Sourcing from China: The Three Essentials

Importers sourcing from China do so because they are looking for ways to save.  They want to outsmart the competition and get their product to market at an unbeatable price.  More than just sourcing a product at the right cost, this kind of success means getting the details right.

We’ve referred to “The Three Essentials” in various blogs and pages on our website. This concept is known to our clients and delivering it is an integral part of our services. These are what we consider to be the 3 non-negotiable, must-be-managed aspects of sourcing from China.

What are the three essentials, these are “must-haves”?  Simply put, they are Pricing, Quality, and Delivery. We call them “essentials” because you cannot source successfully without mastering all three. You must get them all and they all affect each other; they are interlinked.

Consider this: Pricing means nothing without quality, quality directly affects pricing, and not getting both right can cause delays. To get your goods to market on time in the way you want them, you must manage the three essentials.

Let me expand on each:

1. Pricing:

Pricing is more than just getting the right cost. You want the best value, which means the best cost for a very specific quality, and for an on-time delivery.  In other words, in terms of “pricing,” you must consider all the factors that will ensure good value.  The process includes the following activities:

– Establishing clear specifications for the product
– Finding and pre-qualifying factories (Location, experience, reputation, etc.)
– Negotiating (i.e. Lower costs does not have to mean inferior quality)
– Documenting: Putting in place a good, clear purchase order to protect your orders and ensure compliance.

2. Quality:

The quality assurance (“QA”) process starts before the order is even placed. You can’t discuss pricing unless you are absolutely clear about the quality you want.  And, in setting QA parameters, you must be mindful of the delivery deadline. So the QA process must include the following:

– Defining clear specifications for the product (The PSS)
– Pre-qualifying factories based on these requirements
– Interacting with the supplier’s quality control (“QC”) management
– Making sure quality requirements are clearly stated and agreed upon in an Inspection Specification Sheet (ISS)
– Making sure QC requirements are clearly understood and reflected in the order
– Monitoring the factory QC process
– Inspecting the goods as needed (i.e. Pre-production, during production, and post-production. At least once before shipment, the PSI.)

 

1. Delivery:

You should always aim for 100% on-time delivery.  True, it is easier said than done.  There will always be many unpredictable factors (Floods, pandemics, “acts of God,” etc.)  But if you understand the timeline (from product development to customs clearance and delivery) it can be done.  On-time delivery is mostly about managing what you can control and preventing what can be prevented.

At CPG, we achieve 99% on-time delivery on average. Our success depends on implementing various steps, including:

– Placing the order on time
– Supervising the timeliness of all elements of production
– Avoiding surprises: making sure the producer is in-sync with the requirements
– Inspecting on time
– Booking vessels in advance
– Choosing the appropriate shipping method (i.e. Air, Sea, mini-land bridge, etc.)

Managing the Three Essentials well means securing the most savings. In doing so, one often develops a great reputation for quality and reliability.  There is no magic to it, the difference between success and failure in sourcing is all about knowledge and mindful execution.

Contact us to find out how CPG’s 3 Essentials can help you save.

 

By Jocelyn Trigueros