China Sourcing: Improving Chinese Supplier Performance

Importers who have gone through the trouble of researching, qualifying, and building a relationship with their Chinese suppliers are sometimes hesitant to change, even when the quality of their services and output begins to decline. This desire to not want to “rock the boat” with suboptimal suppliers is what we refer to as “captive buyer syndrome.” Despite the difficult process of finding your Chinese supplier and ensuring quality control in China, your customers and reputation should not have to suffer if price, quality, and production timeline standards are not met.

If you find yourself working with a supplier whose performance begins to lag, you have two primary solutions:

1) First, try to get better results from your existing suppliers,

2) Secondly, identify new suppliers and replace your existing ones. Before going for option 2, and giving your existing suppliers the boot, we recommend that you first try to salvage what you have. Below are a few areas to focus on to improve supplier performance.

Communication: As in any healthy relationship, good communication is key. Be sure to very clearly define your requirements and needs to prevent any misunderstandings with suppliers. Also, it is good to remember that communication is a two-way street. Rather than simply giving directions, be sure to listen to what the supplier may need from you as well. Keeping communication clear and transparent will enable you to work through challenges or obstacles together.

Documentation: Doing business with a Chinese supplier requires more than just a handshake and good faith. To prevent any misinterpretation about product specifications or your expectations, be sure to carefully document your expectations for the products themselves and the quality inspection process. This can be managed through Product Specification Sheets (PSS) and Inspection Specification Sheets (ISS).

Make your Intentions Clear: Many importers are interested in building long-term relationships with their most reliable Chinese suppliers. Unfortunately, today’s business environment is disposable. Suppliers may not be aware that their good performance could provide a sustainable and scalable business opportunity. Be upfront with your Chinese supplier about your expectations and intentions. Be sure to document all commitments in a written agreement with the supplier. By making your intentions clear, the supplier has the opportunity to plan their business to meet your needs. They can then put in the extra effort and investment necessary to meet your requirements for the long haul.

Performance Metrics: To improve supplier performance, the importer must first know what level of quality and service they require. Establish key performance indicators that define your expectations for quality, inspections, production timing, etc. Once these metrics are established and discussed with the supplier, incorporate them into your written agreement. Measure them regularly to ensure accountability. As the saying goes, “What gets measured gets done.”

Automate: If an importer is interested in receiving the best quality products, it is helpful to provide consistency and predictability to the supplier. Erratic, inconsistent orders are more challenging for a supplier to process. Through automation and routine, importers can provide more consistent information and make it easier for the supplier to meet expectations on all fronts: price, quality, and on-time delivery.

Price Benchmarking: Even when your sourcing program is going well, it is always good to continue price benchmarking from alternative sources in case your own supplier begins misbehaving. Even if you don’t necessarily plan to switch suppliers, armed with the information from your price benchmarking research, you can keep your existing supplier in line and ensure you are always getting the best price and quality.

Ultimately, regarding quality and performance, the supplier/importer relationship is an interactive process. Systems and processes can be fixed, communication can be improved, and relationships can be salvaged. This will help to ensure that you receive the best results from your China sources, with the quality products that your customers expect.

If you’ve tried all of the above approaches and your supplier is still backsliding, it is time to look for alternative suppliers.

What methods do you use to improve quality with existing suppliers? How do you know when it’s time to jump ship? Share your thoughts with us in the comments below.

 By Jocelyn Trigueros

Editor’s Note: This blog was originally published in November 2022.