HERA Industry Development General Manager Nick Inskip (left)

 Quality has a cost and a value and buying solely on cost can mean that the quality you think you are getting may not be there.

 The recent asbestos issues with the locomotives imported from China by KiwiRail highlights the danger where quality is compromised. While much was made of the fact that it was a subcontractor to the main supplier who used the offending coating, nothing can take away from the fact that it is KiwiRail’s supplier’s responsibility to ensure that their supplier provides a conforming product.

How do they do this? They assess their supplier’s processes and systems. The first of which might be to look at how they translate the requirements detailed in their customers order into an output.

This raises questions about what it was that was on the locomotive suppliers order to the sub-contractor. Did they pass on KiwiRail’s requirement for no asbestos, or not? If not then the fault isn’t with the sub-contractor. Which poses another question, would a different material supplied by the sub-contractor have cost more and is that why the asbestos coating was used?

The more worrying concern is if the coating was such a quality failure, what about the rest of the locomotive? Do we now have to test bolts to make sure they are the right tensile strength and galvanising to make sure there is no antimony present? So as a company and as a country purchasing offshore, you really need to price on the quality risk.

From the KiwiRail example even if your offshore supplier has a quality system and it is certified, that does not mean it actually works to the level we would expect in New Zealand. In which case as a purchaser you need to check everything yourself.

This could include sending inspectors to validate every material used, as well as visiting suppliers to the main contractor and their subcontractors as well. It could mean sending components, lubricants, coatings, wiring and nuts and bolt for independent testing and verification as well as checking the temperature and humidity of the environment when painting is being undertaken.

 Quality certifications and accreditations are only of value as a guide to selecting suppliers if they are trusted. The certifying body for the supplier of the locomotives should now be looking seriously at revoking the certification. After all there has been a huge cost to KiwiRail, everything from their reputation as competent procurers to the costs of taking all the locomotives out of service to check them and probably again to remediate them.

There are the losses that accrue to the customers of Kiwi Rail due to delays because locomotives are out of service and the loss of revenue to Kiwi Rail itself not to mention the time spent by KiwiRail staff and even the Minster for Transport on this issue. Then there are the costs to the supplier, in terms of reputation and the costs to remediate and perhaps compensate KiwiRail.

Buyer beware is a good maxim when dealing in unfamiliar territory but at the end of the day the buck stops with the supplier and after the trouble they have caused, why would you want to deal with them again? Unless of course their being cheap is the deciding factor in which case it’s KiwiRail’s responsibility for buying cheap at any cost!