Supplier Selection: Beyond Quality, Delivery, Cost

Do you have a responsibility to make sourcing decisions on anything other than Quality, Delivery, Cost? This news item about a mass-fatality industrial fire in China opens up some interesting thoughts about sourcing over here.

For future reference after the link dies, the lead of the story is:

A fire at an illegal shoe factory in eastern China has left 34 people dead..

That, by the way, is a great lead. It summarizes the whole thing in a few words:

  • China
  • illegal factory
  • fire
  • 34 dead

The rest is just syntax glue. But, as usual, I digress. What the hell is the point?

Just to be clear, by the way, the original breaking-news story in no way implies that this factory was producing for export, or for that matter, for any other company. So the story is just a lead-in for this post.

Back to the lead of this article: What is your obligation, as a purchasing company, to consider things other than quality, delivery, cost in your sourcing decision?

With the rush to source in China, it is very easy to overlook even obvious things like quality. Just ask Mattel. But if gross violations of China’s internal health, safety and environmental regulations give a potential supplier a cost advantage, do you know it? Do you make a conscious decision to let that “advantage” stand? Or do you go and look for yourself, and include only suppliers which comply with the letter and the spirit of the law – as well as “do the right thing?”

Chinese health, safety and environmental regulations, by the way, are in many cases stricter than what you find in the USA or Europe. Compliance and enforcement, though, is… ah… spotty.

This is, in my mind, an ethical decision, not a legal or financial one. I can only raise the question and let you answer it in your own mind.

One more thing. This was reported on the BBC. The only way I can read BBC news on the internet in China is to go through my corporate VPN. If you try to access BBC News on a normal internet connection, you will get a “Server not responding” error because BBC is not considered appropriate for the Chinese people to read. Frankly, it seems a little arbitrary since every other news service is more or less accessible. Maybe I will start another blog sometime and just talk about “other stuff.”

2 Replies to “Supplier Selection: Beyond Quality, Delivery, Cost”

  1. Please send me some questionaries on supplier selection,rating,performance for my research work

    Thank you,

  2. Don’t forget another nasty little secret about doing business in China – environmental regulations. (Or maybe lack thereof) Many companies who formerly manufactured products in the US have outsourced the work to China. Yes, cheap labor is part of the lower price, but not having to comply with strict environmental regulations also lowers one’s costs. These companies can say that their suppliers “comply with all applicable environmental regulations,” but China’s regulations aren’t nearly as strict as the rest of the industrialized world. Then there’s the problem of the regulations they do have not being enforced. China is a much larger country than the US and this affords unscrupulous individuals many more places to hide hazardous wastes and practices.

    China recently became the world’s largest polluter on many different organization’s rating scales. Looking down the road a bit, it’s safe to say the situation will get much worse before it gets any better. I would also offer that the US went through the exact same cycle with the “resolution” of our problem actually leading to the opportunity for the Chinese. Recall how many companies in the US are still saddled with liabilities from past environmental sins. This could be your company being held liable someday for what your Chinese supplier did (or didn’t) do. Beware.

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