After giving a purchase order to a factory, just sitting back and waiting for goods to ship is fine if you aren’t risking your assets.
If you didn’t pay money up front and you have redundancies in place in case the order fails and your survival doesn’t depend on that order, then you won’t really need to monitor your production.
But if you have things to lose if the order doesn’t deliver, then you had better keep a watchful eye on it.
But getting up and putting yourself on the factory floor may not be good either. Micro-managing a factory, especially when you’re not the boss, might backfire.
Factories thrive on efficiency which means they need to constantly make decisions on how to allocate resources. When you give them a purchase order, they may not start it immediately. They might not even start it sequentially in order. They may decide to put yours at the end for whatever reason.
You might not be able to influence their scheduling decisions but you can ask to be aware of the schedule for your own due-diligence.
There are different ways to monitor your factory’s production and it all depends on your needs. Whichever ones you choose should be communicated with the factory before the order is placed.
At the very minimum is the final inspection which occurs after all manufacturing has finished and goods are packaged in boxes or sometimes prior to boxing when it is unlikely for errors to occur during boxing.
You, your staff or your designated third-party inspection company should do the inspection typically using the “AQL standard” to determine whether goods have reached a level of industrial acceptance. The AQL standard has various levels of strictness. If your requirements require a tighter level of strictness with fewer defects you need to let the factory know ahead of time and expect to pay a higher cost.
You can find many third-party inspection companies on the Internet. Don’t ask your factory to suggest one because there is a conflict of interest and they may suggest someone who is biased. There are many reputable inspection companies like Bureau Veritas, Intertek, SGS, UL, etc. but they are more expensive.
You will also need to establish with the factory and the inspector what constitutes a defect. This is where tolerance values in your product’s specs come in. If a product measures out of tolerance, it can be considered a defect. You should also differentiate between minor, major and critical defects to be fairer to the factory should disagreements arise. Typically it is impossible to anticipate all possible outcomes so it is up to the inspector to exercise common sense and to communicate with you when problems arise.
The inspector should then write up a report with accompanying photos to prove they did the work and issue a pass, conditional pass or fail grade. A conditional pass indicates additional work that needs to be done and (sometimes) the factory can be trusted to perform it without the need for an additional inspection, which saves time and money.
Some people like to maintain a distance with the final inspection process because it can make or break a delivery. Both sides (the buyer and seller) can become confrontational and may behave erratically, when problems arise with the goods, which may sour the business relationship. Outsourcing this step provides a buffer between the buyer and seller to maintain composure and objectivity, but outsourcing invites corruption and misjudgments.
However, I would suggest you still inspect the goods yourself (unless traveling or timing is a problem), because only you know what defects are permissible and what defects need to be fixed and you can work with the factory to find the best solution.
Sometimes a third-party inspection company is used as a “pass the buck” move. If a consumer finds a problem with the product, the company can put the blame on the third-party inspection company rather than having their own company take the hit.
Before the final inspection you should consider asking the factory for production samples. There are types of production samples depending on when during the process they are pulled.
- Shipment Sample:
This is a sample pulled during the peak or end of the manufacturing process and sent to you for approval. It allows you to see if the sample has deviated from the spec. As initial raw materials are used up and different raw materials are introduced, this allows you to see variations of the product with different raw materials.
- Top Of Production Sample:
This is a sample pulled at the beginning of the manufacturing process and sent to you for approval. It is representative of the final product that ships and should use the the actual machinery and materials that will be used for manufacturing.
- Pre-Production Sample:
This is a sample deliberately made (sometimes by a separate sampling team) before manufacturing begins and sent to you for approval. The factory may request that you approve it in writing and may hold up production until you approve it. If known deviations exist, the factory should note it down to let you know that they are aware of it. Care should be taken when reviewing this sample because it will implicitly be treated as a “Reference Sample” in future communications. Any variations in the final product will be measured against this reference sample, instead of the original sample you gave them. In their perspective, it is impossible to create something exactly like your original sample because of differences in machinery, materials and skills and therefore the fairest approach is to have the factory create something as best as they can, and if approved, to use that as the new standard.
Depending on your industry, there may be other types of samples too or some samples may not be relevant. Asking the factory for these samples won’t ensure that the process is going as planned but will ensure that they are making the correct product!
Be aware that factories may charge you for these samples, so only ask for them if you are willing to pay!
While goods are being manufactured and with the factory’s permission, you may be allowed to enter the factory floor to inspect goods.
You may be accompanied by factory staff to make sure you aren’t interfering or stealing secrets.
An in-line inspection is similar to a final inspection, except during a final inspection you typically have an area to yourself to open boxes as you wish, whereas with an in-line inspection, if you move an item to a different location without putting it back quickly, you might mess up the factory’s workflow and they might blame you for any mix ups.
You may be performing multiple in-line inspections on different dates as different stages of production begin, so you should be courteous or else they might not welcome you back. You should always frame your feedback in the angle of a friend; here to help and not to judge people.
Most factories don’t enjoy in-line inspections because they are exposing more than just the product, but also the factory’s working environment. Perhaps it is not very sanitary or the elevator has been out of order for years. Workers don’t like it either, because they’re worried you might tell on them if they slack off or don’t “look busy”.
Some types of products make sense to perform an in-line inspection, but others are either too basic (ketchup packets) or too cheap (bottle openers) or the turn-around speed is too fast to warrant an in-line inspection.
Time & Action Sheet
A common way to keep up with progress is to ask the factory to fill out a Time & Action sheet that has columns across the top for different stages of production and the factory fills out the dates for when that stage of production should begin and sometimes how many units (roughly) have exited that stage of production.
Not all stages of production need to be broken down and included. You only need 3 or 4 to get an overview of the production progress.
On each row going down, you can list each product being manufactured or you can break it down into colors and have details for each color. Don’t break it down too much because requiring too many details makes it prone to errors while recording it and disincentives the factory to report real numbers and encourages them to make them up.
Ask the factory to send you the T & A once a week on a specific day, like Wednesday.
Even if you are too busy to read the T & A, the fact that you have it, gives pressure to the factory to stay on top of production and not to slack off. It also encourages the factory to monitor their own progress as some factories are known to keep no records and don’t know what is where until the very end. Additionally, some factories require these outward facing documents to pass through a supervisor before being released, so by having it go through additional channels allows more people to monitor it’s progress.
T & As are really only necessary if the manufacturing process takes a long time.