ELC Factory visit -UPDATED - November 2017

• Document No.

• Conducted on

  Date

• Prepared by

• ELC Factory Visit- UPDATED - Nov 2017 China suppliers for regional, global use

• Client / Site

• Location
  Address

• Factory Exterior

  Media

• Offices

  Media

• Showroom

  Media

• Model shop

  Media

• Raw material storage

  Media

• Factory floor- general

  Media

• Factory floor - injection molding & tool making

  Media

• Factory Floor-CNC/ cutting machines

  Media

• Factory floor - painting, polishing, plating

  Media

• Factory floor - assembly & decorating

  Media

• Quality control

  Media

• Employee accommodations, (sleeping, canteen)

  Media

• Packaging, delivery & receiving, warehouse

  Media

GENERAL OBSERVATIONS Take some time to understand the entire workflow. If you do not understand something, ask questions. If you cannot ultimately understand why a factory’s workflow is a certain way, it may be a warning signal.

• Does workflow, organization make sense?

  Safe

  At Risk

  N/A

• Employee Conditions observations<br><br>Regardless, happy workers make for productive workers. Visit the employee housing areas to see how they eat, sleep and live when they are not on the floor.<br><br>Satisfactory?

  Safe

  At Risk

  N/A

• Any visible bottlenecks in this factory?

  Yes

  No

  N/A

• Dedicated samples/prototype area/model shop?

  Yes

  No

  N/A

• Production line observations <br><br>Do product samples on the line look similar to the quality seen in the showroom?

  Yes

  No

  N/A

Warehouse observation

• Are there any cosmetics/prestige beauty clients stored?

  Yes

  No

  N/A

• Is the warehouse clean and organized?

  Safe

  At Risk

  N/A

Raw material storage observation

• Arranged by category?

  Yes

  No

  N/A

• Dedicated area?

  Yes

  No

  N/A

OBSERVATIONS AND CONCLUSIONS

• General organization in the factory, machinery?

  Good

  Average

  Bad

• Working environment (light, noise..)

  Good

  Average

  Bad

• Motivation of top management

  Good

  Average

  Bad

• Does Owner, or factory have experience manufacturing similar items?

  Yes

  No

  N/A

• Ease of mutual understanding

  Good

  Average

  Bad

• Can they make our product?

  Select Yes, for sure Probably Probably not

  • Yes, for sure
  • Probably
  • Probably not

• Do they have enough capacity?

  Yes, for sure

  Probably

  Probably not

• Do they already sell outside of China?

  Yes

  No

  N/A

• Outside APAC?

  Yes

  No

  N/A

• Do they understand our standards?

  Yes, for sure

  Probably

  Probably not

• Factory’s main focus

  Select Low cost, high volume Intermediate High quality, low volume Constant new product development

  • Low cost, high volume
  • Intermediate
  • High quality, low volume
  • Constant new product development

DECISIONS

• Is this factory approved for expanded use?

  Yes

  No

  N/A

• Will close monitoring of first production run be necessary?

  Yes

  No

  N/A

• For local factories: Does it appear that the factory can produce similar volumes and quality to our global factories?

  Yes

  No

  N/A

• Is factory approved for initial installations and updates in Sephora?

  Yes

  No

  N/A

• Approved to install new and updates in Other SMC retailers?

  Yes

  No

  N/A

QUALITY CONTROL CAPABILITIES Quality Control. The key here is the number and location of QC checkpoints. Figure out how the rejected parts are handled. If you cannot understand that, it is likely that the workers also cannot.

• What proportion of products is checked during final QC?

  10%

  10-20%

  20-50%

  50-100%

• Does final QC occur before or after packing is completed?

  Yes

  No

  N/A

• Is the first-pass yield displayed on a wall, and tracked day-by-day and line-by-line?

  Yes

  No

  N/A

• Where will abrasion testing, fragrance testing occur?

  In house

  Outsourced

• Are numbers and details of customer complaints displayed on a wall?

  Yes

  No

  N/A

• Test laboratory - is there evidence of regular testing to appropriate criteria?

  Yes

  No

  N/A

• Are conform samples available to workers in production and QC areas?

  Yes

  No

  N/A

• Are in-process QC results recorded in a formal report?

  Yes

  No

  N/A

• Are final QC results recorded in a formal report?

  Yes

  No

  N/A

• Are clear procedures given to each operator and to the QC staff, for each job?

  Yes

  No

  N/A

• Are incoming QC results recorded in a formal report?

  Yes

  No

  N/A

• If the factory is small and has no quality system, What is your subjective opinion about the factory’s ability to deliver quality products consistently? Capable? (Please Click N/A for subsequent quality questions- intended for factories with formal QC)

  Yes

  No

  N/A

• If the factory says it has a quality system, <br>Does the factory communicate requirements to its suppliers on its POs (or other documents)? Are these requirements clearly listed?​

  Yes

  No

  N/A

• Are there QC staff solely dedicated to final QC? How many? Do they only do QC, or also a finishing operation at the same time?

ABILITY TO CONTROL COSTS IN THE LONG TERM

Overhead costs

• Are top managers (general manager, production manager, finance manager, sales manager, QC manager) part of the owner’s family? Or are they professional managers?

  Family

  Professionals

  Both

• What is the standing of the factory building(s)?<br>Are there several empty floors?

  Yes

  No

  N/A

• Can you see recent investments in expensive machinery?

  Yes

  No

  N/A

• How many of these expensive machines are idle?

  None

  1-5

  5 or more

• Is it because of poor maintenance, or because of low production volume?

  Poor maintenance

  Low production volume

  Other

  Not applicable

Maintenance costs

• Is equipment failure down time calculated?

  Yes

  No

  N/A

• Are there checklists for maintenance?

  Yes

  No

  N/A

• Do the maintenance protocols seem to be followed?

  Yes

  No

  N/A

Visual control of costs

• Is the number of pieces per labor hour displayed on a wall, and tracked day-by-day?

  Yes

  No

  N/A

• Is the amount of scrapped material displayed on a wall, and tracked day-by-day?

  Yes

  No

  N/A

• Is the total unit cost displayed on a wall, and tracked day-by-day?

  Yes

  No

  N/A

Degree of lean-ness (cost impact)

• Can you see a lot of inventory kept before production and kept between each production step?

  Yes

  No

  N/A

• Are they selling directly into these markets, or via a third-party trader?

  Direct

  3rd party trader

Client base, export experience (cost implications)

• Are they already selling into markets similar to ours?

  Yes

  No

  N/A

• Do they have experience with the types of quality, safety and documentation requirements which you expect to face when selling their production into your market?

  Yes

  No

  N/A

• Are we one of few direct export customers?

  Yes

  No

  N/A

• Has supplier had experience obtaining UL certification in the past?

  Yes

  No

  N/A

PRODUCTION CAPABILITIES

Production Organization

• Before a new production is launched, are some jigs / tools prepared by the engineering department?

  Yes

  No

  N/A

• Is pre-production inventory well organized?

  Yes

  No

  N/A

• Is work-in-process inventory stored in a predictable way, or do people need to look around to find what they need?

  Yes

  No

  N/A

• Where do the components used in production come from?

Production Planning

• Is production organized?

  (Best) Is production organized as a continuous flow, without any work-in-process inventory visible in the workshop?

  (Very Good) Is there a kanban system?

  (Good) Is there a production planning, with details for each workshop, and updated everyday?

  (Worst) Is there no production planning at all?

Flexibility of production

• Is there a list of approved subcontractors, who can take over part of the job?

  Yes

  No

  N/A

• For which process steps?

• Is there a power generator?

  Yes

  No

  N/A

Visual control of production

• Is the proportion of on-time shipments displayed on a wall, and updated at least weekly?

  Yes

  No

  N/A

• Is the time to make one piece, from start to finish, displayed on a wall, and updated daily?

  Yes

  No

  N/A

SOCIAL COMPLIANCE

Fire prevention

• Are there enough fire extinguishers (in workshops, dormitories)?

  Yes

  No

  N/A

• Are they accessible, and up to date?

  Yes

  No

  N/A

• Are there enough emergency exits?

  Yes

  No

  N/A

• Is it possible to lock them?

  Yes

  No

  N/A

• Are they used as storage areas?

  Yes

  No

  N/A

Worker protection

• Do workers have appropriate personal protective equipment (gloves, masks, glasses, safety boots)?

  Yes

  No

  N/A

• Are there enough first-aid kits? Are they available and full?

  Yes

  No

  N/A

Environmental policy

• Does production generate a lot of waste?

  Yes

  No

  N/A

• Is this waste treated?

  Yes

  No

  N/A

• Has the factory invested in energy-efficient equipment?

  Yes

  No

  N/A

• Is supplier on cutting edge of environmental protocols? (Certifications in materials use, machine process, waste, recycling, etc)

  Yes

  No

  N/A

ENGINEERING CAPABILITIES

• How many designers are there?

  None

  1-5

  5 or more

• Where Is design done?<br>

  In house

  Outsourced

• How many designers can read and write English?

  None

  1-5

  5 or more

• How many engineers are there? <br>

  None

  1-5

  5 or more

• How many engineers are dedicated solely to new developments?

  None

  1-5

  5 or more

• What software do they use?

• Can they show examples of complex new product developments successfully completed recently, in collaboration with overseas customers?<br>

  Yes

  No

  N/A

• Does the supplier understand that they cannot sell products developed for a customer to other customers?<br> <br>

  Yes

  No

  N/A

• Does the supplier show products developed for customers in their showroom?

  Yes

  No

  N/A

MANUFACTURING CAPABILITIES Focus of our review will be on the following relevant ELC VM manufacturing processes, personnel, machinery: Chrome plating, injection molding, fabricated acrylic, vacuum form styrene, high polished clear acrylic, metal powder coating, decoration (screening, metal stamping), wood, electrical.

• Peak production schedules? (Time of year)

Injection Molding Capabilities

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Injection molding images

  Media

Vacuum Forming capabilities

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Vac form images

  Media

Metal Stamping Capabilities

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Metal stamping images

  Media

Assembly & Decoration capabilities

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Assembly & Decorating images

  Media

Tool making & Automation

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Tool making images

  Media

Electroplating capabilities

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Electroplating images

  Media

CUTTING, POLISHING AND PAINTING CAPABILITIES

• Comments: (e.g.# of machines, type and # of operators, level of automation?)

• Cutting, polishing images

  Media

PACKING & SHIPPING CAPABILITIES

• Comments: (e.g. shipping process, packaging quality, automation, condition, # of trucks)

• FOB Nearest port/airport (name and distance)

• Delivery/loading

  Media