The China Sourcing Solution: The 5 steps to sourcing success – Part 2
May 24, 2022
This week’s blog is Part 2 in a three-part series on CPG’s China Sourcing Solution, which provides you, the importer, with what is, in effect, your own branch office and team in China. As discussed last week, implementing the China Sourcing Solution comprises the following five steps:
– Step 1: Understanding the Vision
– Step 2: Getting Your China Sourcing Team
– Step 3: Mission Definition
– Step 4: Execution
– Step 5: Measuring Results
Last week we covered Step 1: Understanding the Vision and Step 2: Getting Your China Sourcing Team. Today, we’ll continue to Step 3.
Step 3: Mission Definition
Defining the mission is an interactive process with your CPG team, in which we outline S.M.A.R.T. (Specific, measurable, achievable, results-driven, and time bound) objectives in granular detail for the first month, and in draft form for months two and three (assuming you start with a 3-month project). While your CPG team will already have a good understanding of your vision from Step 1, defining the mission requires specificity about your products, along with your detailed objectives and concerns.
One of the most common missions for new CPG clients is to improve sourcing for a few high-volume, priority items you are currently buying directly or indirectly from China. To do this, all you need to do is
1) identify the items and
2) share the items and specifications with your CPG team.
An example of this type of mission would be as follows:
Company A: Initial Objectives (Missions 1-3)
Product(s): Stuffed teddy bears
Quantities: Initial order: 3,000; Annual: 36,000
Target Pricing: $1.15 FOB China (15% lower than current costs)
Month 1 Mission
– Create Product Specification Sheets (PSS) for each item
– Identify 3-5 factories able to manufacture to quality specifications and production criteria
– Provide supplier information, quotes, and CPG recommendations to you for review
Month 2 Mission
– Order samples with select factories
– Create Inspection Specification Sheets (ISS) based on feedback on physical samples
– Negotiate purchase order agreement and initial order terms with select factories
Month 3 Mission
– Schedule supplier visit/audit if needed
– Place first orders, manage production, implement quality control procedures
– Manage shipping and logistics
As soon as the mission is finalized, it means that it and all its details are agreed upon by both you and your CPG team. You and your team will have clarity of purpose and your team can get to work immediately! Once work begins, you’ll be in constant contact with your CPG team and be kept up-to-date on all progress. You’ll also maintain complete control over your sourcing program and have the final say in all important decisions during the execution stages.
Next week, we’ll cover the last 2 Steps in the China Sourcing Solution, Step 4: Execution and Step 5: Measuring Results.
See you next week!