Context
A Dutch distributor of DIY and home improvement products had been sourcing from the same Chinese factory for six years — consistent pricing, reliable delivery, no significant quality complaints. Two factory visits over that period had produced favourable impressions, and the relationship had continued on that basis. When the distributor engaged MAXAM Group, it was not acting on suspicion: the brief was forward-looking, intended to assess production capacity and quality system maturity before committing to higher volumes for an expanded product range. The survey found something the client had not anticipated and the supplier had not disclosed.
Our Mission
Conduct a current assessment of the factory's production capability and quality system maturity, verify that declared capacity could absorb the planned volume increase, and re-establish a controlled supply chain on terms that matched the regulatory and commercial assumptions the distributor had been operating under.
Our Approach
MAXAM's supplier survey methodology extends beyond a standard walk-through: production documentation review, workforce headcount verification against payroll, machine utilisation logs cross-referenced against declared capacity, and examination of inbound logistics records relative to stated production volumes. At this factory, the inbound material records did not balance — by a margin pointing to approximately 40% of declared output leaving the facility in semi-finished form. The factory had, over the previous eighteen months, established an undisclosed production-sharing arrangement with a workshop twelve kilometres away, run by a former production supervisor. Sub-assemblies were being routed there during peak demand and returned for final inspection and packaging under the main factory's CE-marked documentation — without any quality system, certification, or contractual relationship covering the third-party site. MAXAM cross-referenced eighteen months of batch codes against the factory's production logs to identify which stock could and could not be traced to fully in-house production; non-traceable batches were quarantined pending re-inspection. The third-party workshop was offered formal qualification with audit and contractual framework; the workshop owner declined, and the arrangement was terminated. Production was returned fully to the main facility at volumes calibrated to its verified capacity, and the purchase agreement was rewritten to include an explicit subcontracting prohibition with financial penalties for undisclosed deviation. MAXAM's ongoing engagement was structured to include unannounced audits every twelve months using the same material-vs-output reconciliation methodology that had identified the original problem.
Before & After Results
| Metric | Before | After |
|---|---|---|
| Undisclosed off-site production | ~40% of declared output | 0% (fully in-house) |
| Subcontracting governance in contract | None | Prohibition clause + penalties |
| Audit methodology | Walk-through only | Material vs. output reconciliation |
| Audit cadence | 2 visits in 6 years | Unannounced annual audit |
"The factory had not been dishonest at the start of the relationship. It became dishonest when the commercial terms created a gap between what was expected and what was feasible — and nobody was looking closely enough to notice. MAXAM's audit was the first to compare what came in the door against what supposedly went out of it."
Head of Procurement
Head of Procurement — Dutch DIY Distributor