Pre-shipment inspection
 | This article needs additional citations for verification. (September 2011) |
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[1]. 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.
Process
Pre-shipment acceptance sampling, involving inspection, and acceptance testing, may be agreed upon between a buyer, a supplier, and a bank, and it can be used to initiate payment under a letter of credit. A PSI can be performed at different stages before shipment, such as checking the total amount of goods and packing, controlling the quality or consistency of goods, checking of all documentation, as for example test reports, packaging list, or verification of compliance with standards of the destination country like ASME, CE mark and import duties.[citation needed]
Inspection companies
There are two types of PSI companies:
- Free-market companies which are privately owned, selling their services to the market. Risks involved might be, especially if it is a smaller company, that the company is paid by the manufacturer and working in its interest. The two largest pre-inspection private and free market companies are SGS and Bivac.[2]
- State owned inspection companies:[where?] only very few companies operating on the market are state-owned or partly state-owned. The shareholding of governmental institutions guarantees independence and objectivity.
A higher form of the PSI is called expediting, in which the dates of delivery and the production are included in the control.
Termination on the PSI requirement
PSI increases burdens and costs in international trade and can be counter-productive for the country of importation and its traders.
Several countries are considering termination on the use of inspection companies' service, following upon WTO Agreement on Trade Facilitation Article 10.5 Pre-shipment Inspection : 5.1. Members shall not require the use of pre-shipment inspections in relation to tariff classification and customs valuation.
In 1988, United Nations Economic Commission for Europe, Recommendation No.18 - Recommended Measure 8.2 “Discouragement of Pre-Shipment Inspection” was adopted.
Particular reasons for pre-inspections from Chinese manufacturers
Many manufacturers in China have reputations that are far from positive. Cutting corners, using sub par raw materials[3] and other methods to raise profits. This often works in the manufacturer's favor as the importing country and customer often lacks both the means and labor to return products to China. Refunds can pose to be equally difficult as manufacturers will not return email, refuse to answer phones or feign ignorance of the order.
A quality pre-shipment inspection on Chinese products[4] helps keep these issues to a minimum.
References
- ^ "Pre-Shipment Inspection – Keep Quality High And Customers Happy | Sourcing Nova". Retrieved 2021-06-04.
- ^ "Pre-Shipment Inspection – Keep Quality High And Customers Happy | Sourcing Nova". Retrieved 2021-06-04.
- ^ "Steel traders lick wounds as Chinese govt swiftly strikes down prices hike | Hellenic Shipping News Worldwide". www.hellenicshippingnews.com. Retrieved 2021-06-04.
- ^ "Pre-Shipment Inspection – Keep Quality High And Customers Happy | Sourcing Nova". Retrieved 2021-06-04.
- "Customs use of inspection companies". World Customs Organization (2015).
External links
- "General description of PSI in German export journal" (PDF). tuev-hessen.de. Retrieved 2010-08-27.[permanent dead link]