I suck at blogging.  Dan Harris does it better.  Renaud Anjoran does it better.  Tom Lasseter does it better.  If you have not already done so, subscribe to those blogs.  Today.

I have not done much blogging this year, as the news has been so universally awful that I’ve been unable to summon the enthusiasm to comment.  Short version, it is ugly out there and it will only get worse before it gets better.  Plan accordingly.

However, as someone who works with entrepreneurs and inventors on a daily basis, there is reason for hope.  People keep coming up with cool new ideas they want to bring to market, and they ask for our help.  PassageMaker had a solid growth year in a bad economy, so I guess I should be Chatty Cathy these days, but a combination of so much work and so little global good news as dampened my blogging spirit.

My one comment for the day deals with bringing a new product to market.  Our contributions to the value chain – sourcing, supply chain management, contract assembly, logistics – are really the easy parts.  The hard work is building a brand and getting it recognized in the marketplace.

If you are thinking about launching a new product, PassageMaker can take the headaches out of the production process.  But we don’t (and can’t) help you sell it.

Too often in the last few years, I’ve seen clients invest thousands in engineering, patents, sourcing, tooling, etc., with little thought given to how to get the product in front of buyers.  If you are planning a new product launch, assume that you are the only one who thinks it is the greatest idea since the wheel and focus on how you are going to convince the rest of the world. And budget accordingly.

My advice:

1 – The internet is great, but not everyone knows how to use it.  If your plan is social media and SEO, make sure you are really the expert you think you are.  Or have the money to hire that expert.

2 – If you are going Big Box, understand what that means.  A PO from a major retailer can be a million bucks on paper and negative income in reality when you consider the lead-times, warranty agreements, performance penalties, etc.

3 – Advertise if you can.  Twenty-some years ago, Coca-Cola assumed that their brand was so strong that they could stop advertising.  They ultimately lost market share to Pepsi and had to spend a fortune to get back in the game.  If you are launching a new product, nobody knows who you are, so you have to get the word out.

4 – If you can’t do it yourself, bring in investors who can help.  I’ve seen businesses with ridiculous numbers of investors, none of whom contributed to making the business a success other than providing short-term financing.  If you are going to add an owner to the mix, make sure they have skills to make the company a success long-term.

The old A/C units that came with the house were not up to the task, so rather than broil while we rip up half the house to install central air, off we go to the appliance store to buy some new window units.  We bought several of the same model, and while I have never thought about an A/C unit needing a remote control, this model had remotes.

After I got them installed, we noticed a tiny little design flaw in the remote.  See if you can spot it.

Were I a dedicated blogger, I would take one of these apart to show you the interior, but now that I have the wonder of a remote control for my A/C, I am not going to risk breaking one of these just for you.  I prefer to luxuriate in my new found comfort like a stereotypical lazy American, thank you very much.

Were I to take the remote apart, you would see that the buttons are molded as one piece.  Molding the buttons as a solid piece is the standard way of doing it, but by creating a part that was symmetrical (likely just a plain rectangle), the designer created a failure mode – the assembler could put the parts together backwards.  What the designer should have done was analyze what could go wrong with the design – could it be assembled backwards? – and keyed one end so the the part was not symmetrical.  Perhaps there is an internal feature that one end of the button strip could have been molded to mate with.  Many companies I’ve worked with use the formal Failure Modes Effects Analysis (FMEA) process, and it is a great tool if you have the discipline to use it.  The Japanese refer to this practice as“poka yoke” (mistake proofing), but often still translated as “idiot proofing”.  I’m not a fan of that translation, because who’s the idiot – the guy would made the momentary mistake of putting it in backwards or the designer who created a flawed product?

PassageMaker often gets classified as a China sourcing company.  While we do source products in China, that is only the smallest part of what we do.  We are primarily a contract assembly company (with that label encompassing vendor coordination, inspection, the actual assembly, packaging, logistics, VAT rebates, etc.).  And I can tell you that we see MANY severely flawed design databases, drawings that appear to have been made by someone who gave no thought to how to put the thing together.

If you are going to spend the money to have something made in China, a dollar’s worth of poke yoke is worth hundred times that in money saved doing inspections, warranty claims and just the general embarrassment of sending a functional part out into the world that is nonetheless defective.

In our Endorsed Service Provider network, we recommend two design engineering firms.  Contract Engineering Services is based in Virginia, USA, and VentureTech is Dutch-owned, based in Shenzhen.  Both do a fine job for our clients and even if you do your own engineering, I strongly urge you to learn from the lesson above and try an mistake proof your design.  It might feel good to blame the Chinese assembly line worker, but who really made the mistake?

Your thoughts?

Quoting the Professor in full:

Japan’s earthquake/tsunami has occupied the news and also spurred a lot of thought. Among other things, it has underscored the fragile and interconnected nature of modern society, and caused some to question the wisdom of “just-in-time” manufacturing approaches in today’s unsettled world.Instead, it is suggested, we might want to focus on “just in case” approaches designed to be more resilient under stress.

Japan’s earthquake was in some ways a triumph of preparedness: Thanks to strict building codes, not a single building in Tokyo collapsed. But the earthquake, and the tsunami it produced, have had impacts that go well beyond the immediate.

In particular, the damage is exposing the extent to which modern supply-chain management has produced a system that is so lean it lacks the reserve capacity needed to cope with disasters.

In manufacturing, plants have been idled around the world because Japanese factories — or often, a single Japanese factory — serve as the sole source for a vital component. With the factories sidelined by damage or power outages, the components are unavailable, and production has to stop.

Ford Motor Company idled a plant in Belgium for five days over parts shortages; Toyota warned plants in the United States to be prepared to close for the same reason. A U.S. plant making car seats had to close because of a shortage of premium vinyl made only in Japan. Ford has suspended orders for some models in red and black because the paints come from a single factory in Japan, now closed. Tales like these abound.

Even the New York subway system is affected by the parts shortage: As National Public Radio’s “Marketplace” reported: “Steel from the north of Japan can’t get to Suzuki. Suzuki can’t make the parts for Hitachi. And Hitachi can’t send the parts to New York. The global supply chain breaks down with the removal of just one link.”

As Edward Tenner noted in the Atlantic: “The tsunami has exposed a weakness in global logistics long recognized in principle but disregarded in practice. Lean manufacturing plus heavy reliance on a single plant equals vulnerability to disruption.”

With managers under pressure to keep costs down, there has been a tendency to cut special deals with single suppliers, and to keep stocks of parts as low as possible. So long as everything goes smoothly, this saves money: Single suppliers give you the best price, and low inventories keep you from tying up working capital.

The problem is that we seem to be in a period where things aren’t going as smoothly as they did for a while. And when things don’t go smoothly, the lean approach means that it doesn’t take much to bring things to a halt.

I mentioned this to a friend who’s got a custom-car business, and he said his experience with disruptions in getting supplies from vendors has caused him to move from a “just-in-time” system to what he calls a “just in case” system, where stockpiles are bigger and alternative suppliers are identified in advance. I think we’ll be seeing a lot more of this, post-Japan.

But the problem goes well beyond cars and subways. Lots of more important systems are similarly vulnerable. My wife takes a heart-rhythm drug called Tikosyn; if she misses a dose, she could die.

Walgreen’s doesn’t want to keep it in stock, so they order a bottle by air-freight when her prescription is about to expire. Normally, that’s fine — but if something happened to interrupt shipping, she’d be in trouble.

She keeps a backup supply, but what would Walgreen’s do for others in a similar predicament? A few days of shipping problems and many pharmacies would be out of important drugs.

Likewise, grocery stores now keep only a small supply of food on hand, depending on regular deliveries for restocking. When those deliveries are interrupted, shelves start to empty pretty fast. (And government emergency food stockpiles are nothing like they were in the Cold War era).

Power plants used to keep a 60-day supply of coal in stock. Now they typically keep only 30 days’ worth. That saves utilities money but it means that there’s less margin if deliveries get interrupted. In the past, severe blizzards have left some utilities dangerously close to running out. Most cities have only a few days’ worth of gasoline.

We’ve come off a period of several decades in which weather was better than average, and in which other forms of societal disruption were fairly minor. The 21st century looks likely to be less placid.

As we make all sorts of plans, at the governmental, the business, or the personal level, it will pay to think more about the likelihood that things won’t go smoothly, and about ways we can prepare now to deal with the inevitable problems ahead.

A new subdiscipline called “resilience engineering” looks at how systems can be made more resistant to failure, and better able to recover when they do fail. That kind of thinking, it seems to me, is relevant to all of us, not just engineers.

The ride seems to be getting bumpier. In all sorts of areas, we need more of a cushion.

This advice is similar to advice I’ve been giving for years when it comes to China supply chains.  Simply put, “your order will be late; plan accordingly”.  When I was supplying parts to a large American motorcycle company, I knew that I had to buffer uncertainty with inventory.  They often couldn’t give reliable forecasts (or I should say, their forecasts didn’t always filter through the other supply chain members reliably), so I had to keep weeks or months worth of product on the floor to compensate.  And that was just the customer – the suppliers were a whole other ration of uncertainty.  This is the dirty little secret of the JIT revolution – the inventory levels are often still there, just held by someone other than the OEM.

If you actually both to read past the first chapter in any book on JIT, you will see that stability is a prerequisite for a JIT system – stability in demand and in supply.  The system can’t work in chaos.  Most Chinese supply chains are far too chaotic to be part of a JIT system (for Apple this is not the case, but chances are if you are reading this blog, the rule applies).

I could go into the math of how to calculate an inventory level based on your target fulfillment goal, but suffice it to say, you are wise to keep some stock on hand.  Much cheaper than airfreight.

As to single sourcing, some products don’t have the volume to have multiple sources, but whenever we have a client with substantial order quantities, I always recommend having at least two sources for each component.  I also encourage clients to develop domestic sources to support 20% of the normal production, and make sure they have capacity to handle increased orders if there are problems with the Chinese suppliers.

So, when you come to China, do NOT expect to run the supply chain the way the new text books say.  Go old school and put some fat in the system.  Just in case.

My client, a good guy from Canada, found his own supplier here in China (something that PM also does, but is able to do a much more thorough job of investigating as it’s a backbone of the business).  And of course, the supplier has not really been a good fit so PM has been hired to help clean up the mess, and get his project finished and sent out.

I feel for our client, as he’s spent a lot of money on what I would call a very luxurious model in this particular market.  He’s gonna have to spend a lot more money to get this project out of china and into the stores.  He himself has seen the light and will most likely use PassageMaker for any future orders he may place.

I don’t really think it’s a situation that the supplier doesn’t care, but I also don’t get the feeling that my client is this supplier’s biggest customer either.  My client is a good source of some money, but certainly not the big fish in the pond so to say, and so things get done, just slowly and not as thoroughly as it could be.  But soon enough this project will be done (knock on wood) and the client can move to a better situation via PassageMaker.  It’s a good account to start with, and I see things only getting harder from here.

It got me think about our services.  Despite the copious amounts of verbiage on our website, I spend a good chunk of each day explaining what we do and how we do it – which is one of the drivers behind developing the upcoming video tours, which we hope to post soon.

Some time ago, casting about for a good analogy for our company, my obscene fatness landed upon the concept of an a la carte menu.  You can use our services in the typical order – Sourcing Feasibility Study (sample report here), Vendor Coordination, Assembly-Inspection-Packaging (sample Product Quality Manual here), etc. – or you can start anywhere in the process you like.  Skip the salad and go straight to the main course.  Or eat dessert first.  We are nothing if not flexible, and our only goal is to help the client be successful in China.

And now I want ice cream.  Damn.

Too many American industries rely on illegal labor to remain cost competitive, thus the constant drama on the border issue.

The China nearly every Westerner sees is the coastal veneer.  The majority of China still dwells in the poor, mostly agrarian interior.  Their source of cheap labor in internal.

And as this article in Slate by Brett Edkins points out, in a sense, many of those Chinese migrant workers are “illegal” anyway.  Key paragraphs:

The United States could begin by conceding one of China’s principal arguments: Human rights are not just about individual liberty, but also economic opportunity. The Chinese “economic miracle,” which lifted 500 million people out of poverty in just one generation, is itself an unprecedented human rights achievement. Yet it gave rise to other pressing human rights concerns, including an issue that threatens to destabilize China’s Communist regime—growing discrimination against the roughly 200 million Chinese citizens who left their rural homes to find jobs in China’s booming cities.

In many ways, these rural migrants resemble undocumented immigrants in the United States. In China, they provide indispensible labor for vast urban construction projects and work in menial jobs as guards, waiters, cooks, or barbers. They are often mistreated by employers, generally live in poor conditions, and receive few social benefits and limited protection from the police. And their children are regularly denied public education.

Chinese newspapers, “Netizens,” and even Communist officials are calling for reforms. Their main target is China’s 50-year-old household registration, or hukou, system. Began as part of China’s state-run economy, the hukou system labels individuals as “rural” or “urban,” indicating their proper place of residence and binding laborers to the land. Today, rural residents are permitted to travel to the cities, but they can still be fined or forcibly returned home if they are caught working or living outside their designated hukou. Obtaining a temporary urban-residency permit from the police is beyond the means of most migrants, requiring a fee and employment documentation. Permanently changing one’s hukou by attending university or joining the military or the Communist Party is similarly out of reach.

Life for a city dweller with a rural hukou is difficult. Their hukou denies them urban welfare and access to public housing. It also excludes them from publicly funded health-insurance schemes. Since fewer than 3 percent can afford health insurance, most avoid medical care altogether. City judges often impose harsher sentences on rural migrants, and employers frequently withhold wages, knowing undocumented workers cannot complain to police without risking exposure.

I will admit I not a fan of the author’s wording, “undocumented migrants”.  If you illegally cross a national border anywhere else in the world (including Mexico), you’ve broken the law.  Only in the modern American journalist and politician world does that deserve an obscurant euphemism.

However, the point of the article is that despite the rapid advances, parts of the Chinese state are stuck in the Maoist past.  One good thing about dealing with PassageMaker, you know our employees are treated well and legal.  As a foreign owned firm, the government would come down on us like a ton of bricks were it otherwise.

Regardless, I am happy to see people in China, including members of the Communist Party, start to address the problem.

He commented on my recent post, “Sheer Import Genius“.  This led me to read two excellent posts on the the good and bad trading companies in China.

His points are spot on.  One of the reasons PassageMaker formulated the Sourcing Feasibility Study (SFS) was to identify and eliminate piss-ant trading companies that don’t add value.

Li & Fung is a tremendous company, and we have sought to emulate them in many ways.  PassageMaker focuses on SMEs – Small to Medium Enterprises, not Li & Fung’s market.  Many of our customers are Tier 1 suppliers to Fortune 500 companies, but they themselves fall into the SME category.  In my mind, this is a fine market to serve.

PassageMaker is not a middleman.  We are not a traditional trading company.  We add tangible value with our SFS, Vendor Coordination, Assembly-Inspection-Packaging and Factory Formation services.  Most importantly, the entire process will be transparent.  We don’t exist by keeping our clients in the dark.

Let us know how we can be of assistance.  If you are not 100% sure about every step of your supply chain, you need our help.  Trust me, you do.

I’ll step up and admit I didn’t.

What’s worse, now that Import Genius is out there, finding your competition’s suppliers is as easy as using a search engine.  Anything imported into the USA is a matter of public record, including the exporter (i.e., your supplier), the type of goods and your receiving address.

Import Genius is an amazing program and I will be using it for sure, but it also highlights another advantage PassageMaker‘s “Black Box” offers our clients.  When you hire us to perform our Assembly-Inspection-Packaging service, that is really a catch-all term for any sort of contract assembly, product inspection, contract packaging, kitting, order fulfillment, pull-pack-ship, freight consolidation, private labeling or branding, etc.  We do everything from kit mobile phone accessories to assemble vacuum cleaners.

Aside from the advantages we provide to help you control your costs, ensure your quality and protect your intellectual property, we also act as a “firewall” to protect your real supply chain.  When a competitor searches for you on Import Genius now, they’ll get the name of your Chinese supplier.  Think about that for a moment.  You invested thousands upon thousands of dollars to establish that relationship, to tool your product and get the production going.  If you are like a typical “mature” PassageMaker client, before you hired us, you were paying for at least a half-dozen trips to China a year.  With business class seats, rooms at the Shangri-La, private cars, etc., that’s $20k per trip.

How confident are you that your supplier wouldn’t sell a knock-off of your product to a competitor?

If they search when you are working with PassageMaker, all they will see is our address as the exporter.  So in addition to saving you on travel expenses, we protect the investment you made in your suppliers.  Our motto is “Trust & Transparency”, and you can trust us to protect that supply chain.  We wouldn’t stay in business 5 minutes if that weren’t true.  In the PassageMaker system, you will always know who your suppliers are, who has your tooling, who has your designs, who has your money and who has your products.  The transparency part only applies to you!

I take full responsibility, as I am the only one who proofreads my blog posts.  I have dyslexia, so I always try and proofread everything 2-3 times before I send it or publish it.  After all, I get enough hounding from the clan in China, to say nothing of the Zen Dragon from down under, that I don’t need to make it any easier for them.

That said, my error sets me up for a good blog post today.  This experience underscores what I was saying in the original post – your business documents are far, far more important in China than in your home market.

Make a mistake or an error of omission on a purchase order, and you may very well be hosed.  Do the same on a Product Quality Manual (PQM), and I can guarantee trouble.

Some time ago, such an error of omission rose up and bit one of our customers rather badly.  We had followed the PQM as approved, but we had not been checking a particular dimension.  It had never been in the PQM, whether we didn’t include it when we drafted the document or whether the customer left it off the original drawing was lost in the mists of time, but the error had persisted undetected by all for nearly 4 years.  It was never a problem as long as the vendor providing that component did their job right, but we are all human and that finally didn’t happen.

Our team inspected the product to the PQM.  The error was so subtle, you would never notice it with the naked eye.  The client assumed all was well and shipped the product, which immediately were rejected in the field.  Long story short, everyone was unhappy and we all lost, but there was no warranty claim to be made against PassageMaker.  We’d followed the approved PQM.

Our policy is we will do what you tell us in the PQM, no more, no less.  It has to be this way, as the biggest problems in China are the admirable Chinese tendency to want to help too much or worse, to improvise when a problem arises.

I had a friend who was buying pillow cases in China.  All the samples came in exactly 1″ too big on every dimension.  Panicked, he called the factory and they told him they so appreciated the order (for several hundred thousand units), that they wanted to reward him by providing extra material at no cost!  After he got his heart pumping again, he contacted our friends at China Quality Focus who went on-site and got things back on track quickly.

Doing business in China is Murphy’s Law on steroids, acid and a truckload of uncut Colombian all at once.  Muse’s 1st Law is “Never Assume Anything“.  Make sure if you want it to happen (or not to) that you put it in writing.

I meant it when I wrote that we LOVE getting 17 pages of corrections back from the client.  It is far better than a cursory review and signature.

We have four (4) internal layers of proofreading for a PQM before it is sent to the client for approval.

1. The PQM is drafted by a Quality Technician, with input from the entire team, including the client.
2. It is then reviewed by the Production Engineer.
3. It is then reviewed by the Project Manager.
4. It is then reviewed by a member of senior management (most often by me).

Only then is it sent to the customer.

This is a time consuming process.  But the alternative is terrible to contemplate.  Anything worth doing is worth doing right the first time.

So make sure you proofread before you sign on the line that is dotted.

This put me in mind of the importance of making sure all your business documents say what you intend them to, ESPECIALLY when doing business in a foreign language.  One of the services PassageMaker offers our clients is help drafting the language on their purchase orders.  Many of our clients come to us after having a bad experience or two in China, and it is amazing how vague some of their purchase orders are.

The Chinese legal system is rapidly improving and a properly written purchase order is a binding contract that can be the difference between getting raked over the coals and being the one doing the raking.

I see similar issues with design databases.  Drawings are often given to us with no material specifications, no finish specs, etc.  I had a drawing once from an client that specified “aluminum”.  When I asked his engineer what type, he responded that he didn’t think it mattered.  This for a part to be subjected to high heat and load stress – you’re darned tootin’ it matters.

We have also received drawings specifying titanium fasteners.  After wasting time looking for these very hard to find fasteners, the project engineer in the USA tells us that he just cut and pasted the fastener drawing and forgot to change the material spec.  Two seconds of his time would have saved two days of our team’s time.

This kind of BS is why we have Endorsed Service Providers.  Choosing with the cheapest guy is very rarely the best deal.

Another area where we frankly NEED our clients to proofread is our Product Quality Manual (PQM), the core of our Assembly-Inspection-Packaging service.  As Mike Bellamy says, “we are generalists; we depend on the client to be the expert”.  We take the lead on drafting the PQM, and submit it to the client for approval, but once they sign off on it, that is what we are going to do, no more, no less.  It becomes our warranty and if the client forgets to tell us something, once they approve the document, that is now the official record.  We’ll happily amend the PQM for the next order, but if it wasn’t written down, not my fault.

Our system incorporates four (4) levels of approval before it is sent to the client for final approval.  From the speed at which some clients approve the document, I know they barely looked at it.  I would rather have a 17 page response as we got from one client than a signature 20 minutes later.

Doing things right takes time, but nowhere near as much time as doing things over.  If your project is valuable enough to bring to market, you have time for some proof reading.

PS – I have dyslexia, and have proof-read this damn post five times looking for typos.  I bet you all find at least one in spite of that effort.