FREQUENTLY ASKED QUESTIONS
01. Pre-shipment Inspection
Pre-shipment inspection (also preshipment inspection or PSI) is a part of supply chain management and an important quality control method for checking the quality of goods clients buy from suppliers.
PSI helps ensure that production complies with the governing specification, contract, or purchase order. A final random inspection (FRI) checks finished products, often when at least 80% of an order has been produced and export-packed. Samples are selected at random, according to standards and procedures.
• Ensure that goods are not counterfeited or being frauded
• Ensure product is of good quality and functional before reaching customers
• Ensure product is safe and does not pose any health risk
• Ensure that packaging is meeting shipment requirement
• Saves higher cost on handling customer’s complaint and reputational risk
Before Inspection
a. Step #1- Inspector Travels to the Factory
b. Step #2 – Inspector Pulls the Sample (And sets aside items for special testing)
During Inspection
a. Step #3 – Conduct Special Tests
b. Step #4 – Check Packaging, Labelling
c. Step #5 – Visual Inspection of the Product
d. Step #6 – Functional Testing
e. Step #7 – Check Physical Requirements
f. Step #8 – Barcode Verification
g. Step #9 – Carton Drop Test
After the Inspection
a. Step #10 – Finalize Inspection Report and Send
b. Download a Sample Inspection Report
02. Social Compliance Audit
Social compliance refers to how a company protects the health and safety as well as the rights of its employees, the community, and the environment where it operates in addition to the lives and communities of workers in its distribution chain and its supply chain. Social compliance also refers to an organization’s perspective on corporate social responsibility (CSR).
Social compliance audits are usually performed by independent social compliance auditors who commands good knowledge on local labor laws and regulations and good skillset on detecting workplace risks (e.g. health and safety hazard, poor working conditions, forced labor etc.)
Social compliance auditors are usually properly trained and certified per certain industrial standards (e.g. SA8000, APSCA)
• To ensure your supply chain is free of issues like child labor, forced labor, and unfair disciplinary practices
• To ensure that suppliers in developing countries are compliant with all applicable labor laws and regulations and ILO conventions (International Labor Organization)
• Supplier with poor working conditions, such as locked exits, excessive working hours and child labor pose tremendous reputational risk to the brands or importers sourcing goods from the suppliers.
• Social compliance audits help to avoid Industrial tragedy like Rana Plaza in Bangladesh in 2013.
Usually, there are 3 elements of such audit. A. Worker Interview; B. Document Review and C. Health and Safety Walkthrough
Worker Interviews: Can be conversation with individual worker or a group of workers who are selected at random to better understand their working conditions and their living conditions if the employees live at the facilities.
Worker interviews usually with the workers’ consensus and is conducted in private to give them the opportunity to bring up any bad treatment or grievances. Interview questions are around issues as work hours and conditions, length of employment, and their understanding of their employers’ disciplinary practices.
Document Review:
After collecting info from worker interview, auditor needs to cross check the reported misconduct against the documentation, so as to remain impartial.
In addition, document review is a way to detect risk related to management system, such as unfair employment contract terms, inappropriate permits per legal requirement (e.g. building permit, wastewater permit).
Document review covers documents from business license to payroll records, any written records or policy related to working conditions.
Health and Safety Walkthrough:
In this step, the auditor will visit very concern of the factory and have a general view of potential health and safety risks, e.g. risk on fire hazards, electrical safety and chemical management.
It is also a process for auditors to observed potential risk on child labor or forced labor by detecting young-looking faces or nervous faces. Then auditor can invite those workers for interview to further determine risk.
After the audit, you will receive an audit report, which will indicate the findings detected during the audit. Usually those findings will be classified at different risk severity level, say critical risk, major risk or minor risk. It is important to work with suppliers to remediate those findings, particularly the critical and major risk to avoid potential reputational damage to you and your suppliers.
Hsin also offers service to work with your supplier on your behalf on Corrective Action Plan (CAP).
03. C-TPAT
The Customs-Trade Partnership Against Terrorism (C-TPAT) program is one layer in U.S. Customs and Border Protection’s (CBP) multi-layered cargo enforcement strategy. Through this program, CBP works with the trade community to strengthen international supply chains and improve United States border security; in exchange, CBP affords C-TPAT Partners certain benefits, including reduced examination rates and access to the Free and Secure Trade (FAST) lanes.
Launched in November 2001 with seven major importers as a direct result of the tragic events of September 11, 2001, the program now includes more than 10,700 Partner companies, and covers the gamut of the trade community to include importers; exporters; bordercrossing highway carriers; rail, air, and sea carriers; licensed U.S. Customs brokers; U.S. marine port authority/ terminal operators; U.S. freight consolidators; Mexican and Canadian manufacturers; and Mexican long‐haul highway carriers. One vitally important aspect of the minimum security criteria Partners must address to maintain the security of their shipments is a documented risk assessment process.
CTPAT Partners enjoy a variety of benefits, including taking an active role in working closer with the U.S. Government in its war against terrorism. As they do this, Partners are able to better identify their own security vulnerabilities and take corrective actions to mitigate risks. Some of the benefits of the program include:
• Reduced number of CBP examinations
• Front of the line inspections
• Possible exemption from Stratified Exams
• Shorter wait times at the border
• Assignment of a Supply Chain Security Specialist to the company
• Access to the Free and Secure Trade (FAST) Lanes at the land borders
• Access to the CTPAT web-based Portal system and a library of training materials
• Possibility of enjoying additional benefits by being recognized as a trusted trade Partner by foreign Customs administrations that have signed Mutual Recognition with the United States
• Eligibility for other U.S. Government pilot programs, such as the Food and Drug Administration’s Secure Supply Chain program
• Business resumption priority following a natural disaster or terrorist attack
• Importer eligibility to participate in the Importer Self-Assessment Program (ISA)
• Priority consideration at CBP’s industry-focused Centers of Excellence and Expertise
When an entity joins CTPAT, an agreement is made to work with CBP to protect the supply chain, identify security gaps, and implement specific security measures and best practices. Applicants must address a broad range of security topics and present security profiles that list action plans to align security throughout the supply chain.
CTPAT members are considered to be of low risk, and are therefore less likely to be examined at a U.S. port of entry.
Customs Trade Partnership Against Terrorism (CTPAT) is but one layer in U.S. Customs and Border Protection’s (CBP) multi-layered cargo enforcement strategy. Through this program, CBP works with the trade community to strengthen international supply chains and improve United States border security. CTPAT is a voluntary public-private sector partnership program which recognizes that CBP can provide the highest level of cargo security only through close cooperation with the principle stakeholders of the international supply chain such as importers, carriers, consolidators, licensed customs brokers, and manufacturers. The Security and Accountability for Every Port Act of 2006 provided a statutory framework for the CTPAT program and imposed strict program oversight requirements.
