by Etienne Charlier
Successful China industrial sourcing is the result of a systematic approach and hard work. Shortcuts may seem smart, but most often, they result in bad surprises, delays or failure. I am always surprised by how often, even large organizations, will be tempted by these shortcuts. A few years ago, we put together a simple 7-steps approach to describe upfront what we believe is required to succeed in sourcing industrial and technology products from China. I take the main points in this post and also link a few older posts that are related.
Many China sourcing initiatives run into trouble because of decisions made or not made at the outset. Unclear targets, unrealistic expectations, lack of resources and many similar aspects, if overlooked, will cause project delays and waste of energy.
Successful companies have thoroughly prepared their project. For example, they dedicate initial time in order to:
To get a short-list of suppliers matching the right criteria, a buyer needs to investigate a large number of potential companies. Only a small portion of them will be good enough to be seriously considered for further steps.
There are no reliable “Golden Pages” in China. Online directories are useful but not sufficient. Information provided by many poor suppliers is not a good representation of their actual capabilities.
The right way to build an initial short list will require you to:
This is probably the single most important step of the whole process. Out of all the suppliers that offer products similar to what you are looking for, you need to find the right match: technical capabilities, required volume and production capacity, account management capabilities, potential for growth and development.
Finding the right supplier requires the most systematic and thorough approach:
Although it may seem easy, getting reliable pricing information from Chinese manufacturers requires special attention. For example, many Chinese suppliers are flooded with benchmark pricing requests. They will screen which request they quote for. In addition, requirements and expectations must be more explicit than when communicating with traditional suppliers.
To get the best out of price requests, it is strongly advised to:
Once the supplier is selected and the main terms and conditions are agreed upon, the next critical step is the first purchase order. This is when all technical and operational misunderstanding needs to be cleared.
Such technical and operational discussions are best held face to face. It is important to avoid misunderstanding and to build a personal business relationship with suppliers.
The preparation for the first purchase order is an ideal moment to organize a high efficiency China trip during which you can:
The only truly safe way to source products from China is to retake control of quality control. It does not necessary mean having extensive inspections for every order. But it means devising a well structured quality control system, managed by the buyer or its representatives:
When arriving at this step, buyers have one or several suppliers they comfortably work with. It took time and resources to get to this point.
This is the time to consider whether this supplier can provide more bang for the buck: