China Supply Chain Management: Placing orders
July 26, 2019
Many companies seek sourcing from China to save on first costs. Seems relatively straight forward, right? Not so fast. Sourcing from China is a complicated process, of which every single stage requires careful attention. Even the savviest of importers can run into trouble if they start getting lax about the management of their China supply chain.
In this blog, we are going to skip over all the initial stages of developing a sourcing program in China, which often begins at the product development stage and moves on to identifying and vetting suppliers, getting satisfactory samples, etc. Let’s assume we’ve done all that and are ready to place our first order. Hallelujah! But wait – even after meticulous ground work has been done, importers must continue to be equally vigilant when placing orders. In this blog, we’ll discuss the common challenges importers encounter when it comes to placing orders.
- MOQ (Minimum Order Quantity): This is a common concern for smaller or new importers. Factories are more likely to accept larger orders and have an MOQ that seems intimidating to smaller importers looking to start sourcing with smaller quantities to test the market. If placing an initial small order, suppliers are more likely to take your business if you’ll be placing more frequent and larger orders in the future.
- Negotiating Costs: Another matter that new importers run into is reducing the cost of orders. This is closely related to MOQ and can be an issue when the MOQ is also low, because the more you buy, the better the cost. Further to the point above, many suppliers are more willing to give the best prices for repeat, consistent orders, which can be problematic for a smaller company seeking to do a smaller test run.
- Product Specification Sheet (PSS) and the Inspection Specification Sheet (ISS): Many companies are so eager to get their sourcing started and orders placed that they fail to have these two crucial documents in place at the time of order placement. Ideally, a PSS and ISS should be included with every Purchase Order (PO) as part of the purchase contract to protect a buyer’s interests and ensure the supplier delivers according to requirements.
- Logistics: Although often seen as separate from placing orders, many importers negotiate with their suppliers to include logistics when placing their order to give them a complete, but estimated, landed cost. This approach may also enable importers to reduce overall costs by bundling the order with the logistical arrangements. One-stop-shop.
Placing orders is a complicated part of managing the supply chain. We believe that for all importers, and especially new importers, it is best to have an experienced professional to place orders on your behalf. If not, the process can be quite lengthy and confusing.
What challenges have you encountered during the order placing process? How have you resolved those issues? Share your experience with us in the comments below.
By Jocelyn Trigueros