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Sourcing from China: basic precautions
As you probably know, it is possible to source almost anything from China these days. Although working with a supplier based on the other side of the world can be challenging, the benefits far outweigh the disadvantages. As long as you take a number of basic precautions.
1) Researching potential suppliers
Just like you would do in your own country, it is crucial to conduct extensive research before selecting a Chinese supplier. Price is, of course, important but it should never be your top priority.
To help you choose the supplier that is right for you, producing a checklist might help you evaluate your options and immediately root out a number of suppliers that are unsuitable. At a minimum, you should obtain references, ascertain what each supplier can (and is not able to) offer, as well as assess the effectiveness of their quality-assurance system.
Once you have gathered all this crucial information – and other information that is relevant to your specific project – you should score each one of them and select those that come on top.
Now that you have created a shortlist of potential suppliers, you should seriously consider asking for samples, whether these are supplied free of charge or not. Ensuring that suppliers comply with quality and safety standards is essential.
2) Selecting a supplier and signing a sales contract
Now that you have selected your supplier, it is time to sign the sales contract. The importance of a sales contract can never be overemphasized. It will:
- Let your supplier know that you are prepared to pay more for extras such as tailor-made specifications or higher quality standards.
- Clearly state the quality and standards the final product should meet. It is very important to specify this right from the beginning as it could prove extremely valuable should a dispute arise at some point in the future. The sales contract should also mention which penalties will be applied should the specifications not be met.
- Specify the payment schedule, usually a 30-percent deposit when placing the order and the balance once the goods have been received and been tested for quality. You should never settle in full upfront (a decent supplier will never ask you to do so).
- Include insurance to protect your interests should the goods be lost or damaged for instance.
Once you have signed the contract, you need to keep an eye on the production process to ensure that the finished product meets your quality and safety standards.
3) Monitoring quality and safety standard
First of all, it might be a good idea to ask your selected supplier to produce a small sample batch to check for any flaws before mass production begins. You should then consider having a quality inspector right on the shop floor so that samples can be regularly and randomly examined. Of course, nothing stops you from visiting the manufacturing plant yourself to carry out your own quality and safety-standard checks. Be aware that in some countries customs may require documentation showing that your product has been tested and approved for use in your home market.
4) Looking ‘after’
Once you have signed the sales contract, you need to make sure that you ‘look after’ your supplier. But be reassured: looking after your supplier will not entail too much effort on your part. You just need to do enough to make sure that he sees you as a ‘special’ customer. This means that your orders will always be handled with the care and attention they deserve, even at peak times.
- When putting together a Request For Quotation (RFQ), make sure you do not miss any important details. Using an RFQ – as opposed to a Request For Proposal (RFP) – suggests that you know exactly what you want so do not do this in a hurry and include as many details as possible.
- Endeavour to stick to the payment terms agreed. It might be worth liaising with your accounts department to ensure that your supplier is paid on time.
- Show your supplier that you wish to establish a long-term relationship with him. You may wish to help train his employees for instance. A better-trained workforce will work more quickly and make fewer mistakes. This could save you some money in the long run.
Sourcing from China makes sense as long as you take a number of simple precautions.
Source Supply Logistics, a British owned company, helps reduce procurement expenses of construction and mining companies by sourcing and supplying any type of goods, equipment and machinery from manufacturers around the world while managing supply chain, time, costs and quality risks.
Our experienced multi-language team sources goods from a broad network of trusted and reliable manufacturers and handles whole supply chain from sourcing and procurement to quality control and shipment. The benefit for our clients is they can lower their operating costs by up to 50%, and get goods of required quality in a projected time.