7 Signs That You Should Start Looking for a New Factory

by | Jan 31, 2017 | Sourcing

It’s easy to feel like you’re “on the outside looking in” when it comes to what your factory is doing in China. Sure, you get inspection reports and you get to see the final products (and their reviews on Amazon), but sometimes there is some murkiness around the production process.

If you have a feeling like something is a bit off with your factory, you could be right! The problem is, it’s hard to know for sure when you’re on the other side of the world. Other than obvious signals like failed inspections or clear compliance issues, what are some subtle hints that you may need to look for another factory?

Our founder, Andy Church, has deep experience in quality and sourcing across numerous product lines and discussed seven indicators that usually point to factory problems lurking just beneath the surface.

1. Unexpected Fees

There are a lot of unknowns during the initial push to overseas manufacturing and we should always expect to continue learning. However, one area that you can and should expect transparency in is how much you are paying and what you are paying for. Unexpected fees should be highly scrutinized as they point to disorganization at best, and internal corruption at worst.

2. The Factory Passes Inspections but You’re Getting a Lot of Returns

The root causes behind a high return rate can be nuanced and complicated. At first glance, passed inspections ought to remove any suspicions that the factory is to blame, but don’t dismiss the possibility just yet.

Maybe the inspection is a “Pass”, but at what point(s) in the process are you or your third party provider conducting the inspections? If inspections are done before production only (Pre-Production Inspections), any number of issues can occur during the manufacturing, packaging, or loading process. That’s why Insight Quality offers inspections at multiple points in the process, including before production, during production, before shipment, and during the loading process.

If you are conducting inspections at each step but still getting high returns, there is a high probability that the factory is manipulating the inspections process somehow – whether it be hiding defective samples from the inspections team, using subpar materials, skimping on packaging standards, or something else entirely.

3. The Factory has Offered Gifts or Special Treatment to the Inspections Team

Be on the lookout for this red flag. The factory should do nothing that may inhibit the unbiased and objective nature of the inspections process. Any sort of gift, treat, or preferential treatment may tempt the inspections team to be more lenient on standards or turn a blind eye to a major or critical defect. More importantly, it likely points to bribing and corruption in the factory.

4. The Factory Neglects Raw Materials Inspections or Testing

First of all, what does that mean? Raw materials inspections validate the materials and components of your product. If your product calls for a copper piece on the inside, raw materials inspections will confirm that your factory is indeed using copper, and not a cheaper and/or less viable substitute.

A factory that doesn’t test their materials opens themselves up to the possibility of either purposely or unknowingly receiving and using lesser-quality materials for your product, which results in a lesser-quality final product.

5. The Number of Failed Inspections Gradually Increases

A sudden increase in failed inspections would be a clear sign that you need to immediately address the quality issues with the factory and possible begin the search to find another manufacturing partner, but don’t forget to look at a factory’s performance over time. Don’t feel stuck with a particular factory. Even though it’s a huge time investment, you owe it to yourself and your customers to only use the best factory for your needs. Reach out to us if you want some help with finding a new partner.

6. Missing Ship Dates

Beyond increased shipping costs and potential fines for missing delivery dates, a pattern of missed ship dates could be masking a number of deeper issues:

  • A delay in obtaining raw materials due to not paying suppliers
  • HR problems
  • Poor production management
  • If a ship date is missed, the factory is normally scrambling to get the order produced ASAP. This could result in cutting some corners to save time and subpar quality.

7. High Turnover Rate in Management or Sales Point of Contact

Does it seem like every time you get used to your contact for the factory, someone else takes his or her place? An occasional new name or face is to be expected, and floor-level workers come and go (especially around Chinese New Year), but your point of contact and upper-level management should remain fairly consistent.

Frequent turnover isn’t a good sign, and may indicate payroll issues, HR problems, or poor management in the factory, which will eventually catch up to your product and your customers down the road.

Still Feeling Uncertain About Your Factory?

Maybe you identified a concerning issue on this list and want to address it, or maybe you couldn’t relate to the problems above but still feel like something is off. Either way, Insight is here to help. Reach out to us to discuss your factory strategy regarding where your manufacturing process is and where you’d like to take it!

Thanks for reading! Do you have any questions about the article? Is there something else you’d like to add? Leave a comment below and we will get back to you.

Andy Church

Founder & CEO, Insight Quality Services


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