Sourcing goal

Sourcing missions usually aim to identify vendors, suppliers and manufacturers in China and Asia so overseas companies can establih a reliable supply chain for their products manfactuing and distribution. The goal is to build database of validated and reliable suppliers who can service the supply chain of our customers so they can focus their time and energy in developping their distribution channel, marketing and sales activities.

With the Internet and high number of B2B platform appearing since year 2000, direct access to potential sources of manufacturers and vendors have never been so quick. It nows seems easy to virtually enter into business with anybody on earth. Many people associate sourcing activities with just googling and sending a few emails to potential vendors and manufacturers. In reality, sourcing activity is rather a risk managment activity than a research one.

Indeed, anybody can search  potential suppliers online, send a few emails to obtain a pricing, specifications, pictures and samples but very few people are actually capable to quantify risks related to procurement and supply chain. If you are shopping for a few samples, then risk of issue is actually quite low. In worst case you will just have wasted money on sample, delivery fees and on time (which in some case cost you more than your own sample). However, as soon as you place order for an amount above 15 000 USD, then the risk related to loss become higher.

Defectives product, planning and schedule not respected, vendors going to bankruptcy or simply disappearing with your deposit, uncapability to reach product standard or requirement (even with a validated sample), corporate social responsibility issue, and intellectual property protection are as much risks which can be considered and quite often neglected by wannabee importers. Yet, they are real and sometimes interfere in the process despite the good impression you may had from your vendor when exchanging by email on a first step.

As soon as your order become consequent, you are quickly questionning wether your vendor will have capability to serve your supply chain with reliability, consistency, repeatibility, with the same level quality all along your cooperation. This is where the shopper distinguised from the sourcing professionals: Professional sourcing is performed with methodology and require a solid experience of the risks related to asian manufacturing. Not only does it include technical and business considerations, it also integrate local and cultural differences and behavior which get possibilities to interfere and deteriorate relationship between buyer and suppliers.

How do we perform sourcing in China

A proper sourcing activity should allow to appoint manufacturers and vendors in full confidence, trust but also with potential capacity to rely on control. Trust is good, but we rather believe in control, true facts, data, processes, methodologies and guidelines. We expect that manufacturers and vendors which work as suppliers for our client to believe in the same. Hence, when we source manufacturers and vendors for our clients, we source profiles.

Most of sourcing agents sources products. We prefer to source skills, capabilities, experience, professionalism, infrastructure, equipment, talented people, character and manufacturing processes. Sure, those talents must also have a significative experience in product they make and manufacture but by experience we know that character and attitude of a business owner are the most important factors which influence the success or failure of a business relationship.

We never base our sourcing on price point. We rather better source a capable manufacturer and discuss pricing rather than trying to do the opposite because we know by experience that a reliable supplier will easily be capable to lower a price, but a poorly capable manufacturer with a low price will probably not success to reach a quality standard or a business ethics.

PHASE 1: PRODUCT STUDY

During any sourcing mission we enforce ourself to understand and analyze product. It particularly means to understand crtical materials and process choice. We study how pricing is influenced by which parameters so we know where we can move the cursor in the price reduction direction without affecting product quality.

PHASE 2: SUPPLY CHAIN ANALYSIS

We usually map the supplier and sub-supplier vendor characteristics and profile type so we know what to expect in term of supply chain. To do so, we usually perform a product construction check allowing us to establish a first bill of material listing parts, material and necessary processes to manufacture each parts.

PHASE 3: VENDOR RESEARCH

Research start with a long establishment of several suppliers  in a large spectrum. Research are usually made simultaneoulsy via different channels: local association, personnal or professional network, exhibition and the Internet. Communication and discussion are established with those suppliers for a first review and feeling, it also include a quick review of official documentation such as business licence. A Short listing is established via refinement.

PHASE 4: AUDITING

From the short listing, we audit manufacturers and vendors to assess and verify their capabilities, their skills, their infrastructures, the genuiness of their business and to confirm their manufacturing process to manufacture the product wanted by our customer.

PHASE 5 : PROJECT DISCUSSION

At the end of the audit, if we estimate the vendor got capability to achieve the product requirement, then our team usually enter into discussion with the manufacturer to establish what can be done and what can not, what are the risks related to manufacturing and/or product development activities. It also allow us to identify pricing leverage for cost reduction and to identify bottlenecks. So that critical factors such as risks can be better controled and anticipated later on when mass production orders are placed to the manufacturer.

 

What do we source

Most of sourcing agent specialized in a particular type of product. It is easy for them because they source one product one time, then serve the same to their different clients. They have a supply chain established and can just trade those products as a intermediary middle men. We work totally differently: we source on demand product, material, components, processes and skills.

With a Lean approach, for us, any product whatever its type is always and just the result of a succession of processes having input and output. What vary are those input and the control made on each process steps. Each sourcing mission we perform start with a preliminary study about the product to understand fully how this product is made from raw material component until packing. We analyze the bill of material deeply and identify product risk area so we know where to focus our sight when we audit manufacturers

By approaching the sourcing activity with a process approach instead of a product approach, we get capability to adress a wide range of product type, from the most simple gadget to the most complicated machinery. This is the difference between a sourcing mission made by engineers versus sourcing made by merchandisers or non technical and process oriented approach.

 

Pricing

Pricing for sourcing mission is usually established based on the following criteria:

• Product complexity and skills requirement needed
• Number of product class and number of involved supplier type to source
• Location of the sourced area (local, regional, national)