by Neale G O’Connor
Recently there has been a spate of incidents concerning exploding hover boards across many countries, leading some customs authorities to seize certain batches of the hover boards over fire risk. A lot of the problems have arisen by the explosion of knock-offs/cheaper versions made by factories aiming to cash in on the craze.
Like many electrical products that contain rechargeable batteries, it is critical that buyers and importers on record know the factory that makes the electrical products they are selling. While it is imperative that the factory has the correct certificates and licenses in place, it is also important to know the factory. Do you the buyer really know the factory and/or the owner of the factory? Does the factory have the necessary quality gates and processes in place to ensure product quality occurs consistently? Does the owner care about quality?
This week I had the opportunity to visit the Freeman hover board factory in Shenzhen to check out the key quality related questions that buyers need to be aware of when auditing a factory. The list is not intended to cover everything but to provide a starting point for further detailed dialogue with the factory.
1. Does the factory have experience in manufacturing the same or similar products?
Our hover board factory (Freeman) is one of three factories – one located in Jiangxi province and three located in Shenzhen. The sister factory in Jiangxi province has a long history of battery manufacturing so this can give some clue as to the group’s core competency. Any electrical product that has rechargeable batteries inside should not be left to a startup factory even if they outsource the batteries from a reputable Korean or Japanese manufacturer. Having the background in the industry helps in properly setting up the quality gates and the specific procedures for battery assembly.
2. What are the key parts of the product that are high risk?
The key parts of the hoverboard are the AC Charger, the battery, and the connections the link the battery to the motor. For Freeman, they have a history of making the AC adapter in the Jiangxi province factory and the factory in SZ is sourcing the component directly from their sister factory. Next the battery comprises 20 cells of 2200 mAH to make a 4.4 Amp battery for the hover board. Importantly, the cells are made by Samsung, which provides a high-quality level as the Japanese, and Korean firms have the quality control to necessary to make the rechargeable batteries stable over a lifetime of 800 to 1000 recharges.
3. Are there any safety features built into the product?
For the connections that link the battery to the motor, Freeman has a kill switch that engages when the battery temperature gets to 60 degrees Celsius, or when the current exceeds a certain level. The photo below shows the owner with the kill switch mechanism in his hand.
4. Does the factory have full incoming parts inspection and testing?
The factory tests 100% of batteries (even from Samsung). Since the motors are part of the wheel, they are fully tested after they are fixed to the hoverboard chassis.
5. What quality gates does the factory have during production? And are these quality gates focused on the critical areas?
The factory has a burn in a room in which they fully charge and discharge the battery packs before they are assembled inside the hover board. Take note of how often the factory undertakes this process and whether they test under different heat conditions.
6. Does the factory have a record of quality control and failure rates?
The factory keeps a full record of quality failure rate. They have a 0% failure on the incoming batteries from Samsung, but they continue to test 100% of these. The factory also tests the motors on all hoverboards once they are attached to the chassis. They have a 2% failure rate and find that 40% of the time is due to connections inside the hoverboard. They are working with the supplier to reduce their failure of the motorized wheel. The three hoverboards in the photo below failed the machine drive test. The final test is when a person rides the hoverboard.
7. Is the factory owner genuinely interested in the highest quality of the product?
I met with the owner over a 3 hour period, during which time he described the history of his factory and his vision for the factory. He accompanied me through the whole factory tour, during which he took us through (we also videoed) every step in the process. At one stage, he showed us the temperature control and kill switch unit that they specifically designed but importantly he connected his hand to the antistatic wire during this time he was touching the electronic component. This further showed his commitment to quality.
As the boss does the workers shall follow. The ultimate test of the commitment of the owner/factory is when it has its own brand. This puts the factories reputation on the line when a product fails. This also forces the factory to engage the end user directly and this process provides a direct feedback mechanism especially if something goes wrong.
8. What is the staff turnover of the factory?
Staff turnover is less than 10% – it is very low due to their bonus system and non-financial rewards given out. They have a recreation area where staff can play with the products during their free time.
The importance of having a low staff turnover is critical to quality and having a sustainable business, as less training required and learning curve associated with the onboarding of new staff. Over time, this helps the factory control costs and maintain profits.
In summary, there are a lot of factors, signals that buyers must look for when selecting the factory that makes your electrical product. For buyers who are the importer on record in their country, I highly encourage them to get to know and see the factory for themselves, even if they are using a third party factory inspection and audit service. These eight questions, while not exhaustive, will help buyers to focus and get the most out of their factory visit and/or their discussions with their third party auditor.
Dr Neale G O’Connor FCPA (Aust) is a Cofounder of China Sourcing Academy, a complete training system for professional buyers seeking to source from China. He is the director of Ricebox (Hong Kong), a China risk management consulting company, and is the founder of the China Supplier 1000 Project that focuses on helping suppliers to develop their international business. He has two books on operational and risk management in China that are available on Amazon, and is an Associate Professor in Accounting at Hong Kong Baptist University.