Manufacturing Audit: What Questions to Ask Overseas Suppliers?

Optimize your manufacturing audit processes with our guide. Discover effective techniques to improve efficiency and quality.

What is Manufacturing Audit?

A manufacturing audit is a systematic examination of a company’s manufacturing operations to assess different aspects. There are two main types of manufacturing audits:

1. Internal Audits: Conducted by the company itself to identify areas for improvement and ensure compliance with internal policies.
2. Supplier Audits: Conducted before on boarding a new supplier to assess their capabilities and quality control measures.

The overall goal of a manufacturing audit is to identify and mitigate risks that could impact production quality, efficiency, or safety.

Why and What is Examined During a China Factory Audit?

How to Choose Best China Pre-shipment Inspection Service?

2 Main Ways Overseas Suppliers Can Cheat Importers.

When you buy from overseas suppliers, you may face some scams, and they can be divided into two categories.

a. Bad Behavior

• Disappearing after paying a deposit or sample fee.
• Price increase after deposit transfer.
• Price increases from one order to the next, independent of the increase in production costs.
• Lack of respect for intellectual property (selling the buyer’s design to other customers).
• Lack of transparency (subcontracting outside of approved facilities, changing components without notice, etc.)

b. Lack of Experience

• Lack of reliability: late deliveries, inconsistent communication …
• Inability/unwillingness to meet the required quality standards.

How do you know if a given supplier will cheat you? Not by asking them…

Even if you are the least intrusive buyer, you need to be wary of fraud. Any small fraud (for example, pretending they are a manufacturer when in fact they are a trading company) is fraud. If they lie about it, they will lie about other things too. So,

Verify without Questions to Ask Distributors.

Without questions to ask overseas suppliers ahead, the first step you should do some supplier background audit by yourself.  Here are some tips:

• Open Google and search for “[company name] scam”. Check several online directories (Alibaba…) and see if their information on these different directories is consistent. If the information displayed is very different (phone number, exact address …), this is not a good sign.
• Search the company’s location, and Check if they are located in a residential building or a formal industrial park.
• Does the supplier participate in trade shows? (They will appear in the list of exhibitors that search engines can usually crawl.) This is a positive sign.
• Have the agency check the company’s registration and check a few other things. More and more service companies and lawyers are helping importers do this.

Let’s say you find a potential supplier, you have some communication with them, you review the legitimacy and reputation of their company, and you want to move forward.

Typically, the next step is to set questions to ask overseas suppliers, and if they don’t fit your needs, they’re disqualified – and if you don’t fit them, they’ll ignore you.

What Questions to Ask Overseas Suppliers?

Now, you have found some potential oversea suppliers, and need to narrow down them to 1-2 after reach out to them. 

If they have at least 1 person who speaks English, give them a call. Make sure the person has worked there for several years (otherwise you’ll get a lot of “I’m not sure” and you won’t be able to dig deeper) and cross-check the information you’ve gathered so far. Below are some questions to ask overseas suppliers:

1. Ask for the Product Information?

If you want to develop a completely new product and you don’t want to show your design too easily, at this stage, you should quote the supplier for a relatively similar product that requires the same production process.

I assume you have asked for:

• Their minimum order quantity,
• Delivery time
• Port of loading and
• Distance to that port
• Payment terms
• A possible price indication.

Best Way to Pay Overseas Suppliers?

The best way to pay overseas suppliers is through bank wire transfers. This service lets you send money from your bank account to a oversea supplier’s bank account elsewhere in the world and is offered by almost every bank or credit union.

When you first time cooperate with overseas suppliers, you should understand the risks of different payment methods to protect your own funds.

2. Can I Know Some Basic Company Information?

You can request samples and ask for payment on their company’s bank account. If this information is provided, this is a good sign. Then, ask them for the address of your courier company so they can pick it up. Does that address match their email signature, etc.

3. Can I Send a Third-party Inspection Agency?

• Mention that you will have a third-party agency audit their factory. See how they react. If they want your business and they are a serious factory, they will welcome the offer.
• Mention that you will have a third party organization inspect their product before final payment. Again, if they are confident in their ability to do this, they will say OK.

4. What is The Main Operation when You Walk Into the Shop?

What is made in-house, what is semi-finished (they can be responsible for new product development, they do final assembly, they work with suppliers to complete the puzzle), and what is completely outsourced?

5. How to Deal with Product/Sample Quality Issues?

How long is the warranty period of your products, and how do you solve the problems if the products are found in the use of customers?

If you develop an ODM/OEM product with a sample fee of more than $1000, you should know that there is a risk of failure, or make a second improve, then who will pay for the new sample fee, or the supplier is responsible for the modification until it reaches your requests.

6. Do You Made this Products Before?

If you select a product in their showroom/booth, has that product been made for other customers before? From which countries? Is it based on their design (potentially a big IP issue)? Do they have exclusive agreements not to sell products to other companies in certain geographic areas?

7. Do You Regularly Sign Contracts with Clients?

Are they even willing to sign legally binding contracts? (Better know this early!) What kind contracts they signed before and can they provide the template?

8. Can I Check Your Document?

You should ask your supplier for this document and check if they are the same company mentioned in their email signature and pro forma invoice.. You should check at least 2 documents:

• a) Supplier Business License
• b) The Certificate

The knowledge of these questions to ask overseas suppliers is used for reference, and you don’t have to ask the supplier all the questions at once. You can combine the questions you need, and slowly develop new questions in the constant communication with suppliers to attract their attention.

No matter how eager you are finding a overseas suppliers to make your product, take your enough time, to ask questions, ask for references and supplier audit.

Overseas Suppliers Audit Conclusion

Even with a good overseas suppliers audits, there are a lot of issues to deal with, from quality control to labor to intellectual property theft to sluggish shipping to payment disputes. There will also be import, customs, and compliance processes. All of them have multiple steps and middlemen involved.

If you follow these steps, you will greatly reduce your chances of being scammed when source products from overseas. After get the answers the questions ask to overseas suppliers. You will have a subjective feeling — do you want to work with them? Do they seem to be a good fit for your needs? Or, may be cooperate with a product sourcing company is a alternative. 

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