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Elksourcing：How to Start Global Sourcing?

Apr 13, 2021 , by 露露

Global sourcing is a trend for many businesses, this is basically a practice of getting services across geopolitical boundaries. But, since there are so many options to choose from, you have to do the whole process intelligently, if keen on making profits.

How to Start Global Sourcing?

1. Learning how to do business in another country-It is never too late to know the unknown! First of all, know the culture and the ways of the country you want to outsource from. Knowing the laws of the country and adhering by it will you an extra benefit if you want to sell to them. Buying from that country will give you a head-start about learning how to trade, before you proceed with the sales afterwards. 

2. Access to cheaper wages-Your labor-intensive manufacturing process is going to be very cheap if you do that in a third-world country. The wages are lower in these countries and you can use this to charge a price accordingly. Do your research as to which country will offer you the best price and the best deals.

3. Increasing supply capacity-Your own country might run from risk of low supplies. In order to avoid the potential danger of low supply, it is important to find alternative supply from overseas. This will considerably reduce the risk of not getting enough of your key material. 

4. Access to raw materials-This problem is the same as that of the above-mentioned one. If the raw materials needed by you are not abundant in your own country, you can avail from the country you are outsourcing from. Finding alternative supply will reduce the risk and increase the available capacity.

5. Considering the investment-Initial investment marks an important start if you are planning to outsource. Considered as the root of the deal, your commitment to the product sourcing companies will be directly proportional to what the service agents will offer. But if you are uncertain about your investment not reaching up to its worth, it is advisable to wait for companies with lower structural fees.

6. Ascertain regulatory practices-Since you have to reach out to the nation for outsourcing, adhere to the laws of the economy. It will be utter disappointment if you have to halt your work due to regulatory violations. For no fault of your own, your business will have to bear the brunt of fines and your investments might go haywire. Avoid these loopholes by researching well about your company’s terms with the laws of the country, or that it does not have any financial ties with any other companies of the country. Regulatory violations can become a hefty fine for you to pay and your work might get stalled for a long period of time.

While browsing online for reviews, look for promising client feedbacks. If the company does not have any track record to show, your deal might not end up being feasible. Go for outsourcing and your company will never again grapple with decentralized purchasing process or low contracts visibility.

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Elksourcing：How to Select a Sourcing Company?

Apr 13, 2021 , by 露露

You will get end-to-end services from a good sourcing agency which addresses to any type of service. Get perfect strategical help from procurement companies that gives you a firm stand in competitive advantages. 

The basic goal is to reach faster savings while taking care of the qualitative side of your relationship with the suppliers. Finding a credible one does not require that much of herculean effort from your end.

1. Going by the reputation

While browsing online for reviews, look for promising client feedbacks. Do not fall in trap of vague responses and always go for glowing customer reviews. If the company does not have any track record to show, understand that your deal will not be feasible. It might just gulp down your money and fail to deliver as promised. So, go for a safe and reliable option.

2. Considering the investment

Initial investment marks an important start if you are planning to outsource. Considered as the root of the deal, your commitment will be directly proportional to what the service agents will offer. But if you are uncertain about your investment not reaching up to its worth, it is advisable to wait for companies with lower structural fees.

3. Doing your research properly 

Never commit yourself to the very first company you bump upon, or the first one that bumps upon you. Understand well about the integrity of the people of that nation, because at the end of the day, you have to rely on them fully for your work to get done. So, consult with multiple companies which will give you an upper hand in understanding the business approaches and who is offering you better rates or terms.

4. Ascertain regulatory practices

Since you have to reach out to the nation for outsourcing, adhere to the laws of the economy. It will be utter disappointment if you have to halt your work due to regulatory violations. For no fault of your own, your business will have to bear the brunt of fines and your investments might go haywire. Avoid these loopholes by researching well about your company’s terms with the laws of the country, or that it does not have any financial ties with any other companies of the country. Regulatory violations can become a hefty fine for you to pay and your work might get stalled for a long period of time.

5. Going for contractual obligations

The right choice of sourcing services can be beneficial while the wrong ones can wreak havoc on your business front. Make sure that your agent provides you with full transparency so that your ideas and designs do not get leaked to any other person. If you are stuck with a shady service provider, there might arise scenes of various regulatory hassles or market risks. So, read the other end of contract carefully and do not forget to place yours, before you shake hands with him/her.

With right knowledge and skill, the sourcing agent will be able to match up to your needs with perfect supplies. Effective outsourcing frees you from worries about on-time shipment as they ensure proper management of timelines. Not only that, you are given a full visibility of holistic analysis and reporting. Come up with the right decision that caters to your fulfillments. So, stop waiting and go for sourcing to define your business goals and determine deployment options.

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Elksourcing：Why Sourcing Agents Can Help Your Company to Win Better Deal?

Apr 13, 2021 , by 露露

Product sourcing delivers to your sustainable value for your procurement from any country other than your own. You will get help from the services of product outsourcing to procure good strategies, giving you a position of competitive advantage. 

Sourcing agents help you to get quality control, shipping management or price negotiation. Not only the benefits, this gives you a chance to get services across geopolitical boundaries. Agents bring together the comprehensive offers with specifications of the product details. You get a good strategy for cost effectiveness and the best end-to-end services. 

1. Work Relationships

First of all, know the culture and the ways of the country you want to outsource from. Knowing the laws will give you an extra benefit if you want to sell to them. Buying from that country will give you a head start about learning how to trade, before you proceed with the sales afterwards. Understand well about the integrity of the people of that nation, because at the end of the day, you have to rely on them fully for your work to get done. Make sure that your agent provides you with full transparency so that your ideas and designs do not get leaked to any other person. If you are stuck with a shady service provider, there might arise scenes of various regulatory hassles or market risks.

2. Highly Skilled Workforce

Your labor-intensive manufacturing process is going to be very cheap if you go to a third-world country. The agent does all the work for you like supplier selection or price negotiation. You also get samples for your approval after which he/she proceeds with your work. You get a full professional service and can consolidate all communication 24/7. You also get full secrecy and your product requirements or designs are never disclosed to anybody else. The sourcing companies provides full transparency and you get to monitor all their actions. There are no hidden charges or kickbacks.

3. Cost Benefits

Most third-world countries are low cost suppliers. Initial investment marks an important start if you are planning to outsource. Considered as the root of the deal, your commitment to procurement outsourcing will be directly proportional to what the service agents will offer. Adhere to the laws of the economy, otherwise you might have to pay a hefty fine for regulatory violations. For no fault of your own, your business will have to bear the brunt of fines and your investments might go haywire. Avoid these loopholes by researching well about your company’s terms with the laws of the country, or that it does not have any financial ties with any other companies of the country. 

With rapidly evolving technology, China is providing you with a secure and responsive supply base that boosts innovation and productivity.

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Elksourcing：Things to Consider for Sourcing in China

Apr 13, 2021 , by 露露

There are several international companies that are willing to source Chinese parts and goods in order to accomplish such objectives. Some of the big retail companies buy a wide range of Chinese products for the lesser cost of goods produced in developed countries. A growing number of industrial players also started sourcing machinery, components, packaging, molds, and other products in China.

How to Find Eligible Buyers in China?

The evolution of sourcing portals and specialized sourcing fairs has made searching suppliers in China quite easy. The procurement managers will possibly get several suppliers that meet all their requirements. Suppliers can persuade the companies of their professionalism with a catchy website or boot and an authentic sales proposition. Most of the companies face the difficulty of identifying capable suppliers and negotiating agreements with them. The difficulties they usually confront range from due diligence or intellectual property violation and interruptions in communications that make the sourcing opportunities less tempting for the procurement managers.

A good China sourcing company always comes at the rescue to the procurement managers. They can also solve the issues related to cultural and language differences the business organizations face during the sourcing activities. There are several organizations who have faced difficulties or only considering the cost factor instead of understanding the fact that global sourcing works when it comprises of the assessment of all the determinants like transportation, cost of materials, inventory carrying costs, quality, operational risks, taxes, and tariffs.

Things to Consider for Sourcing in China

Quality assurance, logistics coordination, and customs regulations are the capabilities that demand special attention from the procurement managers when sourcing. A detailed assessment of pre-selected suppliers as per the company’s specific criteria is the starting point of quality control and assurance. Quality management is a process that goes on. When a capable supplier is hired, its performance has to be measured on a continuous basis. Due to this, companies become able to optimize supplier interaction and performance, boosting the quality and delivery of supplier interaction and performance. The logistic activities during China sourcing comprise of packaging, handling stocks, container loading inspection, shipment arrangement, and the following custom regulations.

Sourcing agents follow a hands-on approach that is needed to monitor the supplier base and take immediate action when corrections are required. Control is a crucial thing to consider for successfully capitalizing in China. When the business organizations take these factors into consideration, they can lay a foundation to facilitate the relocation of larger and more important things for their supply chain operations.

A recognized China sourcing company can always identify trustworthy suppliers, offer quality assurance and control, carry out logistic activities and assist in recruiting personnel. This lets the business organizations set up sourcing offices in China, reducing the need of depending on traders, acquire control and do savings.

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Elksourcing：Why and How to Start-up Enterprises Source from China?

Apr 13, 2021 , by 露露

Nowadays, more and more start-up enterprises are opting for China product sourcing for earning profits in business. Low-cost country sourcing can be arduous for the start-up enterprises due to cultural differences, language barriers, legal difficulty, exchange rates, and business risks. By appointing a good sourcing agent, they can carry out China sourcing activities successfully.

Why Are Start-up Enterprises Sourcing from China?

China is an ideal country for the companies to start with low-cost country sourcing. China owns a steady and reliable supply chain, making it comparatively less risky option for companies who are new in low-cost country sourcing. There are a number of things that make China the perfect sourcing for the risk of opposing start-up enterprises. Following are some of the most vital factors.

1. Proficient Labor Force: Due to the extremely skilled labor in China, the country can manufacture highly complex goods from machinery to automotive to toys. There is actually no similar low-cost competitor for industrial and technical goods. One of the main reasons for start-up enterprises choosing China over others is for the pace at which the country manufacture goods. China can produce several products in a better and faster way than other low-cost countries.

2. Sub-suppliers and Raw Materials: As China has got a huge sub-supplier market, it actually means that numerous low-cost countries literally source their products from China. The country is also a great producer of cotton and several raw materials needed for production. Due to their capability of sourcing everything regionally, it results in the reduction of cost and delivery times. It also leads to the decrease in the level of complexities of low-cost country sourcing.

3. Developed Supply Chain: China comes with highly skilled labor and sub-suppliers. It has got required awareness of the export market after working for years with global companies. It is effective in supporting the international manufacturing market for having the logistics and infrastructure in place. China ensures quality during the whole of the supply chain from sub-suppliers, manufacturing, transport, materials and so on. This is the reason for which China has become the yardstick for low-cost country sourcing. An efficient China sourcing agent can assist the start-up enterprises throughout to do all the procurement related activities without any difficulty.

How Can Start-up Enterprises Source from China?

Start-up enterprises need to do some important tasks escalate the prospective benefits, decrease risk and guide the process of sourcing product from China. The start-up enterprises should know their own products and gather local knowledge for a potent sourcing from China.

1. Understanding the Product: A company should know about its product at first for sourcing from a low-cost country like China. They need to consider the factors like the major components, whether highly qualified workers are required if long lead times are needed if it is labor intensive and others. Each and every low-cost country has various powers as per the needs. start-up enterprises who are new to low-cost country sourcing or for complex products that need a good deal of downstream suppliers, China is an ideal country to choose for sourcing. Every business company that thinks of low-cost country sourcing should know accurately what they are actually looking for with respect to these categories.

2. Acquiring Idea About the Market: China is a totally unique supply market. Its currency, language, politics, geography, and culture drastically differ from other countries. For clearly understanding the advantages related to offers of sourcing product from China, start-up enterprises need time to interpret the market in the best way. Hiring a good China sourcing agent can always work in favor of the start-up enterprises in terms of procurement activities. Procurement teams require a local knowledge of how the Chinese supply chain functions, like including someone in the team who is fluent in the Chinese language. When a company does not have the in-house capability, they need to work along with a company who are efficient in this field of operation, as a single wrong step can result in huge losses for the start-up enterprises.

The increasing consumer demands and growing utilization makes the global approach to sourcing a necessity. Start-up enterprises in large numbers are considering China product sourcing for low-cost supply. China is a mature and stable country, which makes it an ideal place to start for start-up enterprises for product sourcing.

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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：How to Secure Availability for Peak Periods?

Apr 8, 2021 , by 露露

We in procurement  always claim that the forecasts are always wrong. And always we try to create the buffer in order to secure the unexpected sales. But is the safety stock the only way to secure peak periods?

In this article we will talk about three ways to secure the full supply for the peak periods.

Obviously the safest way to secure the unexpected sales growth is to create the extra stock at your warehouses, at your stores (or wherever you keep the goods before sales). But at the same time we all understand that this is the most expensive way. This means that we should pay purchase price for the goods, all the logistic cost, we should freeze the working capital (which involves some interest rate as well). Moreover, stock possibilities at our own premises can become an issue.

So what are the alternative ways to secure the availability of goods in the peak periods? In this article we will go through three of them.

1.   Keeping the buffer capacity at suppliers

Keeping the buffer capacity at our suppliers is not for free. And most likely the purchase price for your goods will be affected by securing the buffer capacity. In this case you should also remember about the lead time from supplier to the sales place.

But still for many supply chains this may be a very cost effective set-up.

2.   Keeping the stock at suppliers:

Keeping the extra stock at suppliers is also a very widely used method. You can agree a specific extra safety stock level to be kept at your supplier for you.

This extra stock can be agreed in number of pieces /or pallets/ or trucks, and also in number of days/ or weeks/ or months.

Depending on production lead times, and capacities at your suppliers you can agree to keep the extra stock in following forms:

a.   In the form of readymade products (less risky, but expensive)

b.   Semi-finished products (medium solution)

c.   Components (risky, but the cheap option).

3.   Just-In-Time deliveries

The most advanced way for the companies to manage their stocks (inventory) is Just-In-Time (JIT) deliveries from their suppliers. Such type of corporation can be a standard for some Industries (like car manufacturing, or electronics), but for most of industries it is still a huge task and a big dream to come to the level of JIT cooperation with the key suppliers. And of course JIT deliveries require the same efforts and the responsibility from both supplier (to fulfill the orders with hundred percent precision) and a customer (to provide the most accurate forecasts).

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Elksourcing：Most Commonly Found Fake Products in China

Apr 8, 2021 , by 露露

It’s no secret that China has become the world’s workshop. An article in The Economist reported that as of early 2015, China was producing about 80 percent of the world’s air-conditioners, 70 percent of its mobile phones and 60 percent of its shoes.

At the same time, China also produces a massive amount of fake products. Here are some the most commonly found fake products in China:

1. Fake consumer electronics

Consumer electronics are one of the most popular fake products you’ll find in China. One example of a counterfeit name brand product here is the iPhone. New iPhones often cost much more than what you might pay in the United States, due to import tariffs and VAT.

It should come as no surprise, given the high margins on fake iPhones, why counterfeiting is so rampant. This past summer, police in Beijing shut down a counterfeit manufacturing operation and seized more than 40,000 fake iPhones valued at more than $19 million.

Most of the fake electronic products are counted as copycat products. For example, you may find a phone with spelling of “Nokai” instead of the brand “Nokia”. The design may be totally different from a real Nokia phone, but the name of the brand is clearly a copy.

2. Fake luxury brand bags and purses

Luxury brand bags are every girl’s dream. But not every girl can afford to buy the real thing. This demand led to the birth of a massive fake luxury bag and purse market.

The fake bags can be divided into different levels:

High-end copies – same design, same logo, excellent workmanship and material. It’s often hard to tell the difference between a high-end copy and the real thing.

Acceptable quality – same design, same logo, poor quality material.

Low quality – same design, misspelled logo and/or poor quality material.

It’s not hard to find a low quality fake in just about any wholesale market in China’s major cities. But some wholesale markets that sell high-end copy bags will go to great lengths to make their bags indistinguishable from their genuine counterparts.