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Assessing Chinese suppliers. What information should you be recording?

By John O' Grady

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A good chunk of your time needs to be invested in analyzing the information that you gather from suppliers in China. Sourcing from China and assessing Chinese suppliers is time consuming full stop. It's even more so if you are not organized. Today let's talk about how you can be a bit more organized in this area.

We are going to look at….

• Common email communication issues.

• The usefulness of templates for recording important information.

• What you should look at recording.

• A FREE “Product Sourcing Report” template.

• Additional things to consider for your China Product Sourcing Reports.

 

Common email communication issues.

Let’s say you are sourcing remotely using B2B platforms or some of the many local sourcing companies in China, the chances are your inbox is peaking with all sorts of information. Even if you are only sourcing 1-2 new products the amount of email exchange that goes on is sometimes mind blowing. Here is a quick bullet list of the type of email overload you are likely experiencing.

• Emails with just price and little specification details. A little Annoying.

• Emails saying, we have “certification” but no evidence is provided.

• Emails from suppliers offering products that have no real relation to what you require…but you were convinced that company could provide the product. A little Confusing.

• Emails that don’t give anything on the lead time or the availability of samples.

• Emails that say we have never made this product but can produce it "no problem". A little Unsettling.

The above is a 30 second list, there’s always so much more that is product dependent. Even with the suppliers who appear to be on the ball, the amount of communications and email ping pong is often aggressive. So much so, you will find yourself searching and re-reading emails to find 1-2 pieces of key information. Your search is not made any easier by the fact all the emails have the same subject line from supplier Z.

 

The usefulness of templates for recording important information.

To say you really gave it a good shot at finding reliable Chinese suppliers reliable Chinese suppliers for a product or project then you should have really been in contact with 6-10 that could do the job. That being the case you have some serious information to sift through. Many companies like Found China providing China sourcing services utilize templates or a report style to record key information. Personally I find them really useful as an easy and organized component for assessing Chinese suppliers. Having all the information in one place is going to really speed things up for you too. Here is a FREE example of what a simple Product Sourcing Report could look like.

With this FREE download you will see that it is good to always….

• include a few key points on the item that is being sourced.

• record points from the supplier that are most relevant for you.

• Include your top 3-5 suppliers shortlisted for this item.

• Create ownership for the report and offer a final assessment. If I had to pick one situation.

Even if you are a one-man/woman band aka wolf pack of one I still believe it’s useful to record data this way. What happens when you start to expand that wolf pack, will your new colleagues understand the way you’ve “had your own system” until now! Times change so be prepared.

 

Additional things to consider for your own China product sourcing reports.

Specification

Each product has it is own particulars with regard to specification so make sure you can easily allow for that in your template. Quite often the standard you require will dictate how much you record in the specification section. For me it’s the most important section – why? Simply because if the specification isn’t right it’s hard to move forward. I mean from a critical point of view, so a small variation that’s known about is not always a deal breaker.

Pricing QTY

Record pricing for more than one quantity when buying from China. For example, take into consideration your own projections, will it be beneficial to know pricing on 1000, 5000 and 10,000pcs early on? You want to get cheaper prices with volume of course but when assessing Chinese suppliers just be wary of anyone offering absolute knockdown pricing.

Mold Costs

Quite often a mold needs to be made for 1 or more component on a new purchase. These fees can vary greatly and so while not always the norm it is an opportunity for a supplier to stuff more profit in. Only last week I was quoted 4 times the actual price on a simple mold. So again verifying Chinese suppliers sometimes requires you to look closer. I’m not saying no one should be making a profit (they should) but just this particular case was a good example of when it’s unjustified.

Prototyping

It is very advisable to get samples before moving forward especially when the product is your own design. This does add another layer of complexity and cost of course. Chinese manufacturers are busy and you won’t be the first to ever ask for a sample – they still have the great samples for the would be client they made for free back in 2008 that went nowhere – for me it’s understandable if the factory is going to give over some resource or production time then some cost covering is fair. The time required from different suppliers can vary quite a bit too so figure out why and record it.

You don’t want to end up with a 20-page monster on your hands but other information like recording the main business scope, bank account details and product certification held by suppliers on the shortlist is worth considering to record.

Having good China product sourcing reports should take some stress away and speed up operations. Tailor the template to what is important for you, your product and your organization.


John O' Grady has been living and working in Shanghai, China since 2004. In all of that time John has worked in sourcing and supply chain management. Currently he is General Manager of Found China, a provider of China Sourcing Services. John enjoys travelling to factories throughout China to find new suppliers, make deals, oversee QC and stay in touch with good friends. Keep up to date with John and Found on their No. 1 China Procurement blog.

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