Thursday, 4 October 2012

Production Scehedule - Get your staff to the Factory

Today we were reminded of the importance of getting your staff into Chinese factories early on during the production process.   Factories in China will frequently take orders with a set delivery time, but will delay delivery.  This is the case for 1 of our clients who were expecting orders to be shipped out from China at the end of this month.

Quality Control Staff went to the factory in China to conduct a surprise IPC inspection on production and were astounded to see that orders were not on production lines yet.  The factory in Yiwu was busy making orders on another product for another client in Europe.

In this case the problem was traced back to the fact that the factory sales department sold more than what the factory can produce......   Factories need to keep working in order to have cash flow to pay workers.  This is the same the world over.  However, there seems to be a bigger disconnect between the sales offices and the production departments in China.   Sales teams frequently oversell on production capacity and timelines to make sure that production space is maximised and there is minimum downtime in factories.   This is a very short term strategy for factories since you are not working to attract and retain long term clients.

What is the solution here?  Check the Remedies & controls you already have in place.   Can you threaten to cancel the order?  Are there penalties for delay?  One solution is to have a strong willed staff to stay in the factory and properly force the factory to stop other production and switch to making your products.   This is a lot of work, but we find that this works well.

What are some of the main reasons for factories continuing to fail on meeting set production schedules.

  1. Sales Departments overselling.
  2. Many components are outsourced and one of the suppliers is unable to deliver.
  3. Power Outage or Electricity Breakdown causing factory closure.
  4. Lack of Staff after major holidays like Chinese New Year.
Work in safe guards through our list of Remedies on China Production.

What are your thoughts and experiences?

2 comments:

  1. I am cutting and pasting this from BeijingBizBuzz because the links contain some great black lists of Chinese scam artists...

    Interpol estimates that every hour 300 people get cheated in/from China for over $3 Billion a year in frauds. But now victims are fighting back and getting refunds and blacklisting the scammers - over 15,000 so far. This is a story of some Americans who cheated the cheaters for $12 million and gave it back to the victims! At least there is now a way to get your money back without up-front fees and lawyers. Check out these links and the China Blacklist for the details:

    http://www.cleverchinacheaters.com

    http://www.zimbio.com/Global+Property+News/articles/7AMCYlZgvpT/Clever+China+Cheaters+Targeted+Foreign+Robin

    http://www.cityweekend.com.cn/beijing/articles/blogs-beijing/expat-life/china-scam-patrol-fighting-clever-with-clever/

    http://open.salon.com/blog/china_business_central/2012/10/05/foreigners_go_shark_fishing_to_catch_clever_china_cheaters

    http://static.globaltrade.net/files/pdf/20121004011428455.pdf

    http://www.cityweekend.com.cn/beijing/events/114792/

    http://www.CleverChinaCheaters.comhttp://www.InternationalRecoveryService.blogspot.com

    http://forums.asiaone.com/showthread.php?t=55021
    --
    Walk softly and carry a Smith & Wesson.

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  2. Those are great links and anyone who even thinks about doing business in China should read them. I have been living and working in China for over five years and I have never seen a more hazardous business environment. I subscribe to CityWeekend.cn and get their free scam alerts every week and they have saved my bacon on two different matters where I was almost fooled. If you need anything personally verified or checked out in Beijing, just send me an email at Fortune500Executive (I charge $500 per day for due diligence work and it hardly ever takes more than one day to check out a company here). BTW... here are some of those sample Scam Alerts to show you just how devious the Chinese fraud masters can be:

    http://www.cityweekend.com.cn/beijing/articles/blogs-beijing/expat-life/scam-alert-eb5-investment-fraud/

    http://www.cityweekend.com.cn/beijing/articles/blogs-beijing/expat-life/scam-alert-id-theft/

    http://www.cityweekend.com.cn/beijing/articles/blogs-beijing/expat-life/scam-alert-headhunter-fraud/

    After reading these three samples you will notice that almost nothing is done honestly in China.





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