It seems that every week the media reports on another large recall of a consumer product that is manufactured in China and sold in North America. It isn't unreasonable to ask how these huge, sophisticated companies could get it so wrong.

They may be multinational in scope and size but, somewhere along the way, they have lost control of their supply chain – a supply chain that starts, for many such companies, in China.

With its much lower manufacturing costs and inexpensive labour, China is a lure that few product companies can resist. When done properly, manufacturing products in China can be achieved without incident, and the quality standards can be as high as those that we are accustomed to in North America.

But successful manufacturing in China requires proper planning and rigorous control of the supply chain. If a company removes itself from the manufacturing of its products by outsourcing to a third party, it must recognize that its exposure to potential problems is higher.

Widespread publicity about the offshoring of manufacturing may be lulling companies into a false sense of security. Sure, it's possible to source components and suppliers in China via the Internet. Yes, there are "agents" based in North America and Asia with contacts who can help you source low-priced components. And yes, you will likely find the lowest price among those suppliers. But too many companies believe that's what offshore manufacturing is all about. They're wrong.

Moving one's manufacturing offshore requires a greater emphasis on supply chain due diligence. The product must be stable, with design kinks worked out and design-for-manufacturing principles worked in to ensure that the complete product is optimized for manufacturing and not simply for the cost of parts used. Price is important – but not more so than the quality of the design and the quality of components used.

Ensuring design quality means working closely with an expert manufacturing partner through the entire process to identify where and when issues might occur and to redesign, to design tests, or to debug accordingly. Documentation must be specific, clear and comprehensive.

Ensuring the quality of the parts requires knowing who and where they are coming from. You must know every supplier in your supply chain and visit them regularly. You must be able to sit down with a supplier to be absolutely certain that they know what is required of them and that they can deliver – repeatedly and flawlessly.

Some of the major retailing chains in North America have supply chain operations in China, presumably to ensure that they have quality control over and with their manufacturing partners there. Smaller companies can get the same benefit from working with partners that have purchasing and quality control operations in China.

There are many good reasons to manufacture a product offshore. But Canadian companies should realize that there is no silver bullet. Offshore manufacturing can create a competitive advantage both in price and agility, but only if it's done right. Getting it wrong can be a very expensive lesson.

Michel Jullian

President and CEO

OCM Manufacturing