“Companies are so used to dealing with suppliers in the United States or Europe that comply with their specifications that they aren’t taking into account that the whole concept of quality systems is a radically new thing to many foreign suppliers in countries like China,” says Randy Goodden, chair of ASQ’s Product Safety & Liability Prevention Interest Group.

In addition to cultural differences and different business operating models, companies sourcing from developing economies are encountering an unfamiliar legal climate often providing no recourse for failure to uphold terms of a contract, document forgery or protection for intellectual property, according to Goodden.

William Barthold, chair of ASQ’s Customer-Supplier Division, recently returned from a sourcing study trip to China, where he found a major difference according to types of ownership.

“We tend to find lackadaisical attitudes from government-owned suppliers where management staff gets a paycheck regardless of performance," says Barthold. “But privately-held companies are the best bet as they are investing in their future with newer equipment and more process and controls.” He adds that private companies with foreign management, such as Taiwanese owners who bring in their own managers and work styles, are the ideal combination right now in China.

Both Goodden and Barthold agree that importing companies need to take more responsibility for their inadequate assessment of risks in dealing with foreign suppliers, insufficient supplier development activity and a lack of discipline in applying quality basics with suppliers.

Preventative Measures Needed

While the United States needs stronger consumer protection measures and an increased capacity of federal consumer protection agencies, ASQ’s quality report identifies some other high-impact actions that outsourcing companies can take to make a difference:

1. Increased On-Site Monitoring. Companies that buy products from China and other countries absolutely have to be on the ground working directly with overseas suppliers. There has to be a presence inside the manufacturing plants and on the shipping end to ensure that everything is being made to specification and to apply pressure when problems arise.

2. Reinforce Discipline In Supplier Quality Basics. Importers need to pay closer attention to the wealth of knowledge available on the fundamentals of customer-supplier relations and guidelines for avoiding product liability issues. Visit http://www.asq.org/cs/index.html for more information.

3. Look Beyond Price to Relationship-Building. ASQ supply chain expert Grace Duffy notes that instead of focusing only on the cost savings of outsourcing to countries like China, importers need to do the work required to implement quality processes and build more long-term relationships with suppliers that will lead to fewer product issues and more repeat business and loyalty. “Unless companies stop cutting corners, we are going to continue seeing some very ugly import quality issues,” Duffy says.

4. Raise Competency Level of Overseas Suppliers. U.S. companies purchasing overseas should offer some form of supplier development to provide a clear knowledge of the purchaser’s expectations, an understanding of the purchasing company’s culture and even assistance to the supplier in setting up a quality management system. Recent import safety scares demonstrate that there’s not nearly enough of this happening right now.

To help bridge that gap, ASQ’s Goodden will offer a series of seminars to manufacturers in China in late January. The “Improving Quality and Product Safety” seminars, which will take place in Shanghai and Hangzhou will enable Chinese suppliers to better understand what their customers are expecting in terms of quality. American importers can also benefit by encouraging their Chinese suppliers to attend. For more information, visit the ASQ Web site at http://www.asq.org/global/.

The American Society for Quality, www.asq.org, is the world's leading authority on quality. With more than 93,000 individual and organizational members, the professional association advances learning, quality improvement and knowledge exchange to improve business results, and to create better workplaces and communities worldwide. As champion of the quality movement, ASQ offers technologies, concepts, tools and training to quality professionals, quality practitioners and everyday consumers, encouraging all to Make Good Great^®. ASQ has been the sole administrator of the prestigious Malcolm Baldrige National Quality Award since 1991. Headquartered in Milwaukee, Wis., the 60-year-old organization is a founding partner of the American Customer Satisfaction Index (ACSI), a prominent quarterly economic indicator, and also produces the Quarterly Quality Report.