311, Middle Jiangdong

Road, 210019 - Nanjing - R.P.China

Tel: 0086-25-6809 3658

Fax: 0086-25- 8609 3678

E-mail: francois.shi@sunchineconsulting.com

Contact: Mr. Francois SHI

Managing Director in China Office

Mob: 0086-18951633559

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Following a noticeable rise in bunker quality problems across the world in the last month, Bunkerspot speaks to Veritas Petroleum Services’ Group Commercial & Business Development Director, Steve Bee, to discuss some of the issues the fuel testing agency has encountered.

Last week, Fuel Oil Bunkering Analysis and Advisory Service (FOBAS) highlighted problems at Galveston and nearby US Gulf ports relating to RMG 380 grade. Further testing suggested the presence of certain fatty acids, which the Lloyd’s Register (LR) subsidiary said ‘should not be present in marine fuels’ and have been linked to sticking and damaged fuel pump components in the past.

This observation was shared by fuel testing agency V-P-S. Last week, the company issued a bunker alert for the ports of Houston and Corpus Christi relating to sediment and high acid issues.

‘It is without a doubt a key concern,’ says Group Commercial & Business Development Director, Steve Bee.

According to Bee, over the first four months of 2018, there have been nine Americas-related VPS bunker alerts of which seven relate to the United States.

‘We have seen contamination cases in Houston,’ says Bee. ‘There have been numerous cases of sludging within fuel in the Gulf.

This issue, says Bee, has been ongoing for approximately one month. Accordingly, VPS is currently conducting a research programme aimed at establishing the root cause of the issue. The company is carrying out a suite of forensic analytical tests in order to identify the contaminants.

‘There’s a whole range of things that we’re looking at,’ says Bee.

Recent fuel quality issues, however, have not been exclusive to the US Gulf region. Bunkerspot has learned of fuel quality issues relating to viscosity and density in the Mediterranean while in Singapore there have also been reports of an increase in off-spec bunkers, which in turn has bumped up the price of heavy fuel oil (HFO) 380 centistoke (cSt) at the global bunker hub. (BPI data shows that between 18 April and 30 April, the price of HFO 380 cSt rose 7%, from $392 per metric tonne (mt) to $420 per mt.)

In 2018, VPS has issued four bunker alerts relating to Asia, Middle East and Africa, three of which have involved residual bunker fuel. According to Bee, these three are connected to catalytic (cat) fines. For the cases involving distillate fuel, the main issues have been issues related to flashpoint.

‘[This suggests] that marine gas oil is probably being blended with more volatile material,’ says Bee.

‘It is too early to identify the source of the problem, but its certainly not related to any single supplier. I’m sure we will get to the bottom of it in the next couple of weeks.’

From: bunkerspot

material inspection service

Sunchine Inspection, a professional one-stop international inspection provider, focus on providing more flexible and humanized inspection serviceto clients from all over the world.

Sunchine Inspection, Thinking for you and doing for you!

China Office

Room 2203, 22/F, Building 03, Zhongtai

International Plaza, 311, Middle Jiangdong

Road, 210019 - Nanjing - R.P.China

Tel: 0086-25-6809 3658

Fax: 0086-25- 8609 3678

E-mail: francois.shi@sunchineconsulting.com

Contact: Mr. Francois SHI

Managing Director in China Office

Mob: 0086-18951633559

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BY RENAUD ANJORAN

When a factory gets sold, the new owner generally brings a new general manager (GM) in.

And what does the GM do? He evaluates the top managers and seeks to replace the under-performers. This is expected in a typical factory turnaround.

He typically finds the replacements among his former team — at his former employer. It allows for quick hires of proven managers and engineers.

However, as Kim Pen from Chinese Manufacturing Consultants tells me, it can backfire violently.

Why?

First, the new GM, and the people he brings in, can get in conflict with the old team. That’s a disaster. And it often happens in China, where the staff is often tied to their managers more than they are to the company.

That risk is even stronger in a small factory of 200 or 300 workers because relationships are more personal than in large structures.

Second, bringing in a new manager kills the harmony that was established among the managers. The whole team gets less stable, and needs to find a new way of working together.

What the GM should do

A new general manager who needs to turn a factory around should follow these steps:

• Try to maintain the harmony in the current managerial team. Do not make big changes immediately.
• Focus on coaching the current managers in the right way, and on instilling a sense of discipline. Some managers that have mediocre performance right now might thrive under better management!
• Avoid rivalries or conflicts between departments. For example, make the factory’s performance (actual vs. target, day by day) obvious to all employees, and set up a common bonus plan. If properly introduced, it pushes all departments to work hand in hand.
• In 3 or 4 months, the current managers will better understand what is expected of them. It will be easy to see which ones can adapt, and which ones should be fired (and there will be no surprise when a firing takes place).

How to drive improvement projects

The tendency is often to hire some support staff — maybe a project manager — to drive continuous improvement.

But using the current managers and supervisors can be much more effective:

• The GM should set priorities for each of them: they should have a few improvement projects under way, in addition to dealing with their day-to-day jobs.
• Every day, the GM can walk around, observe problems, and explain his view to the supervisors & managers of that area.
• Every week, he can have a short review of the progress of the projects. A lot of pressure might be necessary!
• As effective action plans get implemented, managers and supervisors will have less fires to put out… and more time to devote to improvement projects!

Now, what if the GM doesn’t have the capability or the time to drive these projects? Good manufacturing consultants can help. It would generally take this form:

• A senior consultant helps set the priorities;
• More junior consultants come in — maybe once a week — to make status updates and to provide engineering support.

Again, the consultants don’t replace the managers and supervisors. They set priorities for them, they give “homework to do”, and they come back to check what was done.

Unfortunately, a project manager seldom has the experience to set good priorities, and even more seldom has the authority to push managers hard when they are not delivering.

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If some readers have related experiences, it would be great to read about them!

Article Source: qualityinspection