Month: April 2021

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Elksourcing：Good Suppliers Share Same Good Qualities

Apr 11, 2021 , by 露露

Per my 20-year experience in global sourcing and quality management, I’ve learned that good suppliers share the same good qualities.

1. Accountability for quality issues

Admitting to a mistake can be difficult. But when your goods are on the line, working with a quality supplier that takes responsibility for their half of a deal can make a world of difference. That’s why accountability for quality issues tops the list of characteristics of a good supplier.

But a supplier without accountability is more likely to deflect responsibility. They might tell you the quality of the fabric was poor and difficult to work with. Or, if you used a third-party inspector to check the goods, the supplier might accuse the inspector of incompetence or unprofessionalism.

A supplier that won’t own up to their mistakes can hinder your ability to meet deadlines and product requirements. Look for signs of accountability as a key characteristic of a good supplier.

2. Production capabilities

Most importers understand the importance of looking for suppliers who can actually manufacture the product they want. In fact, many importers focus so much on production capabilities of a prospective supplier that they overlook other vital considerations.

In either case, you can learn a lot about a supplier by verifying areas such as:

A.   Raw materials and finished product inventory

B.   Incoming quality control, in-process and pre-shipment quality control procedures

C.  R&D capabilities (important if you plan to develop new products)

D.  Machine and equipment maintenance and calibration

E.   Certifications or licensing (e.g. business license, export license)

3. Expertise in your product type and target market

Asking the following questions can help you vet prospective suppliers’ experience with your product and market:

A.   Where does the supplier export the majority of their products to?

B.   Is the supplier familiar with legal requirements and regulations in your target market?

C.  Does the supplier have a reliable network of sub-suppliers for raw materials, production inputs and components for your product type?

D.  Does the supplier hold industry-specific certifications for your product type?

Buyer references can help you verify a supplier’s previous experience. But you might find prospective suppliers unwilling to provide preferences.

This is not uncommon in China due to buyer confidentiality clauses. But it can be helpful if a prospective supplier can provide reliable references with customers’ contact information.

4. Culture fit: the best suppliers are willing to work with you

The “ideal” supplier is rarely the same for every importer. A manufacturing giant like Apple will have different standards for their suppliers than a first-time buyer that sells on Amazon.

Some suppliers might be more inclined toward developing new products. Others might prioritize reducing their environmental footprint. The key is to find a supplier whose goals align with yours.

You can evaluate culture fit with potential suppliers by asking:

A.   What kind of companies do they typically work with?

B.   What is their minimum order quantity (MOQ)?

C.  What do they know about your business?

D.  How detailed is their quote? Have they taken time to tailor their quote to your specific requirements?

5. Ease of communication

Language and cultural barriers can present real challenges for importers looking for suppliers overseas. You’ll benefit greatly from working with a supplier that’s easy to communicate with. Effective communication can prevent a variety of problems ranging from production delays to product nonconformities.

6. Cooperation with third-party QC

Outside oversight can actually help the factory by:

A.   Pointing out defects the factory’s own QC staff might have missed

B.   Improving their customer relationships by ensuring product quality before shipment

C.  Clarifying product requirements and inspection expectations, preventing customer returns and chargebacks.

7. Ethical compliance

Ethical sourcing has made its way into the spotlight. As larger brands have made headlines in recent years for social compliance violations in their supply chain, countries have taken steps to outlaw goods made with forced labor.

8. Regulatory compliance

Aside from ethical compliance, importers need to ensure their supplier complies with laws in both their manufacturing country and their target market. Failing to ensure regulatory compliance can otherwise lead to legal consequences for you and your business.

Some common market- or product-specific regulations and certifications to verify include:

A.   FCC Declaration of Conformity, Restriction of Hazardous Substances (RoHS) and (CE) for electrical and electronic equipment

B.   Good Manufacturing Practice (GMP) for food, medical devices, pharmaceuticals and cosmetics

C.  General Certificate of Conformity (GCC) for any non-children’s product subject to a U.S. consumer product safety rule

D.  Children’s Product Certificate for all children’s products subject to S. children’s product safety rules

E.   Model Toxics in Packaging Legislation for packaging materials and components

It’s a great idea to ask potential suppliers for previous test reports and certificates as evidence of their compliance. You might also consider arranging independent product testing for a supplier’s samples to further verify compliance where applicable.

9. Clear and comprehensive recordkeeping

The best suppliers proactively update their records and information to seamlessly implement changes. Important information for your supplier to keep organized and continually updated includes: 

A.   Quality standards, including known quality issues, defect classifications and performance standards

B.   Product specifications and requirements, including dimensions, colors and materials

C.  Packaging requirements, including labels, shipping markings and retail printing files

D.  Regulatory requirements, including any changes in legislation and standards

10. A proactive attitude towards continuous improvement

This last quality is probably the hardest to find among overseas suppliers. But it’s also one of the most valuable if you’re serious about maintaining a long-term, high-volume relationship with a supplier.

The vast majority of manufacturers for low-cost consumer products won’t adopt lean manufacturing techniques on their own. But conducting a process audit can help you identify root causes for product quality issues and then work with your supplier to fix them.

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Elksourcing：Various Quality Inspections in Supply Chain

Apr 11, 2021 , by 露露

When a company purchases items from a vendor, a quality inspection is usually necessary. There are various quality inspections in supply chain such as inspections during the manufacturing process, inspection of the final finished product, and inspections while the items are stored in the warehouse.

1. Importance of Inspection of Purchased Items

The quality inspection occurs so that a company can verify that the product is within certainly prescribed tolerances in order for the product to be useful. For example, a company may purchase a paint additive to be used in their manufacturing process, but before it can be used, it has to be inspected to see that the chemical and physical composition of the additive is within the tolerances to be used in the process.

When a purchasing agreement is made with a vendor, it will define the characteristics of the product that are to be inspected and the tolerances that would be allowed. If the item is received and found to have characteristics outside those agreed upon in the purchasing contract, then the company can have the chance to return the item to the vendor.

2. Inspections at the Vendor’s Facility

The quality inspection can also take place at the vendor’s facility. Some companies prefer to perform the inspection before the items are transported to their manufacturing plant. However, the inspections can incorporate more than inspections of the product, but also inspections of the production facility, equipment, documentation, manufacturing processes, and storage facilities.

These quality inspections are important when purchasing agreements are being negotiated. Some vendors may have ISO 9001:2000 Quality Management Standards (QMS) certification which offers customers a greater sense of expected quality and may lessen the requirement of regular inspections.

3. Inspections on Production Line

When a manufacturing company creates finished goods, it cannot afford to wait until the items are coming from the end of the production line before they are inspected. Production issues need to be addressed early in the process in order to correct problems. This can reduce the loss of raw material and reduce the overall time that the production process is shut down. In every type of industry, there is a process where quality inspections can be performed during production. 

For example, in the chemical industry, there should be inspections during the process to test the item at certain stages to ensure that the product is within the manufacturing tolerances. In the manufacturer of consumer products, many inspections are performed so that components are tested as the final product is being assembled to ensure that the finished product will be fault free.

4. Inspections for Finished Goods 

When the finished item comes off the production line it should be inspected to ensure that it conforms to the quality standards of which is to be sold. The final check could include not only the finished goods themselves but the packaging used to ship them to the customer. If the packaging is damaged or incorrectly labeled, then this could require the item to be reworked or scrapped.

5. Inspections in Client’s Warehouse

Finished goods can be sent directly to the client’s warehouse before it is sold. For some items, storage for a period of time can alter the characteristics of the product. For example, some products are susceptible to degradation by heat or cold.

Finished goods that are produced to be within certain chemical tolerances can be affected by environmental conditions so that some characteristics are no longer within the stipulated tolerances. Inspections in the warehouse can ensure that the finished goods are still able to be shipped to customers.

How To Import From China

Elksourcing：How to Develop Good Relationships with Chinese Suppliers?

Apr 11, 2021 , by 露露

When importers decide to source from China, they must invest in developing good relationships with potential and existing Chinese suppliers.

Three aspects are essential to implement a good supplier management strategy in China:

(1) Know your suppliers inside out. 

Identifying and knowing your suppliers is important for building an enduring relationship. There are no shortcuts in this kind of relationship building.

Visit suppliers and see their technical capabilities and capacity with your own eyes. This includes their machinery and equipment, their process technologies, the number and qualifications of their employees, and the like.

A bid is no guarantee of a supplier’s willingness and ability to meet your volume and quality requirements or future competitiveness.

(2) Develop strong relationships with fewer suppliers.

Identify a few suppliers that are willing to commit to a long-term relationship and to jointly creating a competitive advantage.

To avoid fragmentation of the supply base, stop bidding out each part and dropping suppliers anytime another company offers a better deal.

The dangers include shifts in the supplier’s strategy or customer base, and deteriorating performance.

These problems could go unnoticed until crucial shipments are missed, costs mysteriously escalate, or quality suddenly nose-dives.

(3) Work jointly with your suppliers on continuous improvement.

Focus on developing suppliers’ capabilities and advancing their competitiveness over time. Set ambitious but realistic targets for better performance in cost, quality, delivery, or innovation, and work with your suppliers, not against them, in achieving those goals.

Successful continuous improvement requires agreed-on objectives, transparency of current and anticipated costs and processes, and the sharing of improvement ideas.

Large customers often have internal knowledge about advanced concepts such as lean manufacturing that many low-cost suppliers have not yet developed.

How To Import From China

Elksourcing：5 Basic Steps for Sourcing from China

Apr 11, 2021 , by 露露

Sourcing From China is more and more popular for online sellers, however, it’s daunting many new importers. Below are 5 basic steps I have learned from my 20-year experience in sourcing industry:

1. Conducts an initial research

This is the first stage where you decide what your primary activities are, what are the needs of your clients and who your competitors are. These steps help you to determine your business goals and your position in the market. You and your sourcing partner need to design a business plan to determine the performance measurement system and primary work strategy.

2. Evaluate supplier and market

Your sourcing partner, which offers global sourcing service helps you to make a supplier selection benchmark. When you have the list of criteria, you can make further changes in the sourcing strategy and determine the final cost. Given the fact that you already have information regarding clients and prospective markets, you can identify the economic and operational benefits of the project and decide, if you at all want to source from a foreign base.

3. Select suppliers

You can create a request for inquiry and send it to your selected suppliers. After you get back the quotations from suppliers, you can make a final list of suppliers. Then, you can conduct a price negotiation depending on the final supplier list and determine how much you can save.

4. Implement decisions

In this stage, you have to create a performance analysis schedule. Your sourcing partner is going to be a part of the implementation team where you will have to decide resources, shared supply and logistical arrangements. You should keep an account of the performance of every supplier in case of more than one supplier.

5. Monitor supplier performance and take necessary measures.

You must make sure that you, along with the company offering global sourcing service carries out regular performance check and reports it. This will assist you in realizing whether the suppliers are sending products as per your requirements or not. You will also get to know if the suppliers are following your criteria of quality and safety or not.

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Elksourcing：Why Early QC Involvement Is Important?

Apr 11, 2021 , by 露露

Successfully sourcing your products from China implies being careful and diligent about each step of the manufacturing process. QC (Quality Control) is one important step that responsible importers implement at some stages of their production, usually before shipment because it is believed to be the most cost-efficient stage for quality control.

Pre-shipment inspections are best sellers in the 3rd party QC industry; they are performed when production is finished (or almost finished). But without earlier preparation and follow-up with the factory, these inspections might present a few risks that you need to consider:

1. Costly Rework:

Identifying defects late during the production cycle involves higher costs of rework and repair. Unpacking all the finished goods, sorting the defective products, reworking or changing them and repacking them again is costly.

2. Negative impact on Time-to-Market:

If problems are found, repairing them often delays the shipment of your goods, which might affect your time to market.

3. Compromising on Quality:

Because of time or cost pressure, and also because of lack of support from the factories, many buyers end up agreeing for the goods to be shipped even when they don’t meet their initial quality expectations.

4. Damaging your relationship with the supplier:

Creating a healthy and long-term partnership with your supplier is a must to succeed in your products sourcing in China and to consistently get the level of Quality that you want.  Often, issues found during a pre-shipment inspection might lead to arguments and frustrations from both sides (the importer and the supplier).

“No one mentioned this before”, “If you want this quality it will cost more”, “This is unavoidable” are examples of what you can hear from your supplier, because clear requirements and specifications on the products were not agreed before production and proper follow up with your production was not done at early stages.

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Elksourcing：7-step Approach to Make Successful Sourcing

Apr 11, 2021 , by 露露

Successful sourcing from China is the result of a systematic approach and hard work. Shortcuts may seem smart, but most often, they result in delays or failure. I am always surprised by how often, even large organization, will be tempted by these shortcuts. Per our experience, below 7-step approach is required to succeed in sourcing products from China. 

1. Initial preparation

Many China sourcing initiatives run into trouble because of decisions made or not made at the outset. Unclear targets, unrealistic expectations, lack of resources and many similar aspects, if overlook, will cause project delays and waste of energy.

Successful companies have thoroughly prepared their project. For example, they dedicate initial time in order to:

Define specific ranges of products for sourcing, based on an analysis of volume, labor content, technical complexity and other technical, logistics and commercial aspects.

Spell out clear objectives in terms of cost target, volume ramp-up, sourcing project budget and supplier ideal profile.

Gather updated internal information such as product specification and standards for the product to be sourced.

Get a company executive to actively sponsor the project and set up a multi-function project team or involve different functions of the company.

2. Identification

To get a short-list of suppliers matching the right criteria, a buyer needs to investigate a large number of potential companies. Only a small portion of them will be good enough to be seriously considered for further steps.

There are no reliable “Golden Pages” in China. Online directories are useful but not sufficient. Information provided by many poor suppliers is not a good representation of their actual capabilities.

The right way to build an initial short list will require you to:

Identify a long list of potential suppliers as long as possible.

Contact each of them by phone to collect information directly from their sales representative and evaluate the credibility of this information.

Screen out the ones that fall outside selection criteria or whose credibility is not strong enough.

3. Qualification

This is probably the most important step of the whole process. Out of all the suppliers that offer products similar to what you are looking for, you need to find the right match: technical capabilities, required volume and production capacity, management capabilities, potential for growth and development.

Finding the right supplier requires the most systematic and thorough approach:

Perform on-site qualification visits for each short-listed supplier.

Thoroughly evaluate all aspects of the supplier’s business.

Collect samples or visit reference sites.

Pre-qualify more than one supplier.

4. Price quotation

Although it may seem easy, getting reliable pricing information from Chinese manufacturers require special attention.  For example, many Chinese suppliers are flooded with benchmark pricing request. They will screen which request they need to quote for. In addition, requirements and expectation must be more explicit when communicating with traditional suppliers.

To get the best out of price requests, it is strongly advised to:

Prepare a simple but complete pricing request or RFQ, including all necessary technical elements and standards,

Actively manage the quotation process with frequent clarification and follow-up phone calls. This is the only way to ensure complete quotations on time.

Before spending time analyzing data in details, quickly screen noncompetitive quotations and review the assumptions made by suppliers.

5. Preparation for first PO

Once the supplier is selected and the main terms and conditions are agreed, the next critical step is the first purchase order. This is when all technical and operational misunderstanding need to be cleared.

Such technical and operational discussions are best held face to face. It is important to avoid misunderstanding and to build a personal business relationship with suppliers.

The preparation for the first purchase order is an ideal moment to organize a high efficiency China trip during which you can:

Have face-to-face meetings with the 2 to 3 pre-qualified suppliers.

Take the opportunity for a last technical and operation clarification.

Negotiate pricing and other terms.

Agree on the first order: estimated size, timing, payment mechanism, documentation.

6. Inspection

The only truly safe way to source products from China is to take control of quality control. It does not necessary means having extensive inspections for every order. But it means devising a well-structured quality control system, managed by the buyer or its representatives:

Prepare and execute a thorough Quality management plan.

Make regular visits to suppliers to validate planning and progress.

Verify supplier quality documentation and run sample inspections.

Link payment of the goods to pre-shipment certificate issued by trusted party.

Dispatch engineer on site if there is any doubt of quality or operational problem.

7. Development

When arriving at this step, buyers have one or several suppliers they comfortably work with. It takes time and resources to get to this point.

This is the time to consider whether this supplier cannot provide more bang for the buck:

Get more products in the same family of products.

Benefit from larger savings by increasing the scope of work of your supplier.

Get access to cheap technical resources by asking suppliers to work on product variants.

Enter in a supplier development program in order to further improve the deliveries.

How To Import From China

Elksourcing：How to Get Quality Goods from China?

Apr 11, 2021 , by 露露

For China sourcing, it’s crucial to receive what you order, according to specification and on the time agreed upon. In order to get quality goods from Chinese suppliers, you will need to consider below 3 main areas:

1)   Select the right supplier;

2)   Manage quality control system;

3)   Put in place the right inspection plan.

1. Select the right supplier

I like to summarize the importance of supplier selection in three sentences.

You will NEVER get quality from a supplier that is not properly equipped to make it. Suppliers need to have the right equipment, skills and experience.

You will OCCASIONALLY get quality from a supplier with the right equipment and skills but with poor processes in places.

You will get INCREASING quality from a good supplier with equipment, skills and processes and which is also willing to cooperate with you for continuous improvements.

2. Manage quality control system 

When an inspector rejects a delivery because products are below standard, the good news is that it prevented defective goods from being sent to you. But the bad news is that you do not get any goods at all.

It is better to work upstream to further reduce the risk of getting goods below standards instead of just filtering them at the end of the process.

Most buyers purchasing from Western suppliers will “delegate” all quality control activities and planning to the supplier. But in China, it is dangerous to do so. Quality remains the responsibility of the supplier, without doubt. But it is necessary to dig in the details of what actions the supplier has implemented to fulfill this responsibility.

After you select a good supplier, you will want to review the quality control system the supplier is using as a routine. The review is used to make sure that all aspects are covered.

When some areas are not covered, it is common practice to ask the supplier to add a few control items to the plan. In most case it is really not a problem to have additional controls and to receive reports on the results.

It also allows you to explicitly highlight quality requirements and expectations. Many misunderstandings will be avoided during this step.

3. Put in place the right inspection plan 

Once the two previous areas are covered, you can think of pre-shipment inspections. The main purpose here is to avoid that the supplier makes sub-standard products, not only to catch poor products before shipment.

When you focus only on catching poor products, it is like subscribing to a full coverage car insurance policy but continuing driving recklessly which leads to lots of accidents.

Beside catching poorly made products, pre-shipment inspections also can have a strong preventive role. When the supplier knows that the products will be strictly inspected by buyer, they will be more serious on production quality.

In addition, discussing the inspection plan with the supplier is the best way to avoid misunderstanding.

The role of the inspection should include:

Review of the supplier routine QC documentation and reports;

Do again a range of tests on a sample of the goods;

Possibly performing additional tests (material, destructive tests or non-destructive tests).

Conclusion

In our experience, there is no shortcut to these three areas. The difference between very good suppliers and others is that the process will be faster and more straightforward. But skipping one step leads to problem one day or another. 

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Elksourcing：5 Main Reasons for Quality Issues

Apr 11, 2021 , by 露露

For e-commerce sellers, it makes great sense to source directly from China. However, the whole process is complicated, there are many possibilities to cause quality issues. Following are the 5 main reasons I learned from my 20-year experience in sourcing business.

1. Miscommunication

Miscommunication is the most important reason for most quality issues.

Do not believe that your supplier understands your specifications and your expectations clearly after they’ve been told once.

Usually, you are most likely communicating with someone who doesn’t speak English as their first language.

Also, you’re most likely talking to the salesperson, who in turn has to communicate requirements to engineers and production staff. And it’s not uncommon for things to get lost in translation or for requirements to not be clearly communicated to the assembly line.

2. Unclear instructions from the buyer

Many e-commerce sellers assume suppliers will know their requirements. They are not particular about their specifications.

For example, if they’re ordering a yellow T-shirt, they might not specify the exact shade of yellow they want.

Similarly, the buyer might not have indicated the specific type of finishing they want on a product, or where and how the labels should be attached and in such a situation, the supplier is likely to use the option that costs them the least.

It is also possible that the sales representative is not familiar with the product, and might not understand the product details and technical requirements.

3. Cultural differences

It is common for Chinese suppliers to tell buyers what they think you want to hear, even if it’s not the truth just so that they can make a sale.

Also, suppliers may be hesitant to ask questions and admit they don’t understand requirements as “saving face” is an important element in their culture and they do not want to seem incompetent.

4. Buyers pushing for lower price

When e-commerce sellers pressure suppliers on price, they may try to cut corners, which could impact product quality.

For example, the supplier might reduce the thickness of the metal on a spatula, which might impact performance. Or for products made of wood, they might not treat the wood properly which could result in the wood warping over time.

5. Skipping product inspections

Spending several hundred dollars on an inspection can save importers a lot of trouble later on because once the shipment arrives in the importing country, if there are major issues with the product, there’s not much you can do at that point to rectify the issue.