#195 – An Expert Tells How Amazon Product Inspections Can Save Thousands
Experienced Amazon sellers know how quickly quality issues can eat into their profits. They might end up losing their product’s ranking because of poor reviews or possibly run out of stock waiting for replacement products. In either case, it takes both time and money just to get back to where they started.
Today on the Serious Sellers Podcast, Helium 10’s Director of Training and Chief Brand Evangelist, Bradley Sutton welcomes Sajag Agarwal. Sajag is an e-commerce product inspections expert and is here to tell how Amazon sellers can save thousands with a solid inspections program.
Sajag started his own e-commerce brand just out of high school and quickly became successful with 40K in sales the first month and one million in sales after the first year. However, his products suffered quality issues at the factory. When a “professional” inspection failed to address the problem, Sajag saw a new opportunity. He jumped into the inspection business and has been helping e-commerce sellers ever since.
In episode 195 of the Serious Sellers Podcast, Bradley and Sajag discuss:
- 02:45 – Building a Money-Making Minecraft Server in 6th Grade
- 04:30 – A Boring Day at the Mall Leads to E-Commerce
- 06:00 – Making 6 Figures on eBay in High School
- 08:15 – Huge Quality Issues with His Product Leads Sajag to the Inspection Business
- 11:00 – A “Passed” Inspection Report Makes Sajag’s Future Clear
- 13:30 – Quality Issues Hit Project X
- 17:00 – A Good Inspection Isn’t Cheap
- 19:00 – How Different Levels of Inspections Come into Play
- 22:00 – Bradley’s BTS Tip
- 24:00 – How to Mediate Disputes
- 26:00 – When’s the Right Time to Arrange for an Inspection?
- 29:00 – OK, You’ve Found Problems, What’s the Next Step?
- 31:30 – A Reinspection is Crucial
- 33:30 – Working with the Factory
- 35:30 – How to Contact Sajag\
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Bradley Sutton: Today, we’re going to talk to an expert on product inspections, and we’re going to find out how having your product inspected could save you thousands of dollars on your Amazon journey. How cool is that? Pretty cool, I think.
Bradley Sutton: Hello everybody. And welcome to another episode of the Serious Sellers Podcast by Helium 10. I am your host Bradley Sutton, and this is the show that’s a completely BS free, unscripted and unrehearsed organic conversation about serious strategies for serious sellers of any level in the e-commerce world. And we’ve got somebody on the line today coming from Chicago, I believe. Sajag. How’s it going?
Sajag: I’m doing good. How are you?
BradleySutton: I’m doing just delightful. Now you were a suggested for the podcast by Barcus who works here at this company. I’m not sure if he’s used your services before, but he’s heard of some who have, and I know of your main things is inspections. And we’re going to get into that a little bit later, but as I do with all the guests, I like getting just the backstory to show that it doesn’t matter what background we come from or what education we have. We all end up here in the same space as it were with Amazon or with e-commerce. So, so you’re in Chicago now, is that where you were born and raised?
Sajag: Yeah, so that’s a really awesome question. So actually I was born and raised for the first four years in Mumbai, back in India. Okay. And then I came here when I was four years old. My parents actually lived in the US for a little while before I was in India. So, we came here and I came back and I was living here and I was raised in Colorado, in the Denver area, in a city called Fort Collins. And then I moved to Northwest Indiana, Chicago suburbs, and I essentially was for the most part raised there for my entire childhood. And then after that, ended up moving to Chicago.
Bradley Sutton: So, when you were in Indiana there or Colorado, whenever you’re like 10 years old or so, did you have any career aspirations at that time? Like what you wanted to be when you “grew up”?
Sajag: Yeah, definitely. So, when I was like 10 years old, things like that, I was always into entrepreneurship and kind of some weird angles. So, when I was going through grade school, I was actually, I was programming my own websites, programming my own servers, actually opened up my first business was Minecraft. I don’t know if you’re familiar with Minecraft, but it’s like a sandbox game for kids. And so I started off with that actually, when I was in sixth grade, I opened up my first Minecraft server and that really took off. And that’s actually how I made my first, like, I would say decent amount of money was actually in Minecraft and–
Bradley Sutton: You’re in the sixth grade?
Sajag: Yeah. I was in the sixth grade and then I ran that till I was in about eighth grade.
Bradley Sutton: Okay. So, you’re a sixth grader. How much money were you making off of that?
Sajag: Not a ton, in relative standards.
Bradley Sutton: When was in sixth grade if I made 10 bucks, that was good for me. But I’m assuming it was a little bit more than $10.
Sajag: Yes. I made like, I think altogether a few grand on that server. But we also had server running costs and things like that. So, and also it was a sixth grader that loved to buy tech because I was always a little techie guy, so kind of made zero out of it at the end of the day. But I think I made a few, few grand on that.
Bradley Sutton: Well, cool. So then what about upon graduation from high school? Did you keep going on that path or what was your major in college?
Sajag: Yeah, so my major in college was in business and management from Indiana university. And so kind of what led me down this whole path, how I kind of got here was, it’s actually super weird. So when I was in high school, I think it was like sophomore or junior year of high school. I started looking on eBay and that’s when like, eBay was like just coming up Amazon didn’t really like people are selling, but no one really knew too much about it. And eBay was like a huge thing. So I was on eBay and I was shopping out with my mom at the time and we were going to the mall and we were at the mall, she was taking like six hours to get clothes. And I was like bored out of my mind sitting around on my phone. So, I went on eBay and I noticed I needed a phone charger at the time. So I went on eBay and I actually searched a phone chargers. And then I was bored. I had a lot of free time on my hand. So instead of sorting lowest to highest, I went highest to lowest. And I found that, okay, I could buy a hundred of these cell phone cables for like 150, 200 bucks. And then that each individual cable was selling for like five to $10. So that’s kind of what got me into e-commerce in the first sense. And I actually ended up buying. I was like, begging my mom is like, Hey, you know, can I borrow like a hundred bucks? Let me buy this thing here. And she was like, okay, fine, but you need to pay me back. I had money saved up in my bank too, so it wasn’t that big of a deal. So, I bought that 150, $200 order. And then I was able to sell that entire order in about two weeks on eBay, just flipping everything.
Bradley Sutton: And what year was this about?
Sajag: I think it’s almost like eight years ago. So eight years back, maybe 2012 on that time.
Bradley Sutton: Cool, cool. So then you got your first little taste of e-commerce there. How did it progress?
Sajag: So, it progressed pretty quickly. So I started buying and selling stuff on eBay, just a bunch of random stuff on and off. And it just grew super, super quickly. So, actually by the time I graduated high school for like a portion of that period in my senior year, I was netting actually around six figures a year, just buying reselling stuff on eBay. So that’s kind of how that progressed. And then towards the end of that, I ended up founding after that my own brand because I was going into things and I was like, wow, like I’m buying and reselling all this junk on eBay and I’m pretty sure I can make a much better quality product and build a brand. And it’s also, a little bit of a longer term vision versus just buying and flipping things because, you know, you buy and flip things, you run out of inventory, whatever, and then boom, you’re out of business and it’s not really a reliable source of income. So I was like, okay, Hey, I want to make my own brand. That brand grew super quickly. So the first year we did a 40K in revenue. Second year, we did a million and in our third year, we were on track to do about 2 million a year. And, unfortunately what happened is in the third year. So we didn’t get, we got lucky initially working with a lot of our suppliers and some of our products were electronics. Some of our products were more simple. They were just accessories and Velcro, little things like that. So, not too complex, just simple products. But we started seeing like a lot of defects with our products. So, initially we got pretty lucky with our suppliers, but as we started doing more and more orders with them over two years or so, we started having like a consistent quality degrade and our orders just got worse and worse and worse. We started having customer complaints. We started having issues with quality, warranty claims, returns, and I could reviews and with the new suppliers, we didn’t get as lucky right off the get go. So, some of our products that we were launching were having defects right out of the gate, which were pretty terrible for rankings and getting those products up to Amazon.
Bradley Sutton: You were manufacturing these in China?
Sajag: Yeah. All manufactured in China.
Bradley Sutton: Okay. So is that, I assume that is what started your path down, man, this quality control issue at the factory level is kind of an important thing.
Sajag: Exactly. So actually back in, it was around 2017. I moved to China for six months and that was like in the ending year of my brand. And we’re just having a lot of quality control problems. I mean, like five to 10% defect rates dead on arrival units are units that are just broken when they get to the customer and almost a hundred percent failure rates on some other products after a few months of use. And these were, some of these products are durable products. So we were giving like a one-year warranty on these products. And they were just breaking apart after a few months of use. So we had to replace them, refund them or something, and the expenses just kind of kept stacking up. So it was very clear that the batch of products was bad and the inspection was not done properly. And then, so the two days later I had the idea, let me call the inspections company I was working with at the time I had them come to the factory and do an inspection on the products and when they were there and the inspector was supposed to show up around eight or 9:00 AM in the morning and at latest by 10 am. And so I went to the factory super early in the morning. I told the factory, don’t tell them on the client and, you know, I just wanted to hang out and see what was happening with the inspection. I was waiting there for almost four to five hours before the inspector arrived. He arrived in the middle of the afternoon around one or 2:00 PM. And keep in mind, this was a one day inspection. So five hours late into the eight hour a day there. And I thought the inspector was going to get there and he’s going to be apologetic, Hey, I’m sorry. And get right to work and really dive down. But instead of doing that, the first thing he asked the factory was for lunch. He said, Hey, if you don’t give me lunch, I’m not going to start the inspection. So I was like, I was pretty pissed. I was waiting for this guy for five hours and now he shows up and he’s asking this factory for lunch. So the inspector, the factory rep came to me and he’s like, you know, Hey, you know, don’t worry about this. This is normal. And I was like, are you serious? This is like a normal inspection operation here. And he’s like, yeah, yeah, don’t worry about it. We’re going to get him lunch. It’s like 20 RMBS like what three bucks? Don’t worry about it. Let’s get him lunch. And he’ll continue with the inspection after. So they went ahead and bought him lunch. And three, 20, 30 minutes later, he finished his lunch and then proceeded to do our entire inspection, which took me nine hours in the course of about two to three hours, essentially, just visually looking at the products, just opening them up, saying, okay, Hey, these look good. They’re not scratched up. Some of these products were electronics. So we asked him, Hey, you know, we need you to plug it in. We need you to run it through the bend test machine and all of these different things.
Bradley Sutton: What kind of batch was this 200 and 300 out of how many?
Sajag: So I believe that order was about 10,000 units. So this was a batch that was actually 300 units. So that was what he was supposed to inspect. And so we asked them to plug in all those units on all 300 products. And he told us that of course the inspection company said, yep, we’re going to do that. We’re going to do that. And when it came down to the inspection, the inspector only really plugged in about three to five units on every single test and then gave us the past inspection. So when we got the inspection report, the next day, we got to pass an inspection report for a batch of products that when I tested myself, we had a 6% defect rate. Meaning 6% of the products did not work right off the bat. I was not even including the visual defects, those scratches and things like that. We didn’t really have too many issues. And then our wear and tear tests, he notated that on the report and those tests happened to pass as well when he did them. I’m not sure how he did them because I wasn’t in the room. But altogether, when we got the inspection report, when I tested the batch myself, it was clearly a failed order. And when I got the batch results from that inspector, we got a fully passed order. So that’s actually what led me down to the path of founding Movley, because shortly after I ended up moving back to Chicago and Chicago is like a hub for brick and mortar there, not a lot of Amazon sellers here, but there’s a lot of brick and mortar sellers. So I was talking with a lot brick and mortar sellers going to conferences around the space and also conferences all around the US here. So I met with a lot of Amazon sellers, a lot of brick and mortar sellers and ask them all the same question, which was pretty simply do you trust your inspections company? And every single answer I got was, no, I don’t trust my inspections company, but it’s better than doing nothing or something to the tune of those words. And that’s actually what led me down to founding Movley. And the reason that we do inspections, the way we do.
Bradley Sutton: Interesting, I kind of liked that. It’s, you could see firsthand the, what happens when you don’t do it. And I have a similar experience. I mean, you were already doing something that was “the right way” to do things is hiring third party inspections, not relying on the factory and still things were leaking through. But we did the Project X thing here on YouTube for Helium 10. And, and I launch a lot of private label case study products on different people’s accounts just to keep my knowledge fresh. And, and it was, there was a product that we launched and it was from his factory. We’ve been getting stuff for them for like a year. It was actually the same factory as we get some of the Project X items from, and never had any issues with quality. So like, I’m like, you know what, Hey, Amazon’s not my full-time job. I’m not doing this for profit or anything. I’m just doing this for my knowledge and trying to keep profitable products on there, company can get the money for some, or the person who’s letting me use their account. They can get their money, but it’s not like this is my livelihood, so I didn’t have as much invested I guess, in it. So I was like, all right, I don’t need to do a inspection. We’ve bought thousands of approximates factory and never had major issues and then got this. And then like the first couple I opened, I’m like, this is terrible. I was like, it was the worst quality I’ve ever seen in my life of a product. And it was just like, it ended up taking me and my family, I have a warehouse here at my house. So like we opened up like three, the shipment, thank goodness was only a very small shipment and was only like 300 units, took us to inspect everything ourselves, because we had to do a one by one, like four days to do it, like three, four hours a day, three of us, four of us. And then at the end of it, we only had like, maybe like 75 units that were good and everything else was bad. So, I didn’t have any agreements. So like, it’s kind of already, it’s a hassle to try and get credit for this, but then one thing I’m not going to get back is like the shipping fee. So guys out there, this is something that, whether you’re just small time, like one of these small case studies they did or big time, you’ve got a $10,000 electronics products order. You guys should not be overlooking the need for inspections. Now, one thing I think that comes up that a lot of people wonder about is like, Hey, I’m dealing with profit margins here and, and I’m already paying for shipping, there’s these taxes. And then, now I have to do a 3PL warehouse. Amazon sellers are trying to– and rightfully so, you know, save whenever possible. I think everybody would agree that it’s definitely worth it. Like if you had to lose a whole shipment because of a quality issue, we’ll obviously saving costs, wouldn’t have done you good, but at the same time, you can’t do it where it’s going to cut into your profits so much that now you’re not even making money. So like, let’s say a typical Amazon seller might have a minimum order, quantity of a thousand units. And this is not like an electronic product. And obviously electronic product takes a lot more. You got to like turn it on and put it through some things, but let’s just take a, a coffin shelf, for example, our wooden coffin shelf, somebody needs to take a look at it to make sure that they didn’t have any paint running down or that there’s no chips here or there, what would be a typical cost of an inspection. And then what would the process be of like a thousand unit wooden coffin shelf order for a newer Amazon seller?
Sajag: It’s a really loaded question. So yeah, to just kind of address first of all, your point, you mentioned about kind of the way to look at costs. There’s a– we actually ran a calculation and in terms of like inspections and how to run the calculation. And we found out that, let’s say you have a $10 product and you have one bad order, which it could be the fifth order down the line. It could be that fifth order, that six order, it could be the second order. You don’t really know when it happens, it can be the 20th order. And that’s a really common theme. It just happens to be one order or it could be like a consistent decline. That one bad order is enough to sometimes pay. When you take into account shipping costs, packaging costs, lost profit if it’s returned and sent directly to Amazon customers, return it, and warranty replacements, things like that without even including the actual cost of like reviews or brand damage, et cetera, that alone just on a financial impact is sometimes enough to pay for your inspections for that product for several years. A lot of customers have this misconception that inspectors, when it comes to inspection costs like inspectors cost, maybe three to $5 an hour in China, for example. And that really can’t be farther from the truth. So a really qualified well-trained inspector, the market rate for that inspector after benefits, payroll taxes, social security, all those other expenses are considered. It’s about 13 to $19 an hour. So in a general sense, an inspector can only really do one day, one inspection per day. Just because if they’re going out to a factory it’s two hours from the city, finding another factory nearby to do another inspection is going to it’s very unlikely. And even if it does happen, there’s transport times between those factories, other things like that. So, it doesn’t really make feasible sense for an inspector to do more than one inspection in a day. And what ends up happening is that when those inspectors are allocated for the whole day, they have time where they can do a pretty proper inspection. So it’s done for a whole day of labor is about maybe a hundred to $150 just on the inspector cost alone. And then there’s additional costs that go into the inspection, which is the actual fraud and auditing training of the inspectors to travel costs, commendation costs, if it’s a super rural factory, things like that. And obviously also administrative costs to make sure that the inspection is booked properly, the recommendations are done, and the process is followed properly. So altogether, the cost of an inspection to do a good inspection is in the $300 range in that region.
Bradley Sutton: Okay. So now let’s say that’s order number one, your first one, and then hopefully, optimistically thinking, this is not the only order you’re going to keep ordering this. If it takes off on Amazon. Now, what’s the difference between your very first inspection you do have your first order of product and subsequent ones. I mean, is there no difference? Do you do the same exact inspection every time or after the first one you kind of can get like a, or you should go like on maybe a not as stringent one?
Sajag: That’s a really good question. So, in terms of like the sample size to choose for an inspection, there is some flexibility there. So, what most inspection companies use and what you should be using as well if you’re an Amazon seller is you should be using ISO 28, 59, and ISO stands for international organization of standards. And they’ve essentially spent tens of millions of dollars building a statistical model on what is the least number of units to test in a production batch while still being statistically significant. So, it’s not related to percentages. It’s not a ratio, it’s a statistical model. So it’s more of a table and they have three levels in that table, level one, level two, level three. So if you sell to Walmart, you sell to target, you sell to a brick and mortar. A lot of those stores will require you, Hey, we need you to do a level two inspection on every single order. Level one is meant to be a really quick and dirty inspection. It’s not very statistically significant. And on the other hand, level three is the most statistically significant. So in the case of those wooden shelves, a thousand units, level three is about 125 units. And level one is about 32 units. So level three is almost four times more statistically significant, more units than level one. So it makes a pretty big difference. So if you’re selling on Amazon and you have a higher risk of reviews and negative damage and returns things like that with return rates in e-commerce already being four times higher than brick and mortar, it’s really generally recommended you want to go for a level three order or level three inspection on every single order. And that’s really what you want to be doing on every single order is a level, at least a level two, which is the brick and mortar normal, and ideally a level three inspection. So, that way you can make sure that, Hey, my products are good, every single inspection. So what a lot of sellers opt do that we’ve seen and also works really well is when you do that first order, and you’re doing a pre-shipment inspection, the first orders are generally 60% of the time. I would say they’re a hit or a miss. So if it’s a hit, the product is great. There’s no problems. Everything is smooth sailing. If it’s a miss, uh, then it’s super, usually something super wrong. So maybe the color is wrong or the parts don’t fit together or something like that. So, generally to gauge against those risks, you want to do in the first order, a more detailed pre-shipment inspection. So a lot of sellers we work with say, it’s 125 units for level three. They say, Hey, instead of doing 125 units, I want to do 150 or 200 units. I want to do something above the level three level. And another way of actually fighting that risk is actually doing a during production inspection. And those are super useful, especially on the first orders, because you can get a view of the production line and actually be able to benchmark that production line then to future orders. If you run into issues again, so that first order is a hit and your fifth order is a miss. You can do it during production inspection on your sixth order and say, okay, Hey, the production line changed from the first order to the sixth order. And this is what happened. So you can get those insights.
Bradley Sutton: All right, we’re going to pause this really quick because it’s time for my BTS. You can view that as behind the scenes, or you can view that as Bradley’s 30 seconds, whatever you want that to be, basically, I’m going to give you guys my 30-second tip of the episode, and that has to do with sales estimations for items that have variations. So a variation, as you guys know on Amazon, it’s like, it’s a Amazon listing that has different colors. Red, blue, green Amazon gives the same BSR now, bestseller rank for all of them. So there’s no real way using Helium 10’s tools, or just looking at the BSR to like, know which variation or which color is selling the best. So what you guys should do, if you have Helium 10’s Chrome Extension that you can get at helium10.com/extension, you just hit the review insights on there. And then at least you can have the ability to see which variation item gets the most reviews. Now, this is not some exact science where it correlates a number of sales, but at least you’ll know which are the items or which are the variations, the child items that are getting the most reviews and correspondingly usually those are the ones that are getting the most sales. Okay. Now, I mean, another question that I think people might have as far as inspections goes is, yeah, this is all well and good. And we understand this, all right, we can make it profitable, but at the end of the day, this is a third-party company they can come in. And what happens if the factory is like, no, that’s nonsense, like they’re full of full of crap. This product is good, like they’re not tied in any way to the factory. And rightfully so, you don’t want somebody biased, otherwise might as well just have an employee of the factory do it. But what happens in situations like that, where there’s a dispute where the inspector says one thing, and the factory says another thing, and you’re here in Chicago, Illinois, 10,000 miles away trying to mediate this, what happens when issues like that come up?
Sajag: Yeah, it’s a really good question. So that’s when it really gets super important to get down into the results. That’s where the results become like super important. So for example, like when you do an inspection, like at least with Movley, we sent 40 page reports and they have tons of photos of the product, photos of the defects. There’s videos of each test that the inspector did. So if you give a customer instruction, like run it through a bend test machine exactly how they did that, what that machine looked like, how it was set up, how it was run, that’s all in that video. So, what it comes down to that is that the factory says, Hey, products are good. The inspector doesn’t know what they’re doing, et cetera. That’s when you would just want to look at the results. You want to look at the pictures, you want to look at the defects. You want to look at the videos and you want to see, okay, Hey, did the inspector do their job properly? Did they properly inspect the products? And did they run the checks properly? And 99% of the time, the inspector did test the products properly. And the factory is just trying to cut corners. And that’s what we’ve seen in the most part. Now there are times where we had a client, for example, who did a leather products. And when he did an inspection for leather products, the factory said, Hey, we don’t have any problems. But when the inspector found problems, they found a lot of issues like leather was bent or was– it was worn out in certain areas, things like that. And the factory didn’t consider those defects. But the inspector did. And the reason the inspector considered those defects is because they have experience inspecting a lot of other leather products as well. So, when you have all that experience, and you’ve seen all these leather products from hundreds of different manufacturers, you can have a different point of view than what the factory might have or the client might have. So, it really just comes down to looking at the inspection report and saying, okay, Hey, do I consider these defects? Or do I not? And then you kind of know which side to kind of lean from. But if the factory is being super uncooperative, and they’re saying, Hey, the products are good. Despite having clearly bad inspection results, that could just be a red flag on the side of the factory. And that’s when you have issues with your manufacturer. And that’s when things get a little bit more complex.
Bradley Sutton: So what kind of language when you’re first negotiated? I would imagine then the time to talk about these things is not, Oh, products ready to ship. Okay. Here, I’m going to send in my inspection company, I would assume that, Hey, when you’re first negotiating with the supplier, you tell them something like, Hey, I use a third party inspection company and these are the guidelines, or is that suggested to put that into the initial negotiation so that there’s no miscommunication later?
Sajag: Yeah. And nine out of 10 times, it’s really effective to do that in the one out of 10 times, if you give them too much information, then they can kind of game the system. So a lot of times with inspections, you’re not gauging the quality of the products, the root quality issues you’re maybe gauging the symptoms. Like for example, if there was a lot of loose threads in the product, you probably gauging that, Hey, this product is going to come up come apart pretty easily. If it’s like let’s say it’s a threaded product. So if you see a lot of loose threads, you can say, okay, this product may not be good quality. But if you say to the factory, Hey, we’re checking for loose threads. And that’s a very specific thing. You tell them, then they can cut all those loose threads. And it could still be manufactured in a poorly calibrated machine. But now you have no indication that, Hey, this product is going to have more of those threats after a few weeks, because they cut it all out and they trimmed it. So, and that one out of 10 times, it becomes a little bit confusing, but nine out of 10 times, yeah. You do want to tell your factory in advance that, Hey, this is what my inspection company will be looking for. This is what we’re going to do. And it’s really important to have it in writing and not so much because it’s an enforceable contract. But more so because it’s set up in a way that there’s a clear written agreement between the factory and you, so that way, as long as the factory wants to keep that relationship with you, then that’s really enforced at the end of the day, still by trust. It’s very difficult to enforce a contract in China, unless it’s written in English, Chinese, it’s signed and chopped, and you’re going through that entire process, which can be very complex. And then obviously it’s very expensive to actually get that contract enforced. So it’s more so, you want to keep it detailed enough to where that relationship with the client with the factory is built. So you can say, okay, Hey, we’re going to be checking the products. These are the things we’re looking for. We’re looking for visual defects, if it’s a wooden shelf, we want to make sure that it’s built up to the weight limit we discussed. So we’re going to put a hundred pounds on it and leave it there for 10, 20 minutes, and it should not break. And we’re going to put 150 pounds on it. Are we going to keep adding weight until it breaks to test for that? You can kind of give them some ideas. So they know that, okay, Hey, you’re going to be doing a proper inspection and you’re going to be properly testing the products. So if they skimp on any of the specifications, then they might have to remake the entire order. So that’s when it becomes really helpful to kind of set those expectations early. So that way everybody’s on the same page.
Bradley Sutton: I guess another question would be, in regards to inspections is what happens in the case that there is something wrong. What’s usually the next step. Like, do you have, I mean, do you ever have a case where the whole batch needs to be scrapped and who’s responsible for that? Or do you usually negotiate something where there’s some kind of allowance, like a certain percentage that they need to be able to replace? Or, I mean, the whole, I mean, the ideal situation is, Hey, we inspect this and there’s only like two defects. So we think this is good. All right, everything’s good to go, but Hey, devil’s advocate things. Don’t always work out that great. What’s the next step when somebody gets this report and they’re like, yeah, I don’t want to ship this product. Yeah.
Sajag: Yeah. That’s when it can get really tricky. So in terms of acceptable allowance, generally what set most factories used as the AQL system, acceptable quality limits. And that’s laid out in that same specification that I mentioned earlier. ISO 28, 59. So essentially there’s like a number of allowed major, minor and critical defects. So for Movley, for example, we don’t allow any critical defects. And the ratio we use for major is 2.5 and 4.0 for minor. So I don’t have those specific numbers pulled up, but like, let’s say, you have 10 minor defects allowed, minor defects are problems that small scratches on the units, things like that. Customers are probably not going to notice. They’re not going to really care. Major defects are things like, okay, Hey, you know, this might create a return of the product. Some customers may not be too happy about it. Some customers will rate us four stars or three stars for that product, just because of that defect. So, we want them super controlled, but it’s not like a terrible thing. And critical defects are okay, Hey, when we take this product out and we sell it to the customer, this is a definite return, definite one star review. And it’s going to definitely balloon into an additional cost somehow whether it’s in the return or warranty claim, et cetera. So, you always want to look at it from the customer point of view in terms of what is allowed and not in a factory point of view. And that’s set that in the inspection criteria, or just, you use that as an interpretation when you’re interpreting the inspection results to determine, okay, Hey, this is going to be a problem. This is not going to be a problem, et cetera. And I always recommend coming at it from that perspective, because if you’re coming at it from the factory perspective, sure. You might be in a better favor with the factory. But you’re not going to be in a good stance with your customers, right? So if you put critical defects as major defects, and you put major defects as minor defects, your customers are not going to be too happy and that’s going to increase costs for you a lot. And then you want to do what’s called a re-inspection, which is when you apply a tightened AQL. So there’s like, say 10 minor defects was allowed, then you can allow 70 facts. So it’s a lot more difficult for the inspection to pass. And then you randomly sample again, to make sure the factories fix those problems. Now, in the case that the problems are all the whole batch has to be reworked, and this has happened, there are problems like this. Like for example, with running my brand, we had a time when the order was produced in the wrong color, and the whole batch had to be redone. The raw materials were the wrong color. Everything had to be redone. And we’ve had customers where their batch has to be completely redone as well. And generally that happens on the first order. It does not happen on the second or the third order because your factory already knows here are the problems. So, that’s where the during production inspection comes in really helpful. You do that at about 20% of production completion.
Sajag: So, you catch that problem before it balloons because if you catch that at 20% and you tell your factory, Hey, you know, this is the wrong color, or these parts don’t fit your factory will halt production. And they’ll say, okay, let’s fix this. And they would probably agree to absorb all the costs associated with the rework and fixing those products, as long as it’s something that has been reasonably discussed. And they’re not going to charge you for that. And it’s also going to save a lot of time versus if you find it in a pre-shipment inspection. And the whole batch has to be reworked. Most factories are going to do one of two things. They’re going to really push you hard. First of all, to say, okay, Hey, we just want you to buy these products. We’ll fix it for the next order. So you might be in a bind where you might actually, your only option might be to walk away and lose the supplier and also lose the 30% deposit. Or you can tell the supplier and kind of work with them and say, okay, we really can’t buy this product with these problems, you know, our customers will not buy these products. We will not be able to sell them. We need you to fix these, and it’s already at the factory. It’s going to be way cheaper for you to fix it. And then at what in most cases happens is a little bit of a negotiation where the factory says, okay, Hey, we’ll cover 20% of the cost, or we’ll cover 50% of the costs. You have to cover the other 50% of the rework or the new units or whatever it might be. And then you work with them. And then at that point, you’re extending the lead time. You have an additional timeline requirement, but the factory generally will work with you somehow or the other. And they may not make money on that order. They might lose some money, but to build that relationship with you, as long as you come at them, from the approach of, Hey, you’re not the bad guy, it’s a misunderstanding, maybe something where we’re off here, but we really can’t sell these products. Then the factory is going to be a lot more amicable to work with you. And you can say, Hey, we want to order more. We’re launching this. It’s going to solidly well, this is what our projections look like. You know, kind of entice them, give them some carrots. And once they bite down on that, you can probably get away at a lower cost than just paying for a brand new order.
Bradley Sutton: All right, now you’ve been giving us a lot of tips and strategies throughout this, but we have this part of the show. We call that TST, or the TST 30-second tip, what is your 30-second tip on something that’s valuable, that people need to know about how to manage their inspections or something of that nature. It could be how to become a tycoon when you’re in the sixth grade. I mean, whatever 30 seconds, super valuable, super actionable that you can give our listeners.
Sajag: Yeah. So in the lesson of inspections, the biggest thing I would recommend, if you want to do an effective inspections is don’t undervalue what product tests do. So in every inspection you want to make sure that you set up really good product tests. Like for example, in that a wooden board and for the wooden shelf, a breaking test to make sure when the, uh, the board breaks. So I can’t stress enough how important the actual product tests are when it comes to the inspection. Sure. You can do a visual inspection, you can check the products, you can do things like that, but those product tests where you actually go deep dive into the product, into the quality, things like that, where you can talk with your suppliers to get talk with other suppliers, do some research, look at your reviews and think about tests that can combat those negative reviews. Those product tests are going to be the key piece to actually making sure your inspections are effective.
Bradley Sutton: Okay. Excellent. Excellent. Now, if people have more questions they want to reach out to you or perhaps see about your services as far as inspections go, how can they find you on the interwebs?
Sajag: Yeah, definitely. So you can always find us at Movley, movley.com.
Bradley Sutton: Excellent. Excellent. Like I said, I do some case studies here or there, and I have some shipments coming up. Maybe I could do a little test and use your team to make sure I don’t have the same situation as I did the last time. And then I could report back to everybody how the process all works. Like maybe in a blog or something. How’s that sound?
Sajag: Yeah, definitely. We’d love to do that. And we can also walk you through kind of how the product tests work and things like that. And that could be really cool to include in the case study.
Bradley Sutton: All right. Cool. Cool. Sounds good. All right. Well, thank you so much for joining us on the show and we’d like to talk to you in the future and see what’s new in the world of inspections maybe in a year or two.
Sajag: Yeah, definitely. Thanks so much Bradley, for having me on, and I really hope anybody listening. This was super valuable and you got some good insights that you can use and get started with inspections.
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