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3 ways to handle defective products

by Stacy Bruce

Handle Defective Products Feature-small

Unfortunately, no factory is perfect with their production. Product defects are common in manufacturing. They can come in all shapes and sizes. And they’re a problem that can significantly affect you, as an importer, and your bottom line.

So how can you handle defective products?

The goal here is to get your factory to reduce their frequency of defects and hold them accountable for defects that still occur.

Here are three ways to handle defective products:

1. Manage expectations for allowable defects

When talking with a new supplier, or trying to encourage improvement in an established relationship, it is important to manage expectations. Part of this means telling your supplier which defects are acceptable in what quantity of an order.

Outline how to classify product defects

If you’re importing those plastic-beaded necklaces that are handed out for free at the Mardi Gras festival, you probably aren’t terribly concerned about scratches in the paint on the beads. On the other hand, if you’re importing sterling silver bangles, you’re probably going to be VERY sensitive to scratches or oxidation on the surface of the product. Clearly, the value of the product is very relevant to how you might classify product defects.

When you’re deciding how to handle defective products, the value of the product is just as important as the defect found. And while the factory producing your item may classify one particular defect as “minor”, you mayHandle Defective Products be less tolerant and prefer to classify it as “major”. That’s why it’s important to make this clear up front with your supplier before you even pay the deposit on an order (related: 3 Types of Quality Defects in Different Products).

The best ways to classify defects early are to:

  • Include a list of acceptable and unacceptable quality defects directly in the PO issued to the supplier and
  • Send a detailed QC checklist to the supplier that shows a breakdown of possible product defects and how they should be classified (e.g. major, minor and critical). It’s also helpful to include photos, if possible, to distinguish between defects that vary in type and severity.

And for products where dimensions are important specify the margin of error that you will allow for the size measurements. This is especially important for garment products that are hand-sewn and more susceptible to human error.

Set AQL for your order

Many importers mistakenly overlook AQL when talking with a supplier. But actually, setting AQL, a quality standard used by QC professionals worldwide, is an important step toward clarifying expectations for an order. AQL establishes a limit to the acceptable number of product defects found in an order of goods. And it helps you and your supplier decide whether to accept or reject an order based on the number of defects found in a random sample pulled during inspection.

You may choose to rely solely on the QC controls of the factory itself or opt to hire your own third-party inspector (related: Third-Party Inspection vs. Factory Self-Inspection). Either way, AQL helps you handle defective product by setting expectations for how many defects are allowed in the order. And if you find the standard to be too strict or lenient following the first order or inspection, you can always alter it later to fit your requirements.

Define penalties for excessive defect rate

This last step can be effective for some importers. But you should use caution and consider the relationship you have with your supplier before introducing any kind of penalties for high defect rates.

Holding a supplier accountable by charging back for defective product over a certain quantity can be a helpful incentive for maintaining a certain quality standard during production. Likewise, if you hire a third-party to carry out pre-shipment inspection and the result is FAIL, charging the supplier for any subsequent re-inspections often compels the factory to improve quality.

Again, just be sure to consider the potential response from your supplier before enforcing these kinds of penalties. A supplier that values you as a customer they’ve worked with for a relatively long time is more likely to respond favorably. But if you’re imposing penalties on a new supplier or one that views you as a “small fish” in a large pond of customers they deal with regularly, you’re more likely to face resistance or outright refusal to comply.


2. Identify and address issues with product inspection

A great way to handle defective products is to catch quality issues earlier before they make their way into the finished goods. Identifying issues before shipping helps you avoid making assumptions about product quality—assumptions that can cost you money if you find a significant portion of the order you receive is unsellable. There are different stages during the production process where inspection can be performed to show you the current state of your order.

Raw material inspection

Performing inspections of raw materials and components before production begins can potentiallyreveal pressing quality issues. For example, let’s say you’re manufacturing leather bags and want to hold your supplier to certain standard when it comes to choosing a quality leather hide for production. One of the best ways to do this is by actually checking the incoming raw materials in the warehouse before the factory begins working.

Without this added oversight, you might find out months later that inferior materials were used and be forced to either:

  • Accept the bags as they are, even though they don’t meet the expectations of you and your customers, or
  • Start over by manufacturing an entirely new order of the same bags (and possibly finding a new supplier for the order)

Save yourself the nightmare of frantic backpedaling by catching any quality issues related to raw materials and components early (related: Don’t Neglect Incoming Quality Control for Parts and Materials).

DUPRO inspection

A during production (DUPRO) inspection can help you find issues appearing in the middle of production just as inspection of raw materials reveals any problems at the very beginning. An inspector can pull samples of the product from different stages in production to identify any issues occurring during specific processes.

DUPRO inspection is especially helpful if you’re dealing with:

  • Shipments of large quantities of goods with ongoing production
  • Products that involve numerous production stages; and
  • Products that are susceptible to defects and other issues that can’t be reworked or fixed later

Wood molding is typically manufactured in larger quantities with a lengthy production timeline. A consumer electronics item, such as a professional SLR camera, involves many different production processes and components. And many of the defects that might occur during production of a plastic, injection-molded display case are not possible to correct with rework. All of these are examples of products where a DUPRO inspection is ideal for helping you address quality issues earlier.

Final inspection

Final inspection typically occurs when between 80 and 100 percent of an order of goods is finished and packaged. For many importers, final inspection is the bare minimum quality oversight they want for an order. Like other types of pre-shipment inspection, final inspection typically involves pulling a random sample of goods and looking for quality defects, non-conformities and other issues.

The advantage final inspection has over earlier inspection is that it offers insight into the way the goods will actually leave the factory, including verifying packaging.

Aside from personally visiting the factory, there is perhaps no better way to get an accurate look at an order before it ships than with final inspection.


3. Accepting any defects that remain in finished goods

Sometimes you may find defects on a product, such as small black dots or scratches, which are minor enough that you can accept, especially if the product you are making is relatively inexpensive. Other times you may find defects you don’t want to accept but don’t feel are worth reworking. And then there are times when you feel the best way to handle defective products is through rework.

Accounting for defective products with extra inventory

Some defective product is almost always present in any order of manufactured goods. After all, the widely recognized AQL standard accounts for a certain number of defects in a sample size.

Still, you may decide to ask you supplier to ship an extra 5 percent of the total order quantity to account for any retail returns. This strategy is more popular among importers of lower-value products like plastic containers for food storage or earbuds. This can be a cheaper and less time-consuming safeguard in lieu of asking that defective products be reworked prior to shipping.

Reworking defective products

3 Ways to Handle Defective Products

It’s common for importers to ask the supplier to rework or repair any defective products in quantities exceeding expectations. This request can be useful when the defects are easily fixed. But keep in mind that re-work means additional handling, which can add more defects than it helps remove.

Take flash, excess material commonly found on molded products, for example. Reworking this defect typically requires a worker to take a knife to the product and manually cut away the excess material. This may be effective at removing the flash but could also cause scratches or other damage in the process.

Another factor you should consider before requesting rework is time. How far away from meeting your shipping deadline is the factory? When are your customers expecting to receive the goods? These are important questions because rework will require more time. And if you desperately need to ship the order, it may not be worth reworking defective products at the expense of delaying shipping.

e-working defects is a good way to hold the factory accountable and address any quality issues, but always remember the value of the PO, meeting deadlines and the potential consequences of added handling.



As much as we strive to produce a perfect product, defects are a fact of life—an unavoidable consequence of combining great ideas with materials to manufacture the products we love.

Whether they’re minor defects, major issues or critical to your customer’s safety, it’s important to manage any problems directly and openly with your factory. Knowing how to handle defective products can save you time, money and your reputation as a brand.

Remember the words of the late Vince Lombardi, famed coach of the Green Bay Packers: “Perfection is not attainable, but if we chase perfection we can catch excellence.”

And if you’d prefer to hear the podcast that covers this topic instead, click here.

Stacy Bruce is a Client Manager at InTouch Manufacturing Services, a QC firm that performs product inspections and factory audits in Asia for clients in the US, EU and Australia.

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