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

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

The United States Environmental Protection Agency (EPA) has awarded the Port of Oakland $277,885 to upgrade cargo-handling equipment and reduce exhaust emissions on the waterfront.

Entitled the Positive Train Control Enforcement and Implementation Act of 2015, the bill would extend the 2015 PTC implementation deadline to the end of 2018.

Carloads were down 5.4 percent annually to 285,856, and intermodal was up 2.1 percent to 280,844.

Did you know that there is a correlation between logistics solutions and customer loyalty? 70% of customers are willing to spend more money for good customer service which means you must have on-time delivery, proficient inventory management and a strong logistics strategy.

While coffee is one of the first things on the minds of many people early in the morning, it was especially prevalent this week, when Starbucks Chairman and CEO Howard Schultz gave the keynote address at this week’s Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Diego.

Article Topics

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


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

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA