Sourcing in China: Best Practices for Medical Device Companies
By Kandace Nguyen Fu, Senior Vice President of Pacific Bridge Medical
To provide tips on how to avoid common risks and ensure the success of your China sourcing ventures, Pacific Bridge Medical (PBM)’s blog series, Sourcing in China: Best Practices for Medical Device Companies, will outline the sourcing process and provide tips for effective “best practices”, along with illustrative examples from sourcing projects we have assisted clients with in the past. Start reading from the beginning of the series at Phase 1 – Supplier Search, or navigate to other topics through the links below:
- Phase 1 – Supplier Search
- Phase 2 – Contract Negotiation
- Phase 3 – Purchase Order
- Phase 4 – Customs Requirements
- Phase 5 – Quality Inspections
- Phase 6 – Long-term Supplier Relations
The fifth blog in this series covers important points regarding quality inspections and making sure that your suppliers follow the necessary quality standards.
Conducting Quality Checks
When working with Chinese suppliers, it is crucial to have an experienced China quality inspector monitor the production process to make sure that good manufacturing practice (GMP) standards are being met. Please take note of the following issues that buyers commonly experience when conducting quality inspections:
The supplier may not be able to easily understand the product design and specifications, especially for more technically sophisticated products. Buyers must communicate extensively with the supplier to inform them of the product details and requirements, and the quality inspector must be very thorough when monitoring the production process to confirm that the supplier understands how to manufacture the product correctly.
The buyer must maintain a strong presence during the entire production and quality control process and remain aware of what is happening inside the manufacturing facility to avoid unexpected occurrences where the final product does not match expectations. The quality inspector should check the products at both the factory and the freight forwarding center on a regular basis. Initially, it is recommended to be especially diligent with inspections at the manufacturing facility. This will allow you to catch any problems before the products are transported to the freight forwarding center. Once trust has been established, it is possible to reduce your presence at the manufacturing facility and shift your focus to quality checks at the freight forwarding center. However, for Chinese suppliers, it may still be best to maintain quality checks at the factory for the long term. The inspector should keep an eye out for low quality or mislabeled products.
In the event that the buyer is unsatisfied with the quality of the final product, buyers must include a stipulation in the contract stating that final payment is delivered only when the quality of all products in the order has been tested and approved. If the products are not up to standard, the supplier must remanufacture the products according to the specifications at no additional cost.
Weather Conditions and National Holidays
Unexpected events such as extreme weather and power outages can disrupt production and delivery timelines. Buyers should also take note of the major Chinese holidays, which can last a few days to several weeks. Many Chinese factory workers will take additional vacation days off to visit their families who are often located in other provinces. Buyers who are not aware of the timing of these Chinese holidays can be surprised or frustrated with the sudden slowdown on the supplier’s end. Buyers should be prepared to handle any variety of these problems throughout the entire process of working with Chinese suppliers.
Case Study: Catching Product Quality Issues
A client of ours was experiencing many quality issues with their skin marking pens, which they believed were being manufactured by a certain Chinese company (Company A). In actuality, Company A was a trading company that was outsourcing the manufacturing to other companies.
Our client asked PBM to contact Company A to determine why they were having the following problems with their pens:
- The skin marking pens were not packaged in a plastic container as required.
- The skin marking pens did not come with sterile product labels.
- The skin marking pens were noted by the client’s clinical assessment team as being “hard”, “scratchy”, and did not even work when they were tested on a sheet of paper.
- Some skin marking pens ran out of ink very quickly, and some of the other skin marking pens did not even have ink.
- Fine tip skin marking pens are for “prevision marking” on the eyeball, and therefore they must be precise, fine, and durable. The fine tip skin marking pen did not work during the cataract test completed by the client’s clinical assessment team. The fine tip skin marking pens also did not maintain the “mark” during the surgical tools quality test.
PBM’s China team contacted Company A to determine why the aforementioned problems had not been corrected. We discovered that Company A was not the actual manufacturer of the skin marking pens and strongly requested direct access to the real supplier (Company B).
When PBM communicated with Company B, we discovered that Company B was never made aware of the multiple quality complaints our client had previously submitted to Company A. It was confirmed that Company A never forwarded any of the client’s complaints to Company B, so the supplier could not have responded to fix the product quality issues.
With this knowledge, PBM recommended to our client that they discontinue working with the trading company and instead establish direct relationships with the manufacturers of their products. PBM’s China team contacted three other skin marking pen suppliers to obtain price quotes and product samples so that our client could choose to work with the most qualified and suitable supplier for their skin marking pens.
Because our client did not have an on-the-ground presence in China, they were not aware that they were working with a trading company and could not take steps to make sure the manufacturer addresses their product quality concerns. They also had not employed a quality inspector to conduct quality checks at the manufacturing facility in China, so they only discovered the low quality products once they had already received the shipment and paid for the order.
After working with PBM to cut out the trading company and establish a direct relationship with a reliable skin marking pens supplier, our client was able to save costs and work closely with the new supplier to produce high quality pens that conformed to the necessary standards and requirements.
Tune in to next week’s blog on phase 6 of the sourcing process: maintaining long-term supplier relations!