CHINA AUTOMOTIVE SUPPLIER

QUALITY MANAGEMENT BRIEFING

Vol. 5, No. 5, May 2021

1

            Factory Audits & Quality Inspections 

           During & Post COVID-19:

On-site Supplier Audits Remote Participations by International Buyers


Since the outbreak of the novel coronavirus in February 2020, the Chinese government and the whole society have been fighting hard against the epidemic which was quickly brought under control in China. Many companies have since gradually resumed work and production, and a large number of factories have reached order saturation.


While the epidemic was under effective control in China, the pandemic emerged overseas in early 2021, affecting almost all countries. Faced with the epidemic, some countries took measures to shut down, some required people to work at home, and some stipulated social distancing and the number of people in gathering.


For the overseas customers of the auto parts industry, the quality control and new supplier audit in China stopped in 2020. Those overseas customers with no offices or agencies in China are facing even more challenges. The existing supplier resources have been depleted, and the need for the development and quality control of new suppliers has reached the point of urgency.


At present, although the epidemic in China has been effectively controlled, overseas customers are still unable to come to China for various reasons. How to carry out new supplier development and quality control work under the current circumstance has become an extremely imminent task for everyone. 


With more than 20 years of experience in quality management of overseas customers' suppliers in China, Shentou has been providing a variety of services such as second-party supplier audits, new product development, pre-shipment inspection (QCs) and quality complaint processing to overseas customers every year. During the pandemic in particular, the on-site audit accompanied by remote video service we’ve launched has been well received by many customers and customer satisfaction has been greatly improved.


Starting from this issue, the author will focus on how we plan the specific process and carry out the implementation plan of 2nd party supplier audit for overseas customers unable to go to the supplier's production sites for audits, inspections and other quality control activities in the face of the pandemic. We will demonstrate how the on-site quality management work in China could be efficiently combined with remote participation by international buyers in real time, to address the specific needs for continued effective China supply chain management by the international buyers during or even after the pandemic without having to come to China or at least not as frequently as before.


The second party supplier audit is the audit of suppliers by customers. The audit results usually provide decision-making basis for customers on purchasing. For the second party audit, we should consider the level of quality impact of the parts to be purchased on the quality and use of the final products (vehicles or other assembled parts) before determining the audit method and audit scope. We should also take into consideration the company's technology and production capacities, prices, delivery timeliness, services and other factors. 


The methodology of the second-party audit is to audit the quality management system (QMS) associated with the quality of the products to be purchased by the customer, the manufacturing process of the purchased product, the quality of the purchased product, or the customer’s other special requirements.


Planning and implementation of QMS audit, process audit and product audit of purchased products


The planning and implementation of QMS audit for the 2nd party audit include: determining the requirements for supplier audit; determining the audit type, frequency and scope according to the audit requirements; assigning the auditor; completing the audit checklist; implementing the audit and summarizing audit results; verifying the supplier's non-conformity (NC) corrections results and closing the NCs; finishing the audit.


Determine the supplier audit requirements 


Supplier audit requirements are determined based on the supplier's QMS, potential internal and external risks, supplier performance evaluation results, and importance of the product and the processes.

(To be continued)


By Felix SS YUAN

2

Vehicle Muffler


Vehicle muffler is used to reduce the noise produced by the engine of the motor vehicle. Because the length difference of the two pipes is equal to half of the wavelength of the sound wave emitted by the vehicle, the interference of the two lines of sound waves will balance each other out when they are superposed, so as to weaken the sound intensity and reduce the sound.


According to the principle and structure of muffler, there are reactive muffler, resistance muffler and impedance compound muffler.


Primary failure mode:

Blockage failure, corrosion damage and noise elimination failure.


Main causes of failure:

Surface porosity, slag, broken welding, breakdown phenomenon, workpiece deformation, uneven ends, wrong bending position, folds, scratches, fracture.

  

Finished product inspection items: appearance, welding quality, caliber size, finished product structure size, etc.


By QP LIU

3

Golden Sample


In manufacturing, a golden sample (sometimes called an approval sample or abbreviated as just “gold sample”) is the final product sample a customer receives from the supplier. 


The sample is produced by the manufacture. Once the customer is satisfied with the sample, that sample becomes approved, thus the “golden” sample. Typically the customer sends this sample back to the supplier and authorizes mass production. 


After the production of the finished products or before the shipment, when the customer or its QC agent conducts quality inspections, the finished products are typically compared with the golden sample to determine if the finished ones from mass productions match 100% with the approved sample. 


For this QC purpose, sometimes the customer will request several pieces of the final samples from the supplier, sending one back after the sample is approved and keeping one to be used in case quality issues arise. To ensure the integrity of the gold samples, sometimes the samples are also properly “sealed” with bags or containers and/or even signed.


4

Cost of raw materials:

Exchange rates:

USD/RMB: 1:6.4730



EUR/RMB: 1:7.8196



RUB/RMB: 1:0.0861




May 2021


 Remark: Exchange rates are 30-day average from April 27 to May 26

                                                            The above information is for reference only


5

China Supply Chain Alert


Rising raw material costs, unfavorable exchange rate between the USD and RMB, and the continued problems in international ocean shipping continue to dominate the minds of almost all factory managers and exporters.


There have been signs of reduction of the costs of raw materials since early May, as a result of the changing dynamics of the markets and regulatory policies by the Chinese Government. Hopefully the trend will continue and it will soon translate into price reductions of the finished parts.


While the shipping companies have not announced the rates for June, the levels of the shipping costs are now back to where they were at the end of last year. However there is still no improvement on the container shortage at most of the Chinese Ports. For the port at Yantian in Shenzhen, because of the several cases of COVID-19 recently detected, workers and drivers at the terminal storage yards are all busy with nucleic acid testing, so expect further deterioration of the situation at the Yantian Port at the of May.


Meanwhile, the exchange rate between USD and RMB has fallen below 6.40...



SHENTOU SUPPLY CHAIN MANAGEMENT CO. LTD. is a Shenzhen, China, based company serving international automotive clients in the implementation of their China strategies and programs. CHINA AUTOMOTIVE SUPPLIER QUALITY MANAGEMENT BRIEFING is a bi-monthly newsletter published by Shentou to address the specific and unique quality challenges and concerns international automotive companies face with suppliers in China. Comments are welcome at qms@shentou.com. Click here to subscribe.

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