The $500 Average Order Dilemma
Managing product safety and social compliance into large, long-lead-time projects is something that many suppliers and distributors who purchase factory direct have become fairly adept at doing. Most of these efforts have been driven by their end buyer customers' expectations as part of Fortune 1000's focus on protecting their brands. If there are both the time and a large enough order size, it is possible to schedule a third-party factory audit and have pre-production and perhaps even final production samples sent out for testing-and still hit the delivery dates.
The real challenge in our industry is the day-to-day orders. It's not easy to find suppliers that can demonstrate through their documentation and validated processes that product safety and social compliance is a part of their in-stock inventories, which are used for the smaller quantity, shorter lead-time orders that make up so much of the industry's business.
I've heard various estimates of the average order size and lead times for projects in our industry. For the sake of the title of this post, let's base our assumptions on an average order of $500 and delivery within 10 days. From a compliance standpoint, this position is still valid even if the average order size was $5,000 and the delivery time was three weeks.
It is either impractical or impossible to reactively manage product safety or social compliance into inventory you already own in these small quantities and short lead times. Here's why: If compliance was not a primary focus when you placed the order with the factory, it probably doesn't exist. Plus, it costs way too much to provide testing reports on small-quantity orders should you have time to wait for test results before shipping the order. Depending on the product, the costs to rush the testing could be higher than the profit from the order.
The issue is further complicated by the nature of our industry where suppliers inventory blank goods and decorate in smaller quantities on demand when distributors place orders. Even if suppliers were on top of their supply chains and did any testing required to ensure safety and compliance of the blank goods, these blanks are then subsequently decorated to create the final product. This decoration materially changed the product and, as such, requires either new testing or component-level testing on the inks used in decoration.
In other words, while the product could be tested for safety, the inks could not-rendering the entire product unproven or unsafe. Don't count on your Fortune 1000 clients accepting the statement, "We think the product is mostly safe, but we don't have time to test all of it before your event." No way.
So how much would it cost to test each of your inks once a year? Roughly, in the mid five figures. Because of the wide range of ink colors used, I've heard estimates as low as $30,000 and as high as $75,000. This cost is one of the reasons why ink companies historically have not been eager to provide test results. If the results do in fact exist, oftentimes the testing was done many years ago as a part of the ink's development protocol and the results are out of date for today's compliance standards and regulations.
This is an important consideration because if those inks are used on children's products or products that could potentially transfer these inks to the skin and be absorbed, they must be tested under CPSIA guidelines or, at the very least, be labeled in compliance with California Prop. 65 guidelines.
Here's the catch: The ink company is not making the testing and/or labeling decisions, you are. So, if you tested the blanks, had component-level testing of the inks and had a process in place to ensure the product was decorated with the inks that had been tested, then you would be okay from a product-testing standpoint. If not, you could be in trouble.
Unfortunately, whether you want to admit it or not, nearly everyone has a story of a large project where the client's demand for auditing or testing came very late in the project. I've heard many stories throughout the years where this has happened to some very good suppliers. I can't image the lesser suppliers in our industry are any better. I've even received some panicked calls asking for help with finding a solution while the order was in production, in transit from overseas or, worst case, sitting at the client's event.
You get what you ask for and pay for. If you make product safety and compliance part of the upfront criteria for which suppliers you use, there's a much greater likelihood of getting it when you need it.
Brent Stone is executive director - operations for Quality Certification Alliance (QCA), the promotional products industry's only independent, not-for-profit organization dedicated to helping companies provide safe products. A Six Sigma Black Belt, Stone has more than 25 years of in-depth supply chain management experience with extensive expertise in process design, development, improvement and management. He can be reached at firstname.lastname@example.org or visit www.qcalliance.org for more information.