Our partner in Greece and the Balkans has pointed me to an interesting survey about China sourcing good practices. It was performed by David Alexander, a sourcing professional who runs a US-based manufacturing outsourcing firm. He used the deep reach of ten LinkedIn groups related to sourcing, purchasing and outsourcing to inquire what people with first hand experience consider good practices when sourcing from China.
The results from the China sourcing practitioners are as follows:
- Do not start Low Cost Country sourcing if you are not able to build the appropriate team. Consider outsourcing [this team] to insure the quality of your supply chain.
- Specifications must be clear as to the quality standards expected and the acceptance test regime and what happens to the rejects – you do not want them to appear in the local street market if it is a branded item!
- Be present at intervals throughout the production process. The factory you visit may not be the one producing the goods.
- Establish a personal rapport with your supplier. It is good business and makes communication a lot easier.
- Arrange for acceptance testing – either by your own staff or by an outside agency in the country of origin. Nothing is shipped without inspection.
- Develop a supplier approval process.
- Allot resources for site visits.
- Get references for third party teams.
- Determine their ability to complete the contract. Determine if supplier is financially stable. Assure that they have systems and certifications, such as ISO-9001, in place.
- Ensure that they are motivated to provide quality and on-time delivery.
- Be clear why you are using a low cost country and take all costs into account – it may not be so low cost in the end.
We can only agree with these points.
- Good preparation – knowing what we expect as a buyer – make sure we plan and budget for necessary resources – understand the Total Cost of Ownership (TOC) model for the required goods.
- Systematic and in depth search and qualification of suppliers. ISO-9001 is a necessary but not sufficient condition: you will want to perform you own evaluation of how manufacturing and quality processes are applied on a day to day basis. Clearly and explicitly specify what is expected from suppliers and verify price quotes accordingly.
- Set up the right communication channels between China and Western side at both management and working level. Commit for at least one visit per year to meet supplier face to face.
- Set up a supplier management and quality management (including various inspections) system in line with the complexity and criticality of the goods sourced.
Live by these principles and you will avoid most of the pitfalls and horor story that you hear about China sourcing.
Note: If you are a member of one of the following LinkedIn group, you can see the original post in the group discussion:
- GVRT Council of Supply Chain Managers
- Global Sourcing
- Innovative New Product and Service Innovators
- ISM Purchasing and Supply Chain Managers
- Offshoring & Outsourcing Forum
- Procurement and Supply Chain Leaders
- Procurement Professionals
- Retail Global Sourcing
- SME Society of Manufacturing Engineers
- Strategic Sourcing and Procurement