China Sourcing: What you Want vs. What you Need
December 13, 2019
When an importer begins their quest to source products in China, they typically know what they want, but they are not always as clear about what they need.
What is the difference between “want” and “need”? Well, it mostly has to do with details; all the things you need to address in order to get what you want.
Say they are sourcing a toy car. The importer would know what they want – it is a toy car, in a specific shape and color, size, logo and perhaps in a specific box. They are also likely to want it for a specific price range and within a specific timetable.
But this is not enough. To get what they want, an importer must specify their needs in great detail. Start with WHAT needs:
– Specifications: These have to be as detailed as possible and including things like type of paint; pantone color; type of materials; weight; type of packaging, etc., all listed in a PSS (Product Specification Sheet)
– Quality assurance: They need to be sure that the toy car will conform to their needs. For example, they need to be sure that it will roll straight for at least 3 feet and that the tires will not fall off. That must be specified in an ISS (Inspection Specification Sheet)
– Pricing: The buyer needs to be sure that their costs are the lowest possible to ensure, among other things, that competition cannot undercut them. This involves getting quotes from several competitive suppliers.
– Delivery:To ensure the goods arrive at the warehouse in the USA at a specific date, they must demand they are shipped no later than a specific date, making allowances for delays.
Once this is clear, you need to address your HOW needs are met. How do you make sure you get everything you want?
The way to do that is to have systems in place. These must include:
Procedures: Make sure each of your processes are detailed and documented so that you cannot forget any important step. You should have a written procedure for at least each of the following:
– Product specifications, including packaging.
– RFQ (Request for quotation) process
– Quality assurance process, including how the product will be tested to ensure conformity.
– Order placement process, including what documents should be included and signed.
– Monitoring for timely shipment process.
Management: Managing any process from afar is difficult. So, proper management of your supply chain is essential. All it takes is focus; allocating management time and putting in place the right support structure. The systems you must manage include:
– Check and balances: Making sure procedures are followed and supervised by parties that do not have a conflict of interest with the factory.
– HR: Finding and hiring the right people to support you. This is especially important if your sourcing program is large and growing.
– Regular meetings and reports: Get a structured feedback on your RFQs, the production of your orders, your shipping schedule and product research.
Communication: Good, clear, timely communications is the key to success – and the opposite is the cause of most failures. Effective communication is harder in China because of language and culture, but it can be achieved if you are mindful of:
– WHO – Make sure the right people are getting your message, not just an intermediary. Ideally, establish contact with the factory owner.
– WHAT – Everything you say should be consistent with your written documents.
– HOW – Try to keep things in writing. It will be easier to keep track and to make accountable. Also, be ready to listen. This is a two-way street between the importer and supplier. Be candid about your expectations, but listen to the supplier’s needs so that they can meet your expectations.
– WHEN – The Chinese have a saying: “say the nasty things first”. Make sure all difficult topics (price, payment terms, guarantees, penalties etc. ) have been addressed in writing before the order is placed. Afterwards, constantly refer to that if there are issues.
It is the gap between an importer’s China sourcing wants and needs that puts the importer in a potentially vulnerable situation. China sourcing needs are sometimes neglected and that can be the difference between success and failure. But as long as you are very clear about what your needs and how to secure them, you will get what you want.
How do you bridge the gap between your needs and wants? Share your thoughts with us in the comments below.
By Jocelyn Trigueros