Some of you are familiar with the term process capability. Simply defined, process capability is the ability of a process to consistently and reliably meet the requirements of a customer. The process is what you do to deliver a service or product to your customers.
Before an honest customer/supplier relationship can begin, the latter must provide objective evidence (to the customer) of acceptable process capability. If no such evidence exists, the customer will demand extra measures to guarantee the capability. These extra measures are costly to the supplier.
A recent, large news story involved the death of multiple pets (in the United States) after eating "bad" pet food. After investigation, the food was found to contain tainted gluten from China. The gluten contained melamine, a chemical used in plastics, fertilizers, and flame retardants.
As the story continues to unfold, it appears that the root cause of the deaths lies within the process of producing and exporting foods from China. In Saturday's paper, an article titled Pet Food Woes Highlight China Food-Safety Issue, described, in essence, an extremely incapable process for bringing high quality and safe foods into the United States from China. The first paragraph says it all: "The list of Chinese food exports rejected at American ports reads like a chef's nightmare: pesticide-laden pea pods, drug-laced catfish, filthy plums, and crawfish contaminated with salmonella."
As I understood the article, the process for exporting from China is depicted in the simple diagram that appears above. The article mentions that in 2007, about 200 Chinese shipments per month have been rejected at United States ports by the Food and Drug Administration. Does this sound like a capable process to you? Overlay this to your work. Do your customers allow 200 mistakes each month? I doubt it.
What jumped at me was the reliance on inspection. Not 100% inspection but sampling. We know the process is not capable. Put another way, we know it is sending defective food to us. When it arrives at our ports, we inspect a fraction of the total. If the inspection passes, the shipment is released. If the inspection fails, the shipment is held. So, what does a passed inspection mean? The shipment is safe and of high quality? ....Probably not. To me, it only means the inspection passed. The bigger picture is that China's processes for farming, etc. are not capable of consistently exporting safe food to the United States. We should be 100% inspecting all shipments and demand that China improve its processes. Wow! Easier said than done, right?
See the pareto diagram at the top of the page. The graph summarizes by exporting country, the number of shipments rejected by the Food and Drug Adminstration's inspections in 2007. This helps give perspective on the world's rush to move production to "low cost" countries. The top two countries on the graph are India and China. This pair is arguably the top countries being courted by the global, business world. Does the adage, "you get what you pay for" come to mind? Note: What I don't show in the graph is the total number of shipments rejected versus the total number of shipments received. It is safe to assume that China and India ship more to the United States than most other countries. So, to be completely fair, the number of rejected shipments should be expressed as a percentage of total shipments received. I tried hard to get the total shipment data but could not find it.
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4 comments:
My experience with overseas product was the same or worse. Sample submissions were never correct and usually after several repeat failures we were so late to our customers the options were line down for them or submit with exceptions (poor quality). I rarely received real corrective actions from suppliers and we had an avg 6000 - 10000 PPM defect rate. I had to be real creative in my responses to customers to avoid being dishonest and always felt that the same effort to improve our products would have reduced the demand for offshore sourcing. My complaints to management about these problems eventually got me dismissed because I didn't support "Global Sourcing"
As with global or any sourcing, the total cost, not just the part cost, needs to be measured and tracked.
Thanks for the comment. You and Craig both hit the key point on the head: There is a total cost of sourcing business with a "low cost" country. Companies get intoxicated with the inexpensive labor but don't realize the total cost.
Craig,
Well said and very much on point!
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