10 Tips to Minimize Sourcing Issues
August 22, 2012
China continues to make changes year after year by continually adapting to the international market. Sourcing from China can be a fantastic way to improve your business, but it certainly is not easy. There are countless scenarios where a supplier can end up disappointing a buyer, many of which I have experienced first hand. I’ve put together 10 tips on how to minimize sourcing issues and to help guide your China sourcing endeavors.
- Market Analysis – Purchase negotiation is not just a simple task and often requires thorough analysis of the supplying market. This type of market analysis does not only include cost data collection, previous project experience, price variance, and product quality, but also includes the analysis of the material market and macro-economic situations. By analyzing the market in this manner, you can help place yourself in a better position to learn and take advantage of the entire purchasing life cycle and to minimize sourcing issues.
- Supplier Competition – This can be the buyers’ trump card. Sending out invitations to bid for services is a good way to promote competition among suppliers and can also help you select the most compatible supplier. Please be advised to keep your methods of choosing suppliers scientific, fair and open.
- Centralized Purchasing – Centralized purchasing can have many advantages. It can help you efficiently control inventory, pool bulk purchases into discounts, plan consolidated transportation loads to lower costs, and strengthen relationships with suppliers.
- Strategic Alliances – Things will be easier if everyone was on the same boat. Competitive integration can be a good method to achieve a win-win situation for all parties. Sometimes, it is more beneficial for an importer to build a relationship with manufacturers and work in conjunction with each other, rather than simply buying and selling. In this type of situation, a supplier is no longer focusing on trade as a top priority; instead, they will be considering how a joint venture will be beneficial to each other’s strategies.
- Develop a strong budget and plan for sourcing – In any instance where sourcing or logistics is involved, it is critical to properly plan for all stages of the supply chain life cycle and to budget for any unforeseen risks, which can also help minimize sourcing issues. The China market may present various situations that call for last minute changes or orders, so it is wise to budget accordingly.
- Review the purchase order and complete all agreement clauses – It is very important to review your purchase order and agreement clauses with your suppliers. This will ensure that your final purchased goods did not deviate from what the suppliers and manufacturers were originally tasked to develop.
- Follow up closely on your orders – Periodic monitoring and maintenance of contracted goods can help keep contracted work and products stay aligned with what you originally intended and to ensure timely delivery.
- Send your inspector to the factory to perform quality checks and push production if needed – Utilizing your quality inspector can greatly affect final products made from factories in China since inspectors are professionally trained to perform key quality checks and keep the factory moving with product production. Therefore, it is critical to carefully perform on-site visual inspections of your orders from China.
- Pay careful attention when selecting and rating suppliers – This can be a crucial step in your China sourcing life cycle, which can help minimize sourcing issues before they occur. It is important to perform preliminary research before choosing a factory to produce your goods. One way of looking for reliable suppliers is to review on popular business directories that list factories in order to obtain detailed information.
- Have a backup factory just in case – Having a backup factory can be very helpful in emergency situations. There may come a time when factories may face unforeseen production challenges or issues and you may need to move forward with your goods. In this instance, having a backup can help continue your production process without taking a big hit on delivery issues or product quality.
By using the 10 tips listed above, you should be able to get a good start (or improve) your sourcing process. Preventing a problem from occurring in the first place, will almost always save you time, money, and aggravation.
I hope this is helpful and please comment if you have any other tips that you use when Sourcing in China!
1 By Andrew Hitchcock (Flickr) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons