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In this post, I am going to talk about how experienced China outsourcing agents select manufacturers and how you can do all or at least the major part of this job by yourself.
Veteran China outsourcing agents know that finding a good factory is difficult and very time-consuming. But if done right, can lift your company to heights you didn’t dream of. So the investment definitely worth it.
Doing what I am about to talk about by yourself requires a bit of knowledge and experience. If you have been working in China for a while, I am sure you will find some useful tips in this post you can implement immediately.
If you are new to China and just getting yourself familiar with the middle kingdom, I strongly recommend you read the following two posts first:
>>Do you need to work with a sourcing agent?
>>Is working with agents “good” or “Bad”?
The China outsourcing agent checklist
Just like any other task, when you just start, finding a single factory, any factory, seems like a real challenge. But very quickly you realize that finding a factory takes a few minutes. Finding a good factory requires more work, and finding a factory that is suitable for you, on which you can count and work with for a long time – well, that’s a whole different story…
Before you start looking, let’s make sure you know what you are looking for.
Every professional China outsourcing agent has a checklist they follow when they evaluate new manufacturers. Do you have one?
The new supplier wish list
When I ask people what kind of factory they are looking for I get the following wish list:
“It has to be good”
(…OK, Can you be more specific please?)
“It must produce good quality products” –
(Well, no one wants poor quality. “Good quality” by what standards?)
“It must be reliable” –
(This one should be at the top of the list).
“It must be…well…cheap…I mean…competitive…”
(Frankly speaking, this one should be at the top of the list followed by reliability.
I’ll explain in a minute. Stay with me.)
Usually, that’s where the list ends.
But it is definitely not complete. Here’s what’s missing:
The new supplier full wish list
Of course, any supplier we want to work with must be “good”, reliable, making good quality products and…competitive. But that is not enough. This is far from being enough.
Deciding whether a specific supplier is right for you or not, requires much more information.
Screening suppliers is a very time-consuming job. Without the right preparation work, you will find the reason why you shouldn’t work with a specific supplier only after you arrive there. Only after you spent hours, sometimes days on the road, you will find out that the supplier you are visiting is not the supplier you are looking for.
The biggest risk is not that you will not find the ideal supplier. The biggest risk is that due to lack of other choices you will work with the wrong supplier.
So before you buy plane tickets and set appointments, you want to write down your complete “supplier wish list” and try to learn as much as you can about the supplier BEFORE you decide whether or not you should visit them.
There are many things you can do to avoid spending time traveling to, and visiting suppliers you will eventually disqualify or worse, work with for a while, and then decide to change.
The elimination method
Many factors make a supplier, a good supplier. It takes time to evaluate all of them and come to the conclusion that a specific supplier is a suitable one.
So what you want to do is disqualify as fast as possible any supplier that should be disqualified.
To do that you can first evaluate suppliers based on criteria that are easy to check and are easy to obtain such as price and location. In just a minute I am going to list a few things you can ask a supplier before you meet them. According to the answers, you can decide very quickly if you should continue the evaluation process or disqualify them and move to the next candidate.
The most important part of the list
As I said so many times in the past, you want to look for the most suitable supplier for you. That supplier may be good for you and not good for other companies in your industry and it could be good for you now, although it wasn’t last year. It all depends on your organizations’ current circumstances.
What we are trying to do right now is not run a full audit. We are only trying to screen out factories that wouldn’t enter our vendor list as soon as possible and with the least effort spent.
So with that in mind, here we start:
Remember I said this one should be at the top of the list?
Price is not the most important factor. But it is definitely important. And also very easy to ask for.
If the price way too high or way too low, you should definitely hold the trip to this supplier.
You want to work with a factory that is big enough to accommodate your orders but not too big, as you don’t want the factory to look at you as an insignificant customer. This will necessarily impact the level of service you get when the factory will be very busy.
The location of the supplier must make sense in terms of proximity to your other suppliers and the amount of time you and your people have to spend traveling to that supplier.
Main market and customers:
If the supplier you evaluate works with companies in your market, there is a good chance the suppliers can meet quality standards and price levels required in your market. On the other hand, if the supplier is working closely with your direct suppliers, there is a risk these competitors may now have access to sensitive information about your products.
Machines and equipment:
By knowing the quantity and type of machines and equipment the maker has, you can learn a lot about the kind of quality you can expect, the makers’ operation scale and maybe even about their financial situation.
Quality management and customers certificates.
Ask the supplier you evaluate to send you scanned copies of all quality management certificates they obtained and certificates they got from international brands.
By the brands and the date the certificates were issued, you can learn about the quality requirements they are able to satisfy and the history of the supplier.
Photos of key products
You can safely assume, that if the supplier you evaluate has manufactured in the past similar products to yours successfully, or products that require the same capabilities required to make your products, then chances are they can make your products successfully too.