Case Study: Leadership and Structure in Sourcing a New Product
January 3, 2023
Getting a foothold in a burgeoning market can be daunting. Every decision can make or break your venture. Trying to manage this process while sourcing in China only compounds the challenge.
As Environmental, Social, and Governance (ESG) concerns began to dominate the business marketplace, one promotional products company had a vision to develop and source biodegradable drinkware for the hospitality sector. They had the right product and the right idea but lacked the right insight and contacts in China to make this vision a reality.
The challenges they faced included:
-Price: They needed the product to land at a low price point
-Supply: At the time, few manufacturers were making this product
-Vetting: Finding suppliers and qualifying their capabilities was difficult from afar and with the language/culture barrier
-Quality Assurance: To remain ahead of the potential competition in this market, they needed to ensure premium and reliable quality
CPG was commissioned to fully manage their product development, design, manufacturing, and entire China sourcing process. Concurrently, and as a validation of their vision, demand for the product had skyrocketed. CPG needed to work quickly and adapt nimbly to achieve vision success.
Within 2 months time, this client’s dedicated CPG team achieved significant results:
-Identified over 10 suppliers capable of producing the product at the specified quality standards
-Managed the initial order through 5 different suppliers to meet the skyrocketing demand
-Implemented rigorous quality control standards through use of the PSS (Product Specification Sheet) – the product blueprint – and ISS (Inspection Specification Sheet) that outlined detailed testing requirements and pre-shipment inspections
-Performed testing to ensure preferred suppliers’ product was in accordance with strict US regulations (FDA, CA65)
In addition, CPG’s Quality Assurance (QA) engineers analyzed the market and devised a best-practices procedure to make the product consistently and repeatedly. This technical report provided the client with their own proprietary specifications and optimal manufacturing methodology, which enabled them to source the same quality goods with different manufacturers – and thus optimize their output.
The results of these efforts were striking:
-Within 2 months, order volume quadrupled as a result of identifying multiple quality suppliers
-Product quality became the “best in the market”
-Through benchmarking, they were able to identify the 2 best suppliers while retaining other suppliers as alternative options
This forward-thinking company was able to source the best quality at the right price in tight delivery time frames and became an industry leader for their product.
-When trying to optimize both price and quality, the benchmarking process should be thorough and provide multiple options, thus giving companies the most leverage to negotiate
-In an emerging market, it pays to have an experienced team on the ground to identify trends and best practices and ensure you lead from the front
-QA standards start with the right baseline, identified through the development of the PSS and ISS