Tuesday, October 9, 2012

Quality Control for LED Sign Supply Chains

Anyone who has experienced the unique challenges of trying to source product or components overseas will tell you it is not for the weak spirited. Even Apple, one of the most successful companies in the world today is not immune to troubles with oversea suppliers (see here). The logistical, cultural, linguistic, and engineering aspects of sourcing products overseas do not always align correctly. Although It’s safe to say that virtually every LED sign manufacturer uses some components that are sourced from overseas manufactures in one way or another, not all of them have been able to control the quality of these components effectively. This post is written mainly for sign companies who are considering buying “direct” from overseas suppliers, but it will also be educational for end users who are in the market for an LED sign.

Quality control is hard to manage when you're working with factories that are 7000 miles away. It can be done, but it takes a balanced approach and a major commitment by the US based organization. When you buy from organizations that do this well, you significantly decrease your risk of getting a sub-par product and ultimately save time and money by avoiding lengthy service issues and sign outages. However, when you buy from an organization that does this poorly or manufactures most of their LED sign overseas, the risk of poor quality product increases greatly. Here are some reasons why:

Limited Oversight
US distributors or manufacturers who do not have direct contract with the supplier find themselves completely at the mercy of their quality control system...if one exists at all. It is crucial to have direct contact with the suppliers, the ability to meet face to face, speak the language, and to know the right people. There are a large number of overseas component suppliers, but a smaller number of good suppliers out there. Knowing the right supplier to use, and having a good relationship with them is key to a successful quality control program.

Component Swapping
This is something that continues to plague distributors of overseas products. Mike’s last blog post addressed some important aspects of this issue (see here). Many overseas manufacturers will build the sample product (and even the first production run) with high quality components. The initial product seems to work well, and the distributor puts more orders in. This is where many manufacturers will start to swap out the internal components with less expensive alternatives over time. This is done without notifying the US distributor and the end result is a sub-par product that may work initially, but fail miserably after only 1-2 years of service.

Inconsistent Product
Distributors that do not have the resources to design, engineer, and oversee production find out very quickly that their product will be changed to suite the needs of the overseas supplier, without consultation. Component locations, LED Binning (color grading), connector locations, and physical materials are common areas for unannounced changes.

Multiple Sources
When US manufacturers rely too heavily on a single source for a particular component, they lose the ability to respond to product shortages quickly and effectively. The ability to demand quality control is also diminished if the manufacturer doesn’t have an alternate supplier to go to if the quality suffers.

Over the past 5-6 years, sourcing overseas suppliers has expanded in a way not friendly to the sign distributor, or the end users themselves. Unfortunately many sign companies believed they had found a perfect solution to increase profit margins by “going direct” to an overseas manufacturer. However, they did not realize what it really takes to reliably source, produce, and bring components into the US while maintaining the quality expected by today's consumer.

In my opinion, the best manufacturers commit the resources and spend the money needed to support a solid high quality supply chain. They don’t source the entire production overseas, but only the components that make sense. They develop relationships with the best suppliers, and work with them directly. Controlling the quality of the supply chain is an important aspect of our industry and must be actively addressed by the manufacturer. Doing this effectively benefits everyone, including the end users who ultimately feel the effects of a good, or bad supply chain.

-Scott Hofheins

I hope this post has been informative and helpful. As usual, I welcome ALL constructive comments. Please feel free to comment and add anything I’ve missed, or additional tips you may have regarding this topic. Please visit www.vantageled.com for many other resources, white papers, and of course: Great looking LED Signs!

**All posts/thoughts/writings are strictly the viewpoint of me and me alone and do not reflect nor speak for Vantage LED’s beliefs, attitudes, thoughts, etc. unless specifically stated.

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