Managers and salespeople from overseas factories will often assure you they can make any quantity of any product you want, all of the highest quality. But how can you verify what they’re saying is true?
Many importers use factory visits as an opportunity to strengthen their relationship with a supplier and evaluate their capabilities. Productive factory visits can lead to improved product quality, smoother communication and fewer production delays.
And preparing before your visit helps ensure you get the maximum benefit and insight from your trip. If you’re not prepared, your factory contact might rush you through a brief tour of parts of the facility before you have a chance to see any issues or ask any questions.
There’s no substitute for a formal audit of a supplier’s facilities. But visiting the factory is a valuable opportunity for you to informally evaluate the factory for yourself. Whether your factory is in China, Vietnam, India or elsewhere, here are six areas to check during your next visit.
1. Factory organization
You often don’t need a black belt in Six Sigma to spot serious organizational issues during a factory visit.
Poor organization can cause many problems—from order delays to wasteful production processes, poor quality and even safety issues (related: Factory Efficiency: 5 Common Examples of Poor Factory Layout & Process Setup).
But how do you know what a “good” factory looks like? All you need to remember is “5S”.
5S is a workplace organization method originating from Japan as part of the “just-in-time” manufacturing methodology. The rough English translation of each of the five S’s is:
- Sort: Sort through all items in a factory area and remove unnecessary tools, parts and instructions
- Set in order: Organize remaining items and arrange for easy use
- Shine: Clean the factory area on a regular basis
- Standardize: Schedule regular cleaning and maintenance
- Sustain: Train employees to make 5S a habit and monitor implementation
While you might see 5S posters when touring factories, it’s rare to see small- and medium-sized factories that actually implement the 5S method.
Here are a few questions you can ask yourself when visiting a factory to evaluate its organization:
- Do employees seem to be walking far from one production area to another? Moving long distances to transport materials can cause bottlenecks and slow down production.
- Are parts or semi-finished goods stacked neatly in an accessible location? Disorganized items could be damaged or lost between production stages.
- Are materials and components labeled clearly and accurately? You should be able to spot signs and labels next to materials, even if you can’t read the local language.
2. Factory capacity: Production planning board
A supplier will often tell you their production capacity exceeds your order quantity to convince you to place an order. You can often validate this claim for yourself while visiting the factory.
A supplier with a lower capacity than promised might outsource production to sub-suppliers. Most factories must rely on sub-suppliers for different manufacturing inputs, like packaging, for example. But an overreliance on sub-suppliers can complicate your supply chain with the following:
- Increased production and shipping delays
- Misunderstandings regarding your quality requirements
- Limited social or other compliance oversight
A good factory takes steps to plan well for disruptions, whether they’re using sub-suppliers or not. Otherwise, they could constantly be playing catch up, especially around January or February when Lunar New Year affects manufacturing.
Every factory should be prepared year-round for potential material or labor shortages and equipment failures.
To validate a supplier’s production capacity, look for any visual boards on the production floor during your next visit. Do they list the day’s production targets and current progress? Is there a plan for the whole week? Month? These details can reveal the supplier’s true capacity and ability to track and manage orders.
Rushing production is rarely a good idea. And confirming your supplier plans for disruptions helps you rest assured that quality won’t slip during busy seasons.
3. Factory working conditions and instructions
A social compliance audit is often necessary to thoroughly assess your supplier’s working conditions. But the average buyer can still often tell the difference between a safe and unsafe working environment through a few basic checks during a factory visit:
- Are workers wearing any required protective gear to prevent injuries?
- Are workshops properly ventilated where required?
- Can you spot any safety hazards? Puddles of water, unlabeled chemicals and poor lighting are all cause for concern.
Detailed work instructions are another sign of a factory that takes working conditions and production quality seriously.
What are work instructions? You can think of them as the user instructions you reference when assembling a new piece of furniture. Assembly line workers should also have clear instructions, so they can safely and accurately complete production steps, like the below example:
You should be able to see whether the factory has work instructions and whether those instructions seem to be straightforward. The work instructions should clearly outline the processes for workers at particular stations (related: Why Your Factory Needs Work Instructions).
Work instructions should generally be:
- Relatively simple with visual examples included to illustrate procedures
- Highly visible and clear, typically posted at each production station
You don’t need to be able to read and understand the local language to get a basic sense of how effective these work instructions are. Those that appear excessively long, poorly organized, inaccessible or hard to reference for specific information quickly can probably be improved.
4. Production equipment at the factory
Factories will generally cover the up-front cost of purchasing any necessary production equipment. But many factory owners don’t like to invest in the cost of regularly maintaining equipment.
Tools or machines that aren’t maintained or recalibrated periodically can lead to product defects, non-conforming products and inconsistent production runs.
Understanding what equipment your factory has on site can also help you set achievable quality standards based on your supplier’s available resources. You might be surprised to learn which production processes for your product are automated and which may require manual labor that can cause quality variance.
Some relevant questions to ask during your next factory visit regarding equipment include:
- Is equipment regularly inspected and in good condition? The factory should label equipment with maintenance information and log it in organized records. These records should note who performed the inspection and the inspection date.
- Does all equipment needed to manufacture your product appear to be available on site? A factory that doesn’t have all the necessary equipment might be outsourcing production.
- Does the factory have professional lab testing equipment available on site? Suppliers often claim to be able to test your products in their on-site lab but might lack essential equipment and personnel.
5. Warehouse and material inventory
The next factory area to check is your supplier’s warehouses and storage areas for raw materials and finished goods. Improper storage conditions can cause several issues both during and after production.
Degraded raw materials used in mass production can cause quality issues in finished products, requiring extensive rework or replacement. A good factory usually conducts incoming inspections to verify raw materials before use in production.
Proper storage of finished products before shipment is also important for preserving product quality. Temperature, lighting and humidity, for instance, can affect certain products and packaging materials (related: 3 Reasons Your Product Won’t Reach Customers in the Right Condition).
Be sure to check the factory’s storage area for the following during your factory visit:
- Material storage time: A good factory should be able to provide records of incoming materials, including the date they were received.
- Cleanliness and orderliness of storage conditions: Materials can change or degrade if stored for long periods in improper conditions.
- Volume: Warehouse volume can indicate your factory’s capacity. You might even be able to see whether your supplier is working with your competitors by looking at carton labels.
6. Production samples
Many importers choose to plan a factory visit once the supplier has had time to manufacture a production sample. For example, you might plan your visit among other sourcing activities as follows:
- Identify and qualify a potential supplier
- Request quotation
- Place purchase order
- Factory prepares sample
- Visit factory and review sample on site
Reviewing a product sample on site often speeds up a process that can otherwise take days or weeks.
Importers based overseas must wait for the factory to ship the sample, then review it and provide feedback to the factory. These steps may need repeating several times before product requirements are fully understood and reflected in a “golden sample”.
Reviewing samples on site lets you give direct feedback and point out any nonconformities immediately. The founders of Need/Want said this opportunity was invaluable for their importing company:
Immediately, we noticed a few issues with the product… Had we not been there, it would have taken a few weeks to catch them. This alone made it worthwhile for us to fly out there. The entire trip was all worth it just to catch this one mistake.
It’s still a good idea to have your supplier ship another sample after your visit to ensure they’ve corrected any nonconformities. But you can significantly speed up the process by providing clear feedback on site.
Gain more insight with a supplier visit report from a third party
Ultimately, there’s only so much information the average buyer can collect on site during a factory visit. Factory owners are often far more interested in “wining and dining” their customers than accurately representing their production capabilities (related: 3 Cultural Barriers You Must Face for Effective China Quality Control).
Sending an independent quality control professional to your factory can provide many benefits that an informal visit cannot. This sort of visit is commonly known as a supplier verification audit, or quality audit. The auditor typically follows a checklist based on international standards like ISO 9001.
Professional auditors can use their industry expertise to objectively evaluate a supplier on even more areas than the six listed above. And a factory manager is less likely to influence an independent auditor that’s visiting the factory on your behalf.
How third-party supplier visit reports help you find a good factory
One of the main benefits of an independent audit is the supplier visit report you receive with results.
Quality control isn’t many buyers’ primary field of expertise, especially for purchasing managers and business owners. A third-party supplier visit report scores suppliers on objective criteria, making it easy to evaluate and compare suppliers.
A supplier visit report from an independent auditor will include information regarding the factory’s:
- Quality management system: Evaluation of design controls, purchasing controls and production controls in compliance with ISO 9001 standards
- Quality control procedures: Evaluation of incoming, during and final product quality control procedures and use of acceptance sampling
- HR recruitment and training: Evaluations of records showing structured and frequent training programs and ethical recruitment practices
While auditors don’t typically review a production sample during an audit, you can usually ask the auditor to ship a sample to their local office for review. This can still speed up the sample review process by reducing shipment time and costs.
You can often accompany an auditor to observe the audit process for yourself. This might be a good option if you’re planning a visit but aren’t confident about your own ability to evaluate the supplier.
Every buyer should try to evaluate these six areas during each factory visit. Consider checking these factory areas as your main criteria for evaluating a supplier’s facility and capabilities.
You might also benefit from a more detailed supplier visit report from an independent auditor. A formal factory audit is especially relevant if you’re working with a factory for the first time, placing a large order or want to manage your supplier risk.
By gathering as much information as you can during a factory visit, your supply chain will be much better protected against potential disruptions.
What kinds of horror stories or other interesting discoveries have you made during a factory visit? Share them in the comments below!