Auditing a small Chinese factory: does it make sense?

I see some well-meaning importers who pay for factory audits based on a checklist inspired by the ISO9001 standard. However, I am really questioning the value of auditing a small factory (below 400-600 workers).

Don’t get me wrong, I am not suggesting that purchasers roll the dice. They should try to visit the factories before placing orders. It is always good to see what equipment the factory will use, and what kind of products they are manufacturing.

My point is that a formal audit will always show that small workshops are very disorganized. It is often impossible to choose between 2 small factories based on audit reports.

As I wrote before, large factories tend to pass such audits more easily than small manufacturers. There are mainly two reasons for this:

• First, their growth has forced them to move away from the “family business” model and to hire professional managers.
• Second, they often work with large buyers that encourage them to reorganize according to the ISO9001 standard… Upon which are based most factory audit checklists. No wonder they get better evaluations!

In other words: there is no need to look for holes in the quality system, when there is no system in place.

So, what should buyers look at, when they evaluate a small factory? The personality and the motivation of the boss and his managers (often his wife or his cousin).

Because the frequency of quality issues and timing delays depends directly on their involvement.

The bottom line is: visit small manufacturers to “feel” them, and audit the big ones to “analyze” them.

Do you agree?

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UPDATE: a reader sent me this message, and he’s got an excellent point:

When dealing with smaller factories, I’ve often found it quite valuable to visit their key subcontractors, as well.  I then spend more time evaluating these subcontractors.  The reason  being is that what the big boys can do “in house” vis-a-vis capital-intensive equipment and machinery, smaller players need to outsource. The smaller players, thus, often become assemblers/packers of the product – one step further down the supply chain.