In this post, we’re going to explore how to find ‘good’ Chinese manufacturers to outsource the production of your products to. You’ll discover the three hallmarks you can look out for to assess whether you’ve found a capable manufacturer or not.
What is a ‘capable manufacturer?’
Fundamentally when outsourcing product development and/or production to a third party who’s abroad in China, (or any number of other countries like Vietnam, Pakistan, Taiwan, Mexico, etc.), you’re looking for a partner who’s capable of providing you with:
- Products that reach your quality standard
- Costs that do not balloon suddenly after initial quotations without solid explanations
- Products that are safe and comply with your market’s standards
- On-time deliveries
Whether or not a manufacturer is ‘capable’ is pretty subjective. A manufacturer who you think is doing a great job, may not be a good choice for a different company. Ultimately, if you’re satisfied then that’s the main thing, but nonetheless, having some hallmarks to measure a manufacturer’s capability with is always a helpful tool.
So, how to find Chinese manufacturers? Start with these 3 hallmarks of capable manufacturers…
Hallmark 1. Their management system is sound
Most problems occurring during the production process stem from issues in the factory’s management system. If managers don’t have a solid grasp over the entire production process, this is an unstable basis from which to operate. A poor management system in your manufacturer can manifest itself in different ways:
- Poor hiring, training, and evaluation leading to insufficient and/or inadequate resources to handle the work coming in.
- Lack of understanding or tracking of KPIs results in different departments blaming each other for poor results rather than being able to narrow down issues and fix them (this is extremely common in Chinese manufacturers).
- No specific approval process for ECRs (engineering change requests) such as needing to add functionality to a product where managers who don’t understand the changes are being asked to approve them at the last minute, often with disastrous consequences (defective products being made). Do the managers go to a team member who is skilled in the change, such as a technical expert, rather than just approving it? In China, they don’t always do that, especially if there isn’t a process to do so.
- Poor problem-solving where the management fire-fight issues reactively instead of exploring the root cause/s of the problems. Management who don’t try to find root causes of problems using tools such as the 8D are a worry because their factory won’t improve its performance over time.
- Top management (founder etc) who lead by example. Managers who take shortcuts, don’t educate themselves about processes and products, who behave autocratically and don’t empower staff to think for themselves and take initiative will have a business in their image: one that doesn’t perform as well as you’d like.
Capable manufacturers won’t exhibit these ‘red flags.’
Hallmark 2. They follow manufacturing best practices
A capable manufacturer should be following these best practices:
- They hire competent staff and provide them with good training to level up their skills even further. They foster an environment where staff can grow.
- They implement process controls to help staff do the right thing and keep mistakes that can occur in production to a minimum. These controls or actions are used to keep processes within tolerance leading to good quality, reduced waste, correct lead times, better productivity, consistency, and more. If staff are well-trained, following the controls will result in better continuous production.
- They have line leaders policing the lines and making sure that operators follow up-to-date work instructions. Not doing so can result in poor quality products coming off the line.
- They see the value in preventive maintenance for the equipment in the factory. Not every Chinese factory does this, but well-maintained machines swap the maintenance cost for longer life and better quality, that is, long-term, more valuable than a short-term loss of time and budget to perform the maintenance.
- They incorporate an ERP system into their organization. Many Chinese manufacturers aren’t this organized and struggle to have all of the business data required to run smoothly at their fingertips, this is why team meetings can descend into arguments (see hallmark 1) over why problems have occurred. If they are using an ERP system, are they taking advantage of MRP modules around production control and material control? If not, that’s a missed opportunity.
Hallmark 3. They properly transfer products to manufacturing
Let’s assume that you have a well-designed product that’s ready for manufacturing (learn more about this here), you need to be able to rely on your manufacturer to transfer it to production properly.
What does transferring to production mean?
This is where the manufacturer does all of the steps to get your product made according to your expectations. Actions a capable manufacturer will take will typically include:
- Fully understanding your product and what it takes to get it made to spec.
- Undertaking a comprehensive NPI process that includes prototyping, validation of product, appearance, and production processes (through pilot runs), getting the tooling made and signed off, preparing the lines and staff, etc – this alone can take a good amount of time and many rounds of testing on prototype samples to first validate that the product works, its design is sound, and that the production processes are ready to manufacture it with very few quality issues or reliability problems down the line. A good way to measure a manufacturer’s ability to do a good job is to ask them to demonstrate their NPI process, oftentimes Chinese manufacturers can’t explain theirs or show a concrete plan. Here is our NPI process for your reference.
- Implementing a solid reliability testing plan for your products. This is related to the NPI process and it goes further than quality. A capable manufacturer understands that reliability testing is a painstaking process and, if skipped or done half-heartedly, could result in unreliable products that only exhibit their problems once they’re in the field having initially been passed by QC inspectors in the factory. Does your manufacturer explain why thorough accelerated life testing will be done to assure a product can operate correctly at least during its warranty period? If not, that could be the mark of a manufacturer who’ll rush into production with disastrous results…
- The willingness to take their time and not rush into production, neglecting the pre-production work mentioned above. Some manufacturers will push you to skip important steps like a pilot run, but is this in your interest or theirs? If they’re getting paid upon shipment of finished products, take it as a red flag. Assurances that ‘they’ve got this’ and rushing into production may be more in their own interest for obvious reasons.
A word of warning. Even capable manufacturers can still be a bad fit for you
World-renowned manufacturers who are synonymous with good quality, etc, sometimes still may not be a good option for you due to being a poor fit with your company. We’ve discussed an example of this before in our new product introduction process guide for hardware startups over on Sofeast.com:
Hardware startups and R&D companies often dream of working with Foxconn (one of the contract manufacturers working for Apple and many other computers brands). This is often the wrong approach for several reasons:
1. Foxconn group operates many sites, and as a whole is offers extremely variable quality levels. They do a great job for Apple because Apple makes sure all the NPI work is done very well.
2. There are many alternatives that can be a better fit depending on your product type, the complexity of assembly, and the expected volume. For example, if you issue a small order that can be placed on a line and finished in a few hours, most Chinese manufacturers are not interested. Most of them are organized for high-volume, low-mix production runs. They don’t make a profit on small runs. You are better off working with a manufacturer that has a few lines optimized for low-volume, high-mix products and has implemented some Lean principles.
Many importers would assume that working with Apple’s supplier, who surely are able to produce some of the highest-quality products in the world, will yield the same quality for them. But, as the example states, this isn’t the case. You may be too small for the order to be a priority for them to put the full weight of their best people and resources behind, and your grasp and execution of the NPI work before products get into production may not be as tight as Apple’s (who has hundreds of engineers driving and policing that process).
In this case, a smaller, ‘less capable’ manufacturer is likely still a better choice for you as long as they aren’t displaying the red flags mentioned earlier in the article. So it then becomes a matter for your sourcing process – a smaller manufacturer may not tick as many boxes as the likes of Foxconn, but they will tend to give you better service, and their execution will certainly be much faster.
Conclusion
This information is useful for importers who’re sourcing a potential manufacturer and can now measure their capability via these 3 hallmarks. Perhaps a factory audit, as well as a few calls with their management, will uncover the details you need to make the determination of whether they’re capable or not.
It’s also useful for importers who’re working with a factory and not currently getting the results they’re looking for. In this case, you have clear guidelines to assess whether your manufacturer is able to turn things around, or if you need to seriously consider switching to a new manufacturer.
Finding a good manufacturing partner often comes down to your own ability to assess them. Some of the points you see here can help with that process. If you are unsure where to start, feel free to drop us a line and we’ll gladly provide you with some advice based on our experiences as a product R&D and contract manufacturer in South China.
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Our Executive VP, Renaud, created this video explaining the ‘three-legged stool’ approach for superior manufacturing performance where you can explore this topic even more:
