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

Supply chain security provider Freightwatch International has released its semi-annual report on cargo theft in the Asia Pacific region for the first half of 2014, which contains some heartening news for U.S. shippers reliant on trucking, warehousing and retail.

FedEx Ground, a subsidiary of FedEx Corporation, reports today that a decision by a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed previous rulings by the District Court for the Northern District of Indiana in three class action cases involving mostly former independent contractors for FedEx Ground

More talking remains before the deal is done

The transpacific U.S.-flag carrier has been ranked number one in the ocean carrier category for Logistics Management magazine's Quest for Quality award

This year, the Containerization & Intermodal Institute (CII) will be staging the “Connie” Awards dinner in conjunction with IANA’s Intermodal EXPO in Long Beach

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