When Dean Ramler set
up his furniture-making business in China, he
knew that ultimate success largely hinged on keeping
a firm finger on the production pulse.
During a backpacking tour of Europe in the mid-2000s, Dean Ramler had a flash of business inspiration – he could produce furniture of the same quality as the highly priced pieces in Italian stores but make them accessible to everyday people.
Back in Australia, Ramler ran his idea by a friend, Ruslan Kogan, who had founded a business selling Chinese-made electronic goods directly to customers using an online-only business model. The pair realised there was no reason that model wouldn’t work with furniture, so, in 2007, they formed Milan Direct and set off for China to engage suppliers.
Four years later, Milan Direct has sold more than $20 million worth of home and office furniture to customers in Australia, New Zealand, the UK and Europe. Its entire catalogue is made in China and all warehousing and delivery functions are also outsourced.
Ramler concedes that entrusting the manufacturing process to overseas partners can make it difficult to manage the quality of the work. The best way to do this, he says, is firsthand.
“Nothing beats doing it yourself,” says Ramler. “I visit our suppliers in China six times a year and I spend a lot of time with them on the factory floor, teaching them how to improve the quality. They’re actually very receptive to that, which is why I love doing business in China.”
Ramler says this interaction is “very much win–win” for both parties. “The more I can teach them, the more it improves our orders … they’re also selling furniture around the world, and they love to learn how to do it better, because it’s improving quality for all their customers,” he explains.
“With 99 per cent of our suppliers, we know exactly the quality we’re going to get from them, because we’ve invested several years in improving their processes and their understanding of what we want.”
Engaging a third party
While this firsthand approach reaps obvious rewards, the catch is that most Australian business owners cannot spend large amounts of time overseeing operations overseas. An alternative is to use a third-party quality control (3PQC) agent, who can conduct everything from pre-shipment inspections, production monitoring and mid-production checks to post-production checks and container-loading checks. A 3PQC can even have a potential supplier’s factory audited before you place an order, to ensure that the company can, in fact, produce to the levels that it claims.
While a 3PQC can act as “your eyes in the factory”, it is a relationship that also needs careful management, says Ramler. “If you don’t give your 3PQC perfect information on what to check for, you’re going to get back inadequate information,” he notes. “You have to give your 3PQC provider as much information as possible about what they should actually be inspecting.
“We provide our quality control agents with a thorough checklist of everything they should be looking for, photos of what the product looks like when it’s made correctly versus incorrectly and photos of how the packaging should be. If those reports don’t come back at 99.99 per cent, we stop the shipment before it leaves the factory and make the changes to improve the quality before it leaves China.”
Because of the manual labour aspect of quality inspections, it is not possible to test every single item produced. “You may receive a favourable report back from your small sample size that may not be a true reflection on the overall quality,” says Ramler.
“Also, it’s not uncommon for quality inspection reports to come back as having failed, yet when you look further into the details, it can be that the product quality was fine but the 3PQC agent simply wanted you to pay to do a re-test.”
When it comes to quality control, nothing beats being an expert in the products that you’re selling, says Ramler. “I am really passionate about furniture – I can work with furniture all day – so I know exactly what the products should end up like. I enjoy working with our factories to ensure the quality is great – I know what to look for. That’s the first thing.”
Ramler has some final advice for those wanting to head down a similar path. “All too often these days, everyone wants to be an entrepreneur and set up an online store and start importing products,” he says. “Don’t do it for the wrong reason – because you want to make money selling things online – do it because you have a passion for that business.”
Milan Direct’s four key learnings for quality control of offshore suppliers
- Get your hands dirty – do as many quality inspections as possible yourself.
- Know what to look for – if you don’t understand your product perfectly, the supplier won’t.
- Don’t let your third-party quality control agent have its own way – manage this relationship strictly.
- Never assume anything – Dean Ramler says Milan Direct’s first container of chairs came unpackaged, because he forgot to discuss packaging and assumed that the factory would know to put each chair in its own box. “We can laugh about it now but at the time, we had to find cardboard boxes after the container had landed. It added time and cost to the product.”
The views expressed in this article are those of the author and the interviewees, and not of Australia Post.
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