Subscribe to our free, weekly email newsletter!



Sage advice for securing the supply chain

By Patrick Burnson, Executive Editor
December 30, 2011

There’s an ancient Chinese legal concept known as “Lian Zuo” or the “Five Degrees of Culpability.”

Jack Daniels, president of EastBridge Engineering – a company providing manufacturing engineering, vendor development and supply chain management services in the Asia Pacific region – has this to share with our readers:

In the year 221, the rule of China was unified under the Qin Dynasty. The emperor implemented a draconian set of laws to help with keeping the empire whole. One of these laws was Lian Zuo, or extended culpability, whereby not only the criminal, but also those around him are punished for committing a crime. This effectively formalized a system of guilt by association for the five people linked to the criminal.

In the modern era, Lian Zuo is making a comeback in China in an effort to improve the very sketchy food industry there. You get caught making instant noodles that contain recycled antifreeze – the fellow that sold you the plastic packaging and the trucker that hauled the goods to the supermarket are all going to jail.

How is this relevant to us in the West? We find time and again that at least half the product quality problems we encounter in Asia result from low quality, discrepant or out of spec coatings, components, materials and sub assemblies that filter into the supply chain from a cohort of subcontractors and vendors. The out of spec product that you discover may have been built by a forthright and honest vendor, but her supply chain is out of control.

To combat this problem, there are concrete steps that should be taken. These involve executing audits of not only your direct vendor, but also his or her downstream suppliers. We recommend the following:

Require your suppliers to have a strong system of incoming quality control (IQC) that includes mandatory annual audits of their suppliers.

Include language in your supply agreements that force the burden of proof onto your first degree supplier to verify the capability and trustworthiness of the second, third and further separated vendors.

Make them pull representative samples and send them to you in advance of production.

Maintain the right to enter and tour these downstream suppliers yourself for surprise audits.

Incorporate financial penalties into your agreements as compensation should you find inferior workmanship, substituted components or lousy materials.

In the end, knowing your supplier is absolutely necessary – arm’s length relationships fostered by the Internet don’t make for happy and long lasting supply relationships. This extends to your vendors’ supply chain. It’s to your advantage to get as close as possible.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While it feels somewhat hard to fathom, the stage is set for the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio, Texas.

Carload volumes were up 1.4 percent at 300,388, and intermodal volume for the week ending September 13 was up 5 percent at 279,052 trailers and containers.

Company says the Cloud offering allows customers to respond more quickly to new business opportunities, without significant upfront cost and implementation times.

As e-commerce continues to take a bigger piece of the holiday package delivery pie, it stands to reason that companies need to be proactive and prepared in order to deliver premium service during the busiest time of year, which is rapidly approaching. And that is exactly what transportation giants UPS and FedEx are doing this year. How are they doing it exactly? The primary step they are taking is to up their numbers of seasonal staffers.

A recent hearing of the Subcommittee on Coast Guard and Maritime Transportation suggests that the U.S. Merchant Marine industry may be poised for a major comeback.

Article Topics

Blogs · Global · Supply Chain · Risk Management · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA