by Renaud Anjoran in 'Quality Inspection Blog'
I asked Wouter 4 questions:
Q: What are the most common mistakes you see small and midsize importers do?
Mistake 1: Sourcing based on cheapest FOB price only instead of value for money! Many people forget that the cost price of a product is more than only FOB. You can monitor this by making a clear after calculation for your import and compare it with your initial calculation.
Mistake 2: Many companies forget to standardize everything in a ‘workflow’ what can be standardized. So the same common problems keep repeating themselves ever and ever again with different members of the team. A lot of time will we absorbed by solving these small problems, instead of focusing on your main tasks of the job. Think in company interest and not in personal work habits!
Q: What is the average cost of the inefficiencies in an importer’s supply chain? I mean, if the average importer takes measures to improve the way it manages its internal operations, how much would he save? 5%? 10? 20%?
Some loss of margin are sometimes a part of the business model. But I can say we can save easily 15-20% with midsize companies only by getting rid of Excel- and inbox “mania” by introducing a simple standardized workflow and common rules for how to communicate with each other.
Q: When you write “I can say we can save easily 15-20%”, what does it represent? The total costs of the importing company?
Yes, 15%-20% of general costs.
Changing some processes on the purchase side can mean that you ensure an easier processing in logistics, or less costs of capital in the financial department, and so on.
You always have to look at the total of company processes.
Basically you can influence your margin in 2 ways:
The combination of the two means that you are on the way to Operational Excellence.
Q: For an importer sourcing mainly in China, in which case do you advise to create a China sourcing office?
Interesting you mention the term: sourcing office. In my opinion sourcing is different than buying. Although it is very closely related.
Sourcing has more creativity in the job and is translating the vision of the company and ‘product identity’. Extended knowledge of your ‘buying customer’ is important to find product innovation which is sometimes not found on the ‘drawing table’ in the EU headquarters. In my opinion sourcing must always be done by product management. So the answer is ‘NO’ for solely an own sourcing office with only local Chinese employees.
A simple buying office is another case. Buying is executing the developed product conforming to the specs, and against the target FOB price, quality and lead time. This is much easier to standardize and can be done by a local office.