I was terribly bored reading yet another story about product quality problems coming out of a Chinese factory. My weekend had been going really well up to that point, although as an aside, I would like to point out that vodka and Aqua Dots are not a good mix. You might be sitting there happy, after downing a few drinks and sucking on seven or eight psychedelic beads, but the hangover is simply not worth it. Friendly advice: seek entertainment elsewhere.
I've tried to read the usual stories about who was responsible, what cost-cutting policies were at fault, who knew what and when, but none of it is remotely interesting anymore.
Here's what I'm thinking about. I have a manufacturing/sourcing agreement to draft this week for a U.S. client. Haven't done one of these for a few months, and what with everything going on these days, I'm wondering how to beef it up for the protection of my client. Clearly the rules are changing, so these contracts better change too. Some initial thoughts:
1. Materials Specifications — sometimes these are comprehensive, sometimes not. In any event, these are sometimes not provided as attachments to master manufacturing agreements. I think this needs to be standard practice in every instance, and much more detail needs to be included even for low-ticket consumer items.
2. Inspections — most agreements provide for an inspection schedule that includes first batch, ongoing spot checks, and the general ability to inspect at the convenience of the purchaser. All well and good, but I think I would like to see a provision for special inspections in light of any material change in the manufacturing process, including changes to parts/materials used. Cost to be borne by the manufacturer, of course.
3. Material Changes — this might be the heart of where I'm going with all this. I'm thinking of special provisions that mandate disclosure if any raw material, process, or substance that is used to manufacture the product is changed. Sufficient level of detail should be disclosed so that purchaser can decide whether or not to conduct inspections and/or testing of new products. In the latest "scandal" the glue in question was apparently substituted by the manufacturer and not disclosed to the purchaser:
The toxic glue ingredient used by the Shenzhen factory reportedly costs less than one-third what the ingredient that was supposed to be on the beads costs. [International distributor] Moose Enterprise said in a statement last week that it had not been notified when its supplier changed ingredients. <LINK>
4. Failure to Disclose — it goes without saying that any failure for the manufacturer to disclose a significant change would subject it to increased liability, including tight indemnification for any future disputes.
OK, so I realize that this will not work for all situations. A lot of manufacturers over here will not be able to meet these requirements, and a lot of products require frequent changes to materials and processes such that continuous inspections would blow the crap out of miniscule profit margins. Understood. Perhaps, though, these kinds of provisions could be used when appropriate, and the spirit of this can be approached as closely as possible as the situation allows.
Just trying to be constructive. It's a lot more interesting than hearing the same guy from MOFCOM telling everyone to calm down.