Carton Oversight Nearly Cost Us 175,000 RMB

It was 9:03 PM. The factory’s merchandiser called. He said all the cartons for a product currently being loaded were wrong. The shipment was about 15 cubic meters. He asked what I wanted to do.

I cursed under my breath. A late-night call from a factory is never good news. I wondered what the factory’s incoming inspection team was thinking. A few bad cartons are one thing. But why were all the cartons allowed into the warehouse if they were all defective?

Here were the key problems:

1. The merchandiser said the customs cutoff was the next morning.
2. He also said getting new cartons was impossible now. It would take about three days.
3. At this hour, I couldn’t reach my client. I had to make all the decisions myself.

So, what should I do?

The Supplier’s "Solutions"

The supplier’s salesperson gave me three options.

1. "The cartons are too small to seal. Can we just tape them shut? After all, it’s an engineering project, so the cartons aren’t that important."
2. "What if we postpone the entire container shipment?"
3. "If not, we can ship the good products first. We’ll air freight the problematic ones later. Don’t worry, we will take responsibility," he promised emphatically.

I considered these three options.

First, taping the cartons shut was completely unacceptable. This is a classic factory mindset. Yes, for an engineering project, the carton itself might seem less important. But have they considered loading and unloading during shipping? How would a forklift handle this kind of packaging? Some clients use clamp forklifts, not pallet jacks. How would the client stack these goods in their warehouse? Would they need a special area with "This Side Up, Top Layer Only" signs? [STORY: a time I saw damaged goods that arrived at a client’s warehouse because of poor packaging]

Second, delaying the shipment was also not an option. Project orders have very strict deadlines. Also, this was happening near the Chinese New Year. Resources were getting tight and costs were rising. If we delayed the shipment and couldn’t book a vessel, it would be a disaster. The risk was too high.

But I hesitated on the last option. It seemed like the supplier was showing the greatest sincerity in taking responsibility. Then I thought about it again and rejected it. The reason was simple.

On the surface, the supplier covering the air freight costs sounds like a huge sacrifice. But what about us, the innocent client? Would we have zero losses? We would still face costs for new import procedures. We would also have to send staff to pick up the goods from an airport 300 kilometers away.

The supplier’s salesperson probably never even calculated the air freight cost. He just thought it was the production department’s fault. So he was happy to make a grand promise to me. But air freighting 15 cubic meters of heavy goods would cost at least 175,000 RMB. If the production department knew this, they would freak out. This could lead to more disputes. Many times, suppliers can’t keep their promises because they can’t get internal agreement. A cost this big is something the supplier’s boss wouldn’t just swallow. He would eventually pass it on to us, the client.

After thinking this through, I also rejected the option to ship part of the order and air freight the rest.

Finding the Real Solution

The situation seemed to be at a standstill. No solution seemed perfect. Time was ticking away in the quiet of the night. It felt like the whole world was waiting for my decision.

Just as I started to feel anxious, I had an idea. I questioned two things.

1. The salesperson said the customs cutoff was "tomorrow morning." In my many years in this business, I had never heard of a morning cutoff. Was this information wrong? I needed to check the Shipping Instruction (SI). Also, the document cutoff is different from the container cutoff. You can often apply for a "late come" for the container.

2. The salesperson said new cartons would take "three days." This timing sounded wrong. Three days is usually for custom-printed cartons. Our cartons for this project were plain. They should only take half a day.

I quickly shared these two points with the salesperson. I also told him to be sure to tell the production department about the 175,000 RMB estimated air freight cost. Then, I opened my laptop and wrote an email to my client. I explained what was happening and that there were three possible outcomes. I told them we were working on them in order of priority:

1. Best Case: No impact at all. We replace the cartons and catch the vessel on time.
2. Second Best: We ship part of the goods now. The rest will be air-freighted to the destination airport.
3. Worst Case: The entire container shipment is delayed by one week.

I told the client I would have a final answer for them in about 12 hours.

Just after I sent the email, the salesperson called back. He checked and confirmed the customs cutoff was at 4 PM the next day, not in the morning. We had a little more time. Also, the head of the production department freaked out when he heard the 175,000 RMB figure. He said, "We made a mistake, but we can’t pay 175,000 RMB for a few hundred cartons!" He then started calling every carton factory boss he knew to find replacements.

The next morning, I got another update. The supplier had managed to get enough cartons from three different upstream factories. They worked overtime to finish packing and shipping. We successfully avoided a 175,000 RMB loss.

The client only received two emails from me. The first said, "A problem has occurred." The second said, "The problem is solved." They felt no other impact.

As for us, we got the job done quietly and professionally. After this, we did hold the factory accountable with a CAP (Corrective Action Plan). We identified the root cause of the problem and laid out clear steps for improvement.

Lessons from This Case

Here is a summary of the lessons from this case.

1. Solve the Problem, Don’t Just Ask for Acceptance

Many suppliers, when they face a problem, first try to get the client to "accept the problem." They don’t try to actually solve it.

[STORY: a time I worked in a factory where the first instinct for mistakes was to ask the client if they could accept it]. When I was a salesman, I saw this all the time. The factory printed the wrong logo, used the wrong color sticker, or even made a product with the wrong function. The first thought was always to ask the client, "Can you accept it?" Sometimes they even felt the client’s request for compensation was unreasonable. But they never thought about why the innocent client should have to bear the consequences of their mistake. Why shouldn’t the person who made the mistake face the penalty?

This is the wrong way to think. If you have to push someone, push the person who caused the problem first. Don’t just tell your client, "I already tried my best."

2. Taking Responsibility Is Not the Same as Solving the Problem

Willingness to take responsibility is just an attitude. It is not always the best solution. Many suppliers will sincerely say, "Don’t worry, we will take responsibility" when things go wrong. But what does "taking responsibility" really mean?

I believe most people think it means "we’ll ship the defective products back for repair" or "we’ll send a new batch of packaging." But is that really enough?

Imagine you are driving your Porsche and someone hits you. They are at fault, and their insurance agrees to pay. Does this mean there is no impact on you? You don’t want the money. You want your car. Doesn’t it take time to go to the traffic department? Doesn’t it take time to get your car repaired? And after the repair, is it the same car it was before the accident?

It’s the same for a client. If the goods have already been sold to end-users, the "cost of quality" is much higher than the solution the supplier is offering. The financial loss is much more than the FOB value of the product.

Taking responsibility is not the same as solving the problem. Before a problem becomes irreversible, we should always look for a real solution first. Don’t just think the matter is closed because you are "willing to take responsibility." Many times, the responsibility is something you simply cannot bear.

3. The Client and Supplier Are in the Same Boat

I’ve said it many times before: all competition is supply chain competition. Money moving from the supplier to you, or from you to the supplier, is meaningless. That’s just a transfer of wealth, a zero-sum game. It doesn’t make the entire supply chain more competitive. What we should do is make our supply chain lower in cost, more efficient, faster, and more profitable.

This is the real reason we didn’t accept the supplier’s air freight offer. It would have minimized our direct loss. But it would have been the most expensive option for the supplier. The combined cost for the whole supply chain would have been too high.

Finally, let me explain the root cause of this incident.

In our review after the event, we found the problem wasn’t really the QC’s fault. The factory’s designer created the carton drawing but never made a physical sample to test it. After that, everyone in the chain—the upstream supplier, the procurement team, and the QC team—just followed the drawing. Nobody thought to take a sample carton and try to pack the product inside. The problem was only discovered when the loading workers found the products wouldn’t fit.

A small oversight almost led to a 175,000 RMB loss. This is why I often say that many factories have very poor control over their costs.