Developing Trust in China by Building Trustworthy Systems

Thursday, October 13, 2011 11:00
Posted in category From the Factory Floor

A few years back, the Director of Sustainable Sourcing for a large electronics firms told me “I just want to get our Chinese suppliers to the point where I can trust them.  That they will do the work without constant supervision”.  It was before the age of lead paint barbie dolls, and to the best of my knowledge that firm has made little progress on his goal of having (non-JV) Chinese suppliers on autopilot.

For many firms, this is a constant frustration, and as I pointed out in the previous article “When China Can’t Be Trusted “, the repercussions to China not being able to develop trust are having sever consequences.

So how should firms operate in this market?

How should firms develop relationships when your constantly fear your JV partner is looking for a way to steal your IP,  and your clients, or your are unable to trust your primary suppliers to produce at quality?

Simply put, you build systems that you can trust.

Systems that can, regardless of human ignorance, greed, inaction, confusion or incompetence, remove the downside risks that comes with the human element of any process. Systems that at the heart of it, are established to minimize human impact, alert system operators (buyers/ clients) of a failure, and provide the data necessary to make changes to the system (human or mechanical). For me this is a system, as basic as it is, that allows for the most protection for a firm who is engaging with any external party, and in a way where “trust” isn’t an issue.

Pulling out an example from one of my previous projects, a simple construction tool, when we were first given the product we spend some time (about 5 minutes) looking it over and wondering what could go wrong. With a wood handle, two screws, and an aluminum plate, there wasn’t much to it, but immediately we were able to pick out a few of the obvious ones: handle shaping (affecting user performance), handle not properly sanded down (splinters), screws to short (handle comes off the plate), and screws too long (screws go through the handle – stabbing user). Pretty basic tool, with foreseeable production problems.

So we thought.

In fact, what we ended up facing over the course of several years with the client were a number of human factors that lead to some very different failures. Failures that in hindsight were obvious.

Two of the most interesting (creative) being:

  1. The aluminum was thinned by one producer – leading to the plate bending in transit
  2. The wood handles were not cured properly and absorbed water – leading to moldy handles

Fortunately for us, and in large part because our client understood that many things could fail in this process, we had in place a system that allowed us to catch problems before they went to market.

In addition to the client performing their own tests once the container arrived, we also had in place a number of other checks for EACH shipment.

  1. AL sheets were measured & weighed at the foundry before being sent to the AL cutter.
  2. At the AL Cutter, a pre-cut measurement (for thickness) was taken and samples were taken (by a member of our side) from the production line and sent to the client for inspection.
  3. Once the AL plates were finished, and prior to the shipment going to assembly, a unit count and shipment weight were taken to ensure nothing was lost in transit (a lesson learned from an experience with one Hangzhou driver)
  4. When the AL plates were received by the assembly line, a unit count and weight were sent to us (as a double cout)
  5. During assembly, we made one visit to the line (typically half way) to check the quality of product, and again sent a sample to the client for their approval.
  6. At every shipment we were on site to make one final check, load the boxes, and send the truck on its way.

It was a system that resulted in a near zero failure rate to our client (I believe 2 shipments had a problem in 3 years). A system that removed failures in process before reaching the end of the line, or being sent to the client.  A system that accurately pinned down the problems before they left the vendor, which allowed for (1) timely corrections and (2) accurate chargebacks.

It was a system that worked because it removed the “trust” factor with a process that had numerous checks along the way and was fair to all involved.

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3 Responses to “Developing Trust in China by Building Trustworthy Systems”

  1. Homer says:

    October 13th, 2011 at 6:40 pm

    Unfortunately the only way to reduce risk is to no even come to China. Since I have been working here I thought I’ve seen it all, but everyday I see more and more different problems that I thought would never, never be a concern.

    Factories themselves have the same problems with their suppliers. Most of the material I deal with is imported. This rarely has issues. But sometimes it does. The domestically sourced items are for the most part ok, but usually have problems. I have to keep a close eye on it. And also more time than not it’s of lesser quality, metal rusts quicker, snaps rather then bends, and a host of other problems.

    And I’ll tell you right now that if I wasn’t here, they would use it and not even blink an eye. Such is China I suppose.

  2. Your China Product Supplier. Trust All You Want, But Systematize. | Paralegal Paradise says:

    October 28th, 2011 at 7:40 am

    […] post over at the All Roads Lead to China Blog. The post is called “Developing Trust in China by Building Trustworthy Systems,” and it starts out talking of a client who “just want[ed] to get our Chinese suppliers […]

  3. Your China Product Supplier. Trust All You Want, But Systematize. : China Law Blog : China Law for Business says:

    October 28th, 2011 at 8:22 am

    […] post over at the All Roads Lead to China Blog. The post is called "Developing Trust in China by Building Trustworthy Systems," and it starts out talking of a client who "just want[ed] to get our Chinese suppliers to the […]