Why Chinese Factories Focus on Inspection, Not Improvement

In an article I wrote on the CMC blog (China Manufacturing Quality Control: Cost Case Study), I broke down the typical costs of the quality organization in a medium-size Chinese factory.

I addressed 2 common misconceptions:

1. To reach a higher quality level, the factory has to do more inspection;
2. The quality department’s job is to inspect products before shipment, to avoid big issues with customers.

A reader sent us a note that explains why, in his eyes, average small/medium sized factories will never get it.

In the mind of the local ‘laoban’ [factory owner], personnel costs are sunk costs, fix costs; the guy is there (probably many of them) maybe working but most probably having a smoke or playing with his iPhone. So he might as well get down on the production floor and do some solid quality check. No extra costs for the ‘laoban’ at the end of the month.

The only variable cost the laoban might acknowledge are the external laboratory checks. If I think of all the small-medium factories I have visited, the first step is probably to let the ‘laoban’ realize that he is vastly overstaffed and that he can do the same job with one third of the employees. Or maybe ship and sell three times the amount of goods with the same staff?

At that point when he has just a few guys in charge of everything and these guys are running like crazy 24/7, then the laoban might realize that doing some preventive activities is the only way to get quality products shipped in a timely manner.

That’s right on point! Would you agree?