What has to be settled before a first production run starts, what to watch while it runs, and which checks belong before the balance payment is released.
Freeze before you start: five things, in writing
The pre-production approvals are the sample, the specification, the packaging artwork and structure, the labelling text your market requires, and the carton and shipping marks. Each needs a version and a date, and the sample needs to be sealed. If any of the five is still open when production starts, decide explicitly whether it can be resolved during the run or whether the start date moves — the failure mode is not an unresolved item, it is an unresolved item that everyone assumed someone else had closed.
- Sealed sample, specification, packaging, labelling text, carton marks
- Version and date on each, held by you rather than by the factory
- Open items closed before start, or consciously carried with an owner
Tie payments to evidence, not to the calendar
The usual structure puts a deposit at the start and the balance before shipment, and the balance is the only leverage that still exists once the goods are made. Release it against the inspection result rather than against a shipping date, and say so in the purchase order so that it is not a surprise. Where a payment falls due before a check is possible — a material buy, for instance — make sure the thing it buys has been approved in some form, because paying for material against an unfrozen specification is how a whole run becomes unusable.
- Balance released against the inspection result, not the ship date
- Payment terms written so evidence precedes each release
- Nothing paid for against a specification that is still moving
Watch the run while it can still be changed
A first-article or during-production check partway through is worth more than a perfect final inspection, because it happens while the line can still be corrected. Ask for photographs of the first units off the line against the sealed sample, confirm that the approved material is actually the one on the floor, and check that packaging arrived and matches the approved proof. Packaging is the classic late failure: printed weeks after the product was scheduled, and discovered wrong on the day the goods are meant to leave.
- First-article photographs compared against the sealed sample
- Material on the floor confirmed as the approved one
- Packaging checked on arrival, not on the day of shipment
Before the balance: the pre-shipment check
The final check happens when production is substantially finished and packing has started, so a finding can still be corrected. Sampling is statistical — an inspection draws a random sample, commonly under an AQL plan, and reports a judgement about the lot rather than a guarantee about each unit. Supply the sealed sample and the two or three failure modes that would actually cause a return in your market, and require them as named line items. Then read the report before releasing the balance, not after.
- Booked at substantial completion with packing under way
- Your market-specific failure modes named on the checklist
- Report read and accepted before the balance payment moves
What a first run will not do
A first production run is a launch quantity, not a proof that everything is solved. Expect a short list of things you would change: a tolerance that was optimistic, packaging that works but wastes space, an assembly step that slows the line. Record them while they are fresh and fold them into the specification before the reorder, because the reorder is quoted and made from the document, not from anyone's memory. And no inspection removes all risk — what it does is make what you accepted explicit, at a point where you can still decide whether to accept it. That is the whole value on a first run, where nothing yet has a track record behind it.
- Capture the change list during the first run, not months later
- Fold changes into the specification before the reorder is placed
- Inspection reduces exposure; it does not eliminate it
Authoritative references
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