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  • Roger Yao

How to conduct fitness equipment supplier quality audit in China



Fitness equipment buyer’s supplier quality audit


Summary:


This article mainly introduces the evaluation and audit on potential suppliers' quality management in international trade, and lists the normal audit contents of supplier audit. While explaining the current situation of supplier audit in the fitness equipment industry (subjective judgment, lack of professionalism and too-high cost) and analyzing the challenges brought by the current transformation of trade mode (from OEM to ODM) and the lack of professional manufacturing expertise, the author puts forward four suggestions to the customers who have not yet established an effective supplier audit mechanism: Establish the right supplier audit plan, strengthen the audit of critical manufacturing processes, obtain the support and cooperation from R&D and after-sales departments, and establish good interaction with suppliers through quality audit.


Key words:


Fitness equipment, brand customer, supplier audit, quality management, critical manufacturing points.


1. Supplier audit and its purpose in international trade


1.1 Definition of supplier audit


Supplier audit refers to the evaluation on the supplier's compliance, manufacturing capability and reliability of management system conducted by customers.


In international trade, it is a common business practice for foreign customers to conduct potential supplier audit (also known as factory inspection) before formal cooperation with Chinese suppliers. According to the audit theme, supplier audit can be divided into quality management audit (or quality factory inspection) and social responsibility audit (including employee rights, occupational safety, environmental management, etc.)


This article mainly discusses the audit on Chinese suppliers by foreign trade buyers or customers with the theme of quality audit.


As the name implies, the supplier quality audit is to take production management and quality management as the main focus, carry out field inspection on the supplier's production site, understand the potential risks in production quality management, provide evaluation opinions, and propose corrective action plan to the supplier for the non-conformities.


1.2 Purpose of supplier quality audit


Generally speaking, the quality audit on suppliers by customers is mainly aimed at the following three purposes:


  • Verify the authenticity of supplier information


Foreign customers initially contact Chinese suppliers, usually through B2B online platforms, exhibitions, and even by Google search. In order to confirm the authenticity and compliance of the information provided by potential suppliers, the customer will send its staff or a third party organization to conduct on-site verification, which is the basis and prerequisite of the quality audit.


  • Evaluate the supplier's ability to deliver qualified products


The evaluation of manufacturing capabilities, especially quality management level, is the key part of supplier audit. The auditor will evaluate whether the supplier has sufficient production capacity and quality level, and whether these capabilities and levels are stable and reliable through the inspection of the production site, management methods, methods, processes and the actual operation of the entire quality assurance system. Then, according to the audit results, decide whether to include the audited suppliers in the list of qualified suppliers.


  • Propose rectification direction and corrective and preventive measures


According to the nonconformities found in the quality audit, customer is able to establishes a communication mechanism with the supplier and discuss the corrective action plan together so that the supplier can effectively reduce the quality risk after CAP implemented. Whether the supplier has rectified the non-conformities in a timely, positive and effective manner reflects the supplier's ability level for improvement and willingness to cooperate, which is also a focus for customers to investigate potential suppliers.


2. Normal items of supplier quality audit


Although different customers adopt different audit methods in the supplier quality audit, determine different audit contents, and form different audit reports, we can summarize the audit items (in the form of questions) from the aspects of personnel, machine, material, method, environment, and quality checking in the production management.


2.1 Personnel organization


  • What is the organizational structure of the enterprise?

  • What are the responsibilities and division of labor of relevant posts?

  • Is the actual number of employees and the number of personnel in each department reasonable?

  • Have employees in key positions been trained and obtained relevant qualifications?

  • Are employees stable? And the turnover rate, especially in the weak and peak seasons?


2.2 Equipment and facilities


  • What production workshops, processes and processes are there?

  •  Does the configuration of production equipment match the process flow?

  •  Are the production equipment in good condition and meet the process requirements?

  •  Does the quantity of production equipment meet the planned output requirements?

  •  Are the main equipment regularly maintained and recorded?

  •  Are the main equipment regularly calibrated by qualified departments?


2.3 Production materials


  • Which parts are self-produced? Which parts are out-sourced?

  • Are raw materials from qualified suppliers?

  •  Is there a regular supplier evaluation mechanism?

  •  Are raw materials traceable?

  •  Are key raw materials certified?


2.4 Management methods


  • Are there clear management policies, objectives and procedures?

  • What are the production processes? Are they reasonably designed?

  • Are there clear standard process operation specifications?

  • Are these process specifications strictly implemented?

  • Procedures and processes for handling customer complaints?


2.5 Production environment


  • Are defective parts & products identified and isolated?

  • Is the working environment safe, clean and orderly?

  • Is the safety and health protection of employees guaranteed?

  • Are storage facilities effective in avoiding product damage?


2.6 Inspection and test


  • What are the inspection items of incoming materials, semi-finished products, key control points and finished products?

  • Are the settings of these test items reasonable and sufficient?

  • What are the executive standards for the sampling size and frequency of inspection?

  • Are there clear inspection and test specifications available?

  • Do the inspectors operate according to relevant SOP?

  • Are all inspection and detection records kept?

  • How is the concession acceptance of defective products implemented?

  • Are laboratory tests carried out according to national/international standards?

  • re the test instruments and tools reliable and regularly calibrated?


However, it is worth noting that the audit form combines employee inquiry, document inspection and on-site observation. In the audit, the contents of the above parts are not separated independently but multiple related. Experienced auditors will verify the relevance by "what they say", "how they do?" and "how they write down", rather than just relying on single evidence to judge and score.


3. The current situation of supplier quality audit in fitness equipment industry




The above are the common focuses of supplier audit conducted by foreign customers in consumer goods industries.


BUT, what is the situation of supplier audit in the fitness equipment industry?


According to the author's understanding of the supplier audit practice in fitness equipment industry, customers with different scales, different stages of development, different market positioning and different management styles differ greatly in supplier audit management. It can be roughly summarized as the following three situations:


3.1 Subjective decision making


Most customers (especially small and medium-sized fitness equipment brand customers) have the business cooperation decision-making power concentrated on the boss or one or two senior managers. In their view, it is unnecessary or uneconomical to systematically evaluate suppliers. The supplier audit and evaluation methods for such customers are often simple and subjective. The customer representative visits the production site during the business meeting, even without visiting the supplier on site, based on the recommendation of friends or business intuition, completes the evaluation of the supplier's quality capability, and thus made the decision whether to cooperate with the supplier.


3.2 Lacks depth and professionalism


Large supermarket customers usually have included the supplier audit process and audit standards in their procurement project management, and designated the Quality Department to be responsible for the audit and evaluation of new suppliers. However, due to their extensive product lines (which may also involve food, clothing, home textiles, shoes and hats, toys, furniture, outdoor sports and other products), the supplier audit of fitness equipment also follows the general department store product audit method. In the face of fitness equipment products with relatively complex product structure and manufacturing process, the general audit method is often more general and inclined to the upper system management, and lacks in-depth understanding in specific manufacturing processes and related key control points. In factor, some auditors may lack sufficient understanding of the characteristics, features and standards of fitness equipment products.


3.3 High-cost audit of professional brands


The few professional brands in the fitness equipment industry have very detailed supplier management requirements and perfect supplier audit process. With its rich industrial technical experience, professional talent team and adequate budget, such customers have made huge investment in supplier quality management and supplier audit. It is understood that such premier brands usually conduct two audits for new suppliers (preliminary audit and formal audit), with the joint participation of Quality Department, Procurement Department, Project Department and other departments. Each audit takes 2-3 working days. In this way, customers need to invest at least 10-15 man-days in the quality audit, which is impossible for most small and medium-sized customers.


4. Quality audit challenges brought by changes in market environment



4.1 Transition from OEM audit to ODM audit


The history of the fitness equipment industry is not long, which is about half a century. The earliest market and production of fitness equipment originated from developed countries in Europe and America, while China's fitness equipment manufacturing industry began to develop gradually in the recent 20 years.


In the early stage, most of China's fitness equipment factories mainly imitated products and do OEM for foreign brands. And the customers provided necessary guidance and standard on product design, main parts selection, and production process setting to quality criteria and testing. Therefore, in the supplier audit, customers focus on the implementation of production management. In short, if suppliers strictly follow customer requirements and standards, there will be almost no big quality risks.


However, in recent years, with the improvement of Chinese factories' own capabilities, more and more factories/suppliers have independently designed or jointly designed products, especially some new structures, new processes and new technologies (such as smart software and hardware) are more developed by suppliers, forming a trend of gradual transformation to ODM mode. This change has brought challenges to the supplier's product design, manufacturing and quality management. In the past, the purchaser conducted a top-down supervision audit, but now it is more to cooperate with the supplier to understand and evaluate the supplier's management ability in the face of new structure, new process and new technology.


4.2 Lack of audit expertise


The ideal supplier auditor in fitness equipment should have the following abilities:


  •  Have rich experience in quality audit of suppliers in mechanical industry

  • Good communication skills with suppliers, including language communication skills

  • Good know-how of various fitness equipment products, features, and standards

  • Be familiar with the production process and key technical points of fitness equipment

  • Understand the new technology, structure and process of fitness equipment industry


As mentioned earlier, during the OEM time, many professional buyers in Europe and the United States were manufacturers themselves, with their own production lines and quality management personnel with rich manufacturing experience, so they had deep understanding in manufacturing. However, with the traditional brands abandoning local production and manufacturing and moving to China, there are fewer and fewer talents who understand the production process and manufacturing management. Some brands (especially e-commerce brands) that have emerged in recent years have primarily focus on marketing, brand promotion and channel development. And their enterprises lack the genes of manufacturing and technical things, so it is difficult to cultivate talents in manufacturing and quality management.


If the personnel engaged in supplier audit only have general audit experience, but do not understand the fitness equipment industry, fitness equipment product features, related processes and new technologies used, the audit job could not be effectively done.


5. Suggestions on supplier quality audit to buyers



5.1 Establish an audit plan suitable for your company


In general, most international buyers in the fitness equipment industry pay insufficient attention and investment on supplier audit. However, we do not recommend that all buyers adopt a comprehensive audit system or simply copy the audit system from leading brands in the industry. Only the ones that are suitable for themselves are the best.


  • Buyers who have not established supplier audit


In the case of limited professional and technical personnel and quality budget, the brand customers can simplify the audit working procedures on the quality assurance system (upper management process), and focus on the specific critical control points in the production process, especially for the main process of the intended procurement products. If the design structure of the products to be purchased is relatively complex or the series newly developed by the supplier, it is necessary to employ professionals with rich manufacturing experience in the fitness equipment industry to help the buyers conduct supplier audit. For the sake of long-term development, professional brands should train their own quality technical team to take charge of supplier quality management.


  • Traditional retailer buyers


Although the general supplier audit content has been adopted by the big retailer buyers, given the complex manufacturing process of fitness equipment and many potential quality problems, it is suggested that such buyers can establish a special audit list and audit content for fitness equipment category if possible. The audit content should be a key quality control point covering the production and manufacturing of all fitness equipment. At the same time, it is also necessary to provide auditors with training in the knowledge of fitness equipment products and manufacturing technology.


  • Cross-border new entrants


Such customers are often newly-developed e-commerce or cross-border entrepreneurs, and may not have long contact with the fitness equipment supply chain and products. Compared with traditional brand customers in terms of products, markets, manufacturing, etc., they still lack experience accumulation, and lack skilled professionals. For such buyers, it is an efficient and low-cost way to cooperate with professional technical service companies in the fitness equipment industry to conduct supplier audit.


5.2 Focus on critical manufacturing processes


Broadly speaking, quality audit can be divided into three levels: product audit, manufacturing process audit, and quality assurance system audit.


Almost all buyers conduct sample review before formal purchase to ensure that the sample meets the procurement requirements through the specification check and functional exercise. As for the audit of the quality assurance system, due to the complexity of its management system, it is difficult to conduct in-depth evaluation in the audit within one or two days. In reality, even if nonconformities are found, as a small and medium-sized purchaser, it is difficult to obtain the cooperation of suppliers for improvement, and it is impossible to carry out major rectification on the management system and achieve good results in a short time.


The in-depth audit of some key manufacturing processes is often not given enough attention (probably because the auditors do not understand the manufacturing process), and this part is indeed an important factor affecting product quality. In fact, the rectification measures for the lack of key manufacturing processes tend to be less costly, more effective and easier to get the cooperation of suppliers.


Take the indoor exercise bike assembly line as an example: the riveting method of bearing, the crank taper tightness, the setting of motor wire, the setting of the minimum and maximum torque value and other processes are the key points that affect the product performance.


5.3 Cooperation with product development and after-sales department


The supplier quality audit should not be carried out by the quality department alone. In order to obtain better audit results, the participation and cooperation of the product development department and after-sales service department is very important.


If the product development department provides the specific specification grade, performance parameters, and difference characteristics of the products to be purchased, the auditors will be more targeted in the supplier audit process, and find corresponding audit points according to the samples. It has proved that this targeted audit is more straightforward, more efficient and more helpful for procurement projects.


For example, when the product that the customer intends to purchase from a supplier is a non-powered curved treadmill, the auditor does not need to spend too much time on the quality management of electric control or motor, but focuses on the mechanical structure of the product; If the product development department plans to develop HA class products, the auditors should check the accuracy level of the product and the condition of the test equipment according to the relevant test requirements (such as EN957).


The historical quality problems accumulated by the after-sales service department will also give guidance to quality audit. For example, the top10 customer complaints, abnormally high frequency repair parts and durability problems of products after use. Before starting the audit, the auditors should obtain these historical statistics from the after-sales service department. The auditors carry out point-to-point audit from the relevant manufacturing process to the quality assurance system with specific problems.


5.4 Establish good communication with suppliers through audit


The supplier audit should not be a one-way evaluation, nor should the audit conclusion of "PASS" or "REJECT" be given as the end of auditing. In most cases, the first audit should be the starting point for cooperation and communication with potential suppliers. Customers should take vantage of the quality audit to fully understand the suppliers then discuss the potential risk points affecting product quality to find an acceptable and cost-effective solution for both parties. Once the partnership with the supplier is established (order placed), the quarterly or annual audit should also be carried out, and the nonconformities in the first audit report can be used as the reference basis for the subsequent audit.


6. Conclusion


The supplier quality audit serves the procurement project management, which should effectively identify the risks in the manufacturing process and lay a good foundation for long-term cooperation with suppliers. In view of the characteristics and development of the fitness equipment industry, the buyers should also keep pace with the times and develop appropriate supplier management strategies and quality audit procedures according to the actual situation of the purchaser.



Author: Roger Yao

  • The founder of FITQS/FQC, quality engineer

  • 20-year experience in fitness equipment industry for sourcing quality management

  • The columnist of magazine “ China Fitness Equipment” for product review section

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