Even little quality control problems can have big consequences for manufacturers serving demanding markets.
The failure of the tiniest, comparatively inexpensive O-ring, gasket, seal or machined part can result in recalls, refunds and the rupturing of business relationships founded on total quality control and the highest safety standards.
The problem can infect and paralyse entire distribution chains in key industries such as construction and engineering, mining and energy, oil and gas, manufacturing, metals and materials handling, transport and automotive, medical, defence and marine.
"The issue of quality governance is magnified by distance from suppliers — both geographic and cultural distances and differences," said Paul Sly, general manager of one of Australasia's leading specialist suppliers of seals and gaskets, CSGtech.
"If, like so many Australian manufacturers, you are sourcing from China to compete, then being unaware of what causes even small quality variations can be devastating."
CSGtech works closely with manufacturers and end-users to source the most suitable and most cost effective products available in Asia in general and China in particular, where it has its own staff overseeing quality control in different production plants.
It is currently opening an office in China to provide even closer supervision of the quality focus and governance required for doing business in China, which recently become the world's top manufacturing country by output, ending the US's 110-year run as the largest goods producer. Chinese exports of all types are estimated to have exceeded $2,000,000,000,000 last year.
"China just can't be beaten for value on its output. And the initial batches of product are usually excellent — exactly to spec," Sly said.
"But as time moves on, these initial standards can change for reasons non-Chinese customers don't understand — particularly where these customers are not careful to ensure they are communicating constantly and clearly with their supplier in China.
"One of the big reasons for quality and product variations is that Chinese suppliers generally are great at dealing with huge quantities of production — big orders where margins of a few cents are critical. They have to be flexible and responsive to cost in such a vast commodity market and will change suppliers accordingly.
"Down the line this can have unforeseen consequences n Australia, where our biggest orders often amount to an hour's production in China — but where quality control, not cost, is the critical issue to us. So Australian companies have to look out for what happens if suppliers substitute something different and just a fraction cheaper – but something that ultimately doesn't work when it arrives Down Under and then the situation gets ugly.
"We know of a manufacturer of plumbing products, for example, who bought components from China worth about $30 of the input into a product of an eventual retail price of $300. His supplier substituted a different type of O-ring to save a few cents – destroying totally the value of a container load of the product sitting on his doorstep, worth tens of thousands of dollars.
"The poor fellow was stressed right out – his best customers, whom he had spent years building up, were demanding answers. It's an awful feeling when your best customers start ringing you up to say an entire batch has failed — and you've got hundreds more of the same sitting in your inventory.
"He was very quick to sort out the issue through his representation in China, and ensure it never occurred again. But potentially this sort of situation can destroy relationships right down the market chain — not to mention the legal and safety issues.
"We had an instance ourselves of a quality-focused global company seeking to source a coupling for use in mines in cold regions where the temperatures descend to minus 50 deg C. One potential supplier suggested standard materials it had used for a product designed for a totally different climate. It looked similar and was cheaper — but it would have failed badly in service, regardless of cost.
"The lesson from this is to ensure you properly manage the whole selection, acquisition and quality assurance process, from factory floor to customer's door."
CSGtech has shown its own commitment to national and global standards of quality assurance processes by gaining ISO 9001: 2008 Quality Management Systems – Requirements certification.
ISO 9001 certification is invaluable to customers in demonstrating that the organisation involved can consistently provide quality processes that meet the requirements of customers and of any applicable regulations relating to them, according to Sly.
CSGTech sources componentry for manufacturers and end-users serving industries such as construction and engineering, mining and energy, oil and gas, manufacturing and materials handling, transport and automotive, medical, defence and marine.
Products CSGtech produces and subjects to world standards of quality control include: gaskets and O-rings in all materials and sizes; castings, including high pressure, gravity and sand; silicone products, including extrusion and moulding; machining and stamping, including fasteners and custom work; extrusions, including plastic and rubber; mouldings, including rubber, plastics and custom; plastic shim from 025-1.5mm; and Viton and Teflon custom work
"The Chinese are among our best suppliers in Asia and we love their "can-do" attitude," Sly said.
"Through our network of internationally accredited manufacturers in China and elsewhere, their competitiveness means we can supply an exceptionally high level of product at exceptionally competitive prices.
"But sourcing from China is a case where the devil is in the detail: the difference between a raging success and a flaming failure can be proper time and effort invested in understanding your market and having in place the highest standards of quality control.
"If you don't understand the quality governance issues in dealing with China, you might as well butt your head against the Great Wall."