There are numerous reasons to source a contract manufacturer in China, Vietnam, India, or elsewhere in Asia to manufacture your electronic products. Oftentimes the cost is lower, they have great capabilities and experience, and the supply chain infrastructure for materials and components is comprehensive (at least in China). Also, you can avoid ceding control of your product IP and project in general if you get good advice and avoid the dangers of working with an ODM or OEM.
However, there are some common problems that can crop up with these E-CMs. Let’s take a look…
Why use a CM?
Firstly, China, predictably, leads the way in global manufacturing output with around 28% of all output itself. And its position in electronics is even stronger.
Startups, SMEs, and even large multinationals use Contract Manufacturers when they lack the in-house know-how and facilities required to manufacture products. After all, many figure that it’s better to use a factory already set up to do the job, especially if the costs are modest in comparison to the West.
As, I wrote before, in this post about working with contract manufacturers (assuming you take all the legal precautions, you finance the development of your products, and you have negotiated for full transparency):
You’ll benefit because:
You own the product IP, tooling, etc, because you paid for it.
You’ll also own the list of component suppliers because, again, you paid for it. This is relevant if the CM helps you source components suppliers, or if you did some of that sourcing work, for example.
Since you own your product and supply chain info, you can switch suppliers relatively easily as they will not hold on to the information (provided they have been paid for the work done).
You are more involved in the R&D and manufacturing process, and you have more control and visibility over the project’s progress, costs, quality, and estimated delivery time.
Working with a CM is more collaborative in the sense that they will share more details about what they do and some customers get very involved in working along with them, although this isn’t essential.
Despite these clear benefits, some importers struggle when working with an Asian CM, perhaps most often with product quality that doesn’t reach their expectations.
Common problems encountered with electronics CMs
The below problems are based on the May 2022 ASQ.org Quality Progress article: “Relationship Goals Techniques For Managing Offshore Contract Manufacturers” and also our own decades of experience in working with CMs (and running our own contract manufacturing subsidiary, Agilian Technology).
Some of the most common problems and why they occur are as follows.
Issues arising primarily from a poor NPI process
- The CM fails to understand your documentation correctly – if the CM doesn’t understand your quality standard, for instance, then how can they manufacture products that will reach your expectations?
- They interpret measurement units incorrectly – this may affect important factors like your component and product’s tolerances. If these are out, you’re immediately sailing into troubled waters when it comes to quality and reliability.
Commercial & integrity issues
- Sourcing component parts from unauthorized suppliers – a compliance disaster. At worst, you’ll be unaware that your product is on the market containing non-compliant parts that could lead to it being unsafe. At best, you’ll have to stop production and reverse the project until compliant parts from authorized suppliers can be procured. (note: listen to a more detailed explanation about the dangers of unauthorized subcontracting and other work here)
- Changing processes without being authorized to do so – see above, production processes that you haven’t authorized can easily lead to non-compliance or at least poor quality and reliability as during the NPI process you would have based your testing on specific processes which have now been altered. (see below, also)
Issues mainly originating from poor systems & processes in the factory
- Changing processes without your authorization – see above. (note: also sometimes a commercial & integrity issue)
- Their process controls during manufacturing are not consistent – this leads to a less efficient factory where quality and delivery times can suffer as unexpected manufacturing problems keep cropping up due to the lack of controls (note: a part of this would be addressed by a good NPI process)
- The packaging of final products is not consistent – packaging issues can lead to damage in transit to products that were, before shipping, absolutely fine and 100% reliable. Leaving a CM to decide could be a mistake if you haven’t specified which packaging should be used and tested it for durability beforehand.
Poor product quality
Perhaps the most common complaint is about the product quality coming from CMs, but this is a common gripe for many importers with Chinese and other Asian manufacturers and one of the reasons that factory audits and product quality inspections are key activities for importers to carry out.
There are many reasons that cause product quality not to reach your required levels, and they can be split into different categories:
The CM may not have good controls and measurements in place for quality.
- A lack of process controls could lead to manufacturing issues slipping through the net.
- Not measuring processes and results during important points of the production process also leads to issues causing a knock-on effect if, say, a defect passes to the next station unnoticed.
- They may struggle to get up to speed if not included during the product development process. The factory’s engineers will be able to confirm if the factory is able to handle specific product requirements, production processes, and/or design changes if they have advanced warnings.
The factory lacks an understanding of different key items
If your CM doesn’t have staff with the experience and knowledge required, a lack of understanding can cost you. This can be picked up by audits, and you might provide training if and where needed.
- They may not have clear work instructions for operators due to not understanding how to write them, so they need to be created and verified otherwise production errors could occur.
- Likewise, if they read the product drawings incorrectly.
- If their English is poor, the language barrier can cause mistakes. Consider translating all important documents and messages professionally in order that there can be no misunderstanding.
If a CM doesn’t understand or respect your quality standard, how can you expect good quality products?
- Be sure that the CM understands your quality standard fully and that there are no grey areas.
- It’s better to work with a contract manufacturer who has a currently certified QMS, such as ISO 9001 at the very least.
- Auditing and sending quality inspectors to the CM on occasion is useful, even if they have been doing a good job, for keeping them on their toes and identifying problems that could escalate earlier.
- Encourage the use of preventive and corrective action plans for fixing and preventing issues.
Poor supplier management
CMs may not focus on what sub-suppliers are doing, even if they’re the source of CTQ (critical to quality) components, for example.
- Perform IQC on incoming components and materials to find if there are issues.
- Insist that the CM implements a supplier management system.
- Audit and inspect key sub-suppliers so you have control over your supply chain, or train the CM to do so satisfactorily.
Poorly trained operators
If the CM doesn’t value well-trained operators, this can understandably result in poor quality products.
- The CM need to create clear and accessible work instructions.
- Operators need to undergo a formal training session, and not be thrown into work underprepared.
- You might need to conduct the training so they understand key points about the product.
Poorly calibrated test and measurement equipment
Tolerance issues and other defects can be missed even if inspectors believe they’re right if their equipment isn’t calibrated or verified properly.
- Equipment needs to be calibrated/verified to standard.
- An outside party may go in to do the calibration/verification to assure that it’s correct.
Badly maintained equipment
Preventive maintenance is not always a popular activity in China! It goes without saying that machines that break down can cause quality defects and other problems, such as if they’re worn and the tolerances of products are out of specification, for instance.
- You should check that they are doing maintenance and have a solid schedule for it.
- Verify their records periodically to maintain pressure on them to do this important task.
Being aware of these issues shouldn’t put you off working with electronics Contract Manufacturers in China, India, or Vietnam. Rather, it helps you prepare for and head off issues before they have a chance to occur.
Working with a local third party who can help you source, audit, and inspect such a factory provides a useful safety net. But you will have noticed that some issues occur due to poor supplier management, meaning that you also have a part to play, such as making sure that you provide your CM with crystal clear requirements, quality standards, expectations, product drawings, etc, in order to leave no grey areas for them to trip up on (or exploit).