COPQ Case

How to Work with Supplier to Secure Quality?

I would like to share a case regarding the shipment quality ruins
 the business.
2 days ago, I have been approached by a buyer (keep in mind in this case the buyer is comes from China, not oversea buyer)
 
He is asking me: how can I persuade my supplier either to rework the shipment lot or refund me?
 
And then, he tries to describe the detail of his headache problem.

1. He scouted out this supplier A from many suppliers and decide to collaborate with supplier A upon looking at their samples (no glue mark at all, good assembly workmanship), and only 50% price if compared to others.
2. Then, supplier A made several rounds of sample which all finally meet quality expectation, (no excessive glue mark), even though the owner of supplier A complains that the buyer is too picky on appearance with very minor/tiny defective.
3. From buyer’s perspective, it is a normal requirement for exporting order. But mighty become picky for these suppliers who used to sell only to domestic market. However, they buyer still incredibly happy with the delight quality and cost from supplier A. And the supplier never asking for sample and courier fee, everything is smooth and happy.
4. Here is the step to put the buyer in trouble – buyer paid 100% before the product been delivered.
5. Buyer received then not only the mass product but also shocking surprise!!! There is no 1pc product can 100% meet quality expectation or the sample send before the mass production. And only 10% of the product can be acceptable to sell.
6. Supplier replies buyer saying: it is absolutely that the mass product is not able to equal to the pilot production sample. Please sort it by yourself if you really do not accept it. these small excessive glue mark does NOT affect the function. You are too picky if you reject these 90% of product which it is acceptable in our eyes.

 
The buyer in a very embarrassing situation now, and asking recommendation, how to collaborate with supplier to solve this case.
This case hits the topic of COPQ – Cost of Poor Quality.
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I am not going to spend words on the solution but want to focus on how to prevent this embarrassing situation.

1. Always follow the guiding principle – Pay balance amount upon inspection pass.
2. Send people to do During-Production Inspection while the production complete 5% of the total order quality. In this case, you will detect the issue earlier and stop the production to contain the lost.
3. Please sign physical golden sample to supplier as much as you can, and inform supplier this is your standard
4. Prepare quality acceptance specification with defect photo and ask supplier to sign back.

The supplier attaches importance only to things when we take it formally.