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Factory Performance Improvement through Process Auditing in China

November 12, 2015

 by Renaud Anjoran

I recently read an interesting case study that describes a company's efforts are improving the performance of its suppliers (many of them Chinese factories).

It was written by the deputy general manager of quality assurance at Landis+Gyr Ltd in the Quality Progress magazine (published by the American Society for Quality), October 2015.

The buyer, Landis+Gyr, developed a process audit checklist based on the VDA 6.3 standard. (Note that CMC has developed proprietary process checklists that follow the same logic as VDA 6.3 but go more in depth since they are industry-specific.)

One challenge was to ensure a time-based action plan from the supplier based on audit observations. Constant follow-up and feedback was required to ensure they were completed. A re-audit was done to ensure the observations were closed in a phased manner.

Interestingly, the best results came from the EMS (Electronic Manufacturing Service) factories. We reproduced a couple of graphs below:


In these two EMS factories, the in-process defect rate of the items supplied reduced to an average of 4,000 parts per million (ppm). Earlier, the product quality was inconsistent, and the defect rate had varied from 6,000 ppm to more than 12,000 ppm.

In other industries, improvements were not as good. For example, the plastic suppliers had lower overall scores due to their internal systems’ low maturity. According to the author, the main differentiator among plastic suppliers was the employees' skill set.

In my mind, this last observation points to the limits of relying solely on process audits. They are a great start in the search for "gaps" in the operations, and we use that approach in our initial assessments. However, in most cases they are not sufficient. Here is what we have observed in China:

  • Well-managed factories can understand our main findings and put an action plan together. In some cases (when they have the required technical competency in house) they do a good job by themselves.
  • Some factories don't have the technical resources, are relatively well managed, and welcome our involvement as consultants. This is a great scenario.
  • The vast majority of Chinese factories are incapable of putting an action plan together, committing resources to it, and executing. This is partly due to the bad habits we described in a previous post (fixing a factory in China). One solution is involving consultants who will be "in people's faces" all the time and who will push for changes.
  • Middle managers are often afraid of changes. They are the ones who resist our suggestions for improvement the most. In the absence of strong leadership, there is no way a factory can implement any project that requires extended efforts in one direction. Again, consultants who know how to push (without breaking relationships) are the key for improvements.

In conclusion, we love process auditing but this approach only gives results by itself in well-managed and technical competent factories. Other organizations need the involvement of consultants or a turnaround manager in order to improve their performance markedly.


22 Signs Of Good Factory Management in China eBook

Topics: Quality

Renaud Anjoran

Renaud Anjoran

15 years experience in China.
Partner, China Manufacturing Consultants.
Worked with hundreds of factories in China.
Certifications: ASQ CQE & CRE; ISO 9001 & 14001 lead auditor.
Author of well-read blog, Quality Inspection Tips.

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