Category: Shopify Tutorial

Elksourcing:What to Do Before New Production Starts

If you are launching a new product, there are a number of steps that you can take to ensure production starts up as smoothly as possible. The sayings “if you fail to plan, you plan to fail” and “the devil is in the detail” are particularly applicable here. However, you look at it, you must have a plan in place for your production start-up.

1. Inspection checklist

A sample is not sufficient to establish a standard. You need to write down what will constitute a product “conform to expectations”.

2. Quality control plan

An inspection checklist is useful for you to check the finished products. But a quality control plan will guide the manufacturer in what to control during production.

A control plan includes dimensional variations, measurement methods, machines or equipment to be used for a specific task, control methods and corrective plans, and more if necessary.

3. Sample approval

Before production starts, there has to be an approval process where samples are signed off. It allows you, the buyer, to systematically cross-check the criteria in your inspection checklist.

A sample approval process can be used regardless of what industry you are in; the primary objective is to provide the manufacturer with a clear and understandable set of requirements. It helps to ensure the processes used to manufacture your products are consistent and repeatable between production runs.

4. Drawings / technical specifications

Every industry, from apparel to consumer electronics, requires products to be made to a specific standard or specification. It is paramount that the technical data file is complete and finalized prior to production start.

5. Change control process

Once the technical data file has been released for production, ideally any changes required must be managed through a change control process.

This way, any change implementation can be managed and scheduled. It also produces a revision history to be monitored so that the wrong parts are not produced due to the previous specification being used.

6. Machining work instructions

Machine settings need to be written clearly with a full understanding of each step. During the production trial run, each of these processes would be monitored, measured, and adjusted for optimum output from a quality point of view.

7. Maintenance plan

Having a maintenance plan in place helps repair machines that breakdown… But having a preventive maintenance plan in place is even better. It allows the manufacturer to have scheduled maintenance carried out on machines that will help to improve a machine’s life and will help avoid those unplanned maintenance activities that generally prevent production from continuing.

8. Production pilot run

The pilot run should be carried out with production machines, with all the relevant equipment that will be used in mass production, and ideally with the same components as mass production.

The output from the pilot run will allow you to analyze data such as machine settings and process capability studies, to review the process instructions, and to get products for testing and validation.

There can be a number of pilot runs where there have been changes to improve the output results. These pilot runs can have small incremental step improvements, but at some stage production has to start and this is triggered by signing off the final pilot run.

Summary

In order to achieve a smooth production start-up, you should have a solid plan in place beforehand. What needs to be done, when it needs to be done, how it needs to be done, and what to do when things go wrong, should all be very clear.

Elksourcing:Key Steps to Start Global Sourcing

Global sourcing is not as difficult as you may think, especially when you have the right partner. The process is fairly straightforward, but if you have never worked with a partner in China or had experience producing a product overseas, it can seem overwhelming. So, where do you start?

Step 1:  Product Assessment – Assess what you are trying to manufacture. If it is an established part or component, you likely have access to dimensional drawings, samples, and a list of processes needed to create that product. Your intentions may be simply price or supply chain driven, which may lead you to seek a partner who can review the available resources and offer real cost savings solutions or additional capacity. Alternately, if your product is something still in development, evaluate if you are going to need guidance to bring the product fully to market and if there is any conceptual work still to be done. In many instances, this second scenario will lead you to a completely different solution.

Step 2:  Product Samples – Once you have found the right partner and know what path you are marching down; the next step is to obtain a prototype or sample. Based on the information you have provided and the manufacturer chosen to produce the part overseas, your global sourcing partner should be able to provide a prototype or sample part, which can be used to test form, fit-functionality, or simply review the look and feel of the materials chosen. This step is critical to ensuring you will be happy with the result.

Step 3:  Production – this is what it is all about! Your final product will go into production once a sample or prototype is approved and timeline established. Normal production time is 30 to 60 days after you approve your product for production (depending on the complexity of the project). You can and should expect regular updates from your partner regarding the production status, when the product will be shipped, and what port it will be arriving at, to name a few. A good sourcing company offers such specialty services as monitoring of production process, quality control, and capacity management.

Step 4:  Quality Control – This is one of the biggest perceived obstacles when placing goods overseas for production. Many people think that China = poor quality. This couldn’t be farther from the truth, especially when you are working with a proven, experienced global sourcing partner; quality should be an expectation and the norm. While the quality process goes hand-in-hand with production, it also encompasses things like in-house testing, on-site inspections and packaging check.

Step 5:  Shipping – Logistics is crucial to overseas production because knowing your products are shipped and on time can make or break the global sourcing process. Things happen in any manufacturing scenario, but when your partner has dedicated logistical resources, headaches and surprises can be avoided entirely.

While there is no one great path to moving your product overseas, as always, choosing the right partner is half the battle.

Elksourcing:Tips about Selecting an Overseas Supplier

When selecting an overseas supplier, you need to get the right price and quality, while making sure the supplier can be relied upon to meet high standards and delivery dates consistently.

The reliability of your supplier is crucial. While a competitive price is also important, make sure that low prices don’t come with unacceptable compromises on quality or on the level of service you will receive.

Selecting a supplier

The main stages in the supplier-selection process are:

Drawing up a shortlist of potential suppliers

Comparing the shortlisted suppliers on the basis of value for money, reliability and creditworthiness

Visiting the suppliers, if possible, to see their operations

Deciding which of the suppliers to work with

Value for money from suppliers

Make sure that you’re happy with the price, quality and terms the supplier is offering. Get a written quotation. Any quotation should clearly state the terms of sale – i.e. how the shipping, insurance and associated transportation costs and duty are to be allocated between you and the supplier.

Ask for a sample based on your specification to make sure the supplier is capable of producing what you need.

Supplier reliability

It’s important to research supplier reliability. If possible, visit the supplier. Look at their work and their production system.

Find out as much as you can about the supplier. Talk to:

Any western references the supplier can give you

Importers with experience in the market

Trade associations and other importers in your sector

You should also check the reliability of any sub-contractors to which your supplier may be outsourcing work.

Supplier creditworthiness

Financial checks of overseas suppliers can be difficult due to a lack of accessible financial information. See if your bank’s international trade team can carry out a status query – a query into the company’s financial standing on your behalf.

Be cautious. Avoid advance payment or long-term contracts until you trust the supplier.

Build solid relationships with overseas suppliers

Trust is a crucial element of any supplier relationship. While it can take time and planning to build a solid relationship with overseas suppliers, doing so makes it more likely that you will increase business with them. It may even enable you to negotiate more favorable terms.

Build trust gradually with suppliers

The key is to build the trading relationship slowly. Initially you should leave nothing to chance. Draw up written contracts that are clear and unambiguous. See overseas supplier contracts.

Typically, your initial contracts with a new supplier will be on a project-by-project or shipment-by-shipment basis. As the relationship develops you may move to longer contract periods and potentially be able to negotiate better terms.

An important part of building trust is learning how things work in your supplier’s country. Are there important cultural and social differences, or differences in the way business is done? See entering overseas markets.

Supplier communication

Communication is an obvious potential obstacle when dealing with overseas suppliers. Even simple actions such as language barriers, routine telephone calls can be complicated by factors such as time differences and low-quality phone connections.

Face-to-face meetings are likely to be infrequent, but they can be vital to the trust-building process – so plan them carefully.

In addition, there are potential language barriers. Which language will you use with your supplier? Do you have enough foreign-language speakers in your workforce? Do these employees have the skills they’ll need to deal with your suppliers? Would it help to use local interpreters, especially for key meetings, to avoid misunderstandings?

Monitor, review and adapt your supplier relationship

Make sure you monitor key aspects of the new supplier relationship. This will make it easy to identify areas for possible improvement.

Schedule progress reviews with the supplier. If there have been any problems, decide together how to resolve them. If everything has been working smoothly and profitably, you may want to extend the level of business you’re doing together. 

Elksourcing:Ten Tips about Successful Exporting Your Products

Here are ten tips to help you export your products successfully.

1. Research your market

Does your prospective foreign customer need what you are selling at the price that will yield you a profit? What is the competition and how will they react?

2. Implement an export strategy and review your capabilities

Ask yourself: what would my business gain from exporting?

3. Construct an export plan

Define how you will enter the foreign market. Finalize human resources and marketing strategy and allocate an adequate budget to cover export start-up costs.

4. Choose your sales presence

Establish whether you need a direct sales operation. Or is an agent or distributor more effective? How will you manage your overseas sales presence?

5. Promote your product

How are you going to market and sell your product? Customize marketing to the target country.

6. Get the Customs side right

Contact HM Revenue & Customs to clarify requirements. Make sure your reporting practices are watertight.

7. Get paid on time

Ensure your cash flow will remain at a safe level. Guarantee sufficient credit for your future sales. Take out insurance cover if necessary.

8. Choose your distribution methods

Consider the implications of selling over long distances and across national frontiers.

9. Transport goods effectively

Assess and choose the most effective transport method and make sure the goods are insured by you or the importer.

10. After-sales policy

Regularly liaise with customers, export agents and banks. Monitor political unrest or other adverse conditions in the country of destination. Manage regular servicing and warranty claims.

Elksourcing:Minimize Online Sourcing Risks by Supplier Verification

Sourcing experts are strongly emphasizing the need for even the most experienced buyers to ensure effective evaluation measures when selecting suppliers in China—particularly when sourcing online.

This follows the abrupt departure of Alibaba’s top two executives after their disclosure that the company’s sales staff “intentionally or negligently” allowed fraudsters to set up more than 2,300 verified storefronts.

Let’s face it, we are all still going to be looking online for new suppliers. So, what can you do to protect yourself if you cannot fly to China to investigate every potential supplier that you come in contact with?

The online sourcing experience should look something like this:

Search only for suppliers that have been verified by a third party outside of the website that hosts their information.

Pay for background information and document confirmation for any potential supplier before you make any commitments or pay a deposit.

Include in contracts with your supplier mandatory QC visits during production and before the balance of payment is made at the completion of the project.

Have a lab test your products to confirm quality and components.

Confirm and verify container loading to see that what you have ordered, tested and checked are indeed what are being shipped.

While all of this might sound like a lot of time and money to be spending on relatively seamless online ordering, it is less than the cost of losing a 30 percent deposit, and takes less time than finding a completely new supplier and starting all over again.

So how do you know if you should really be paying for these additional services? Here is a list of clues to help gauge a supplier’s level of risk:

The supplier:

Will not provide copies of licenses or documentation on request.

Does not want you to visit its factory.

Asks for cash and provides no guarantee, e.g. cash transfer via Western Union

Is not easily or consistently available to talk with or meet outside of the online forum.

Will not or cannot provide you with references or client referrals.

Provides an oddly large range of either products or services.

Will not allow third-party QC.

If your chosen supplier is not satisfactorily providing this information, search for alternatives or at least get reputable third parties involved in the process to help protect your investment.

Factory visits or audits continue to be critical in the supplier verification process. Buyers can opt to go to the plant themselves or engage a third party to conduct supplier audits, which could include an assessment of manufacturing and QC processes and confirmation of compliance with various industry, safety and environmental standards.

Exaggerating the truth in terms of factory capabilities is one thing, but claiming to be a factory and disappearing with the buyer’s money is a whole different level of fraud. But that fraud has been happening for years in China—nothing new.

What makes the situation at Alibaba so shocking is that Alibaba markets itself as a safe place for buyers to find suppliers and provides a host of services to put them in touch with each other. But now we learn Alibaba staff cooperated with the thieves to scam the buyers.

Most of the scams happened to buyers who purchased $1,200 or less of high-demand electronics at low prices. This makes total sense for a number of reasons. Small buyers generally do not have the experience to know when they are getting scammed and fail to do their due diligence in advance.

Unfortunately, because they may be on a tight budget, many small buyers do not utilize third-party QC to check the quality of the goods before final payment is made.

In summary, pray for the best but plan for the worst. Do your due diligence when selecting a supplier and tie payments to delivery.

Elksourcing:Key Points About Managing Quality Control in China

Regular, consistent and independent quality control is possibly the most important part of the buying-from-China experience. Some key points:

Write it, confirm it, repeat it, and confirm it again with someone in authority. Get things repeated back to you from the people responsible for each step.

Get things signed.

Determine what is essential, what should happen, and what would be nice to have. But do not tell your supplier anything is less than mandatory.

Safety, industry and customs standards are mandatory.

Product features are crucial.

Specific attributes that are not defined by law or function are important.

QC essentials

In-house QC is not independent. It is profit insurance for the supplier. Either do QC yourself or pay a third party to do it for you. But do it no matter what.

Check incoming materials/components, semi-finished goods, packaging and finished goods.

Unless you can wait for a complete product re-do with no financial penalties, final QC on the last day before product is to be shipped is a complete waste of time and money.

In-process QC is not a quality guarantee but it is preventive action to identify small problems before they become critical.

Give your supplier a copy of all QC reports, and ask the manager to feedback with corrective actions on found defects.

Who must be involved

Engineers-these are typically the only people that really know what the machines can do and what they can get out of them.

QC and line managers-they have the most direct impact on the daily quality of your order.

Managers-include them or everything else is a waste of time. They have to be the ones to sign off and enforce agreements when you are gone.

Salespeople-they will need face from you when you find out they do not know what they are talking about. You will need to keep them happy since they are the ones that control the price.

Problem solving

The only thing worse than no product is bad product. Negotiate accordingly and have a backup, just in case.

There will be problems-count on it.

Allow the supplier to fix it before you step in-but make sure you are aware of problems and solutions.

Do not wait too long to stop problems.

To find the real problem: Listen, ask, take notes and ask again-there is almost always a public story and a real issue.

Keep detailed notes of every conversation.

Just because you know who is to blame does not mean that you can now solve the problem.

Admit when the problems are your fault and hold the factory to the same standard. Be fair and never be punitive.

The goal is to get finished quality product. Do not go too far in your anger or demands.

Lose a deposit instead of an entire order.

Shipping

The end of a production run can be especially risky.

With other orders waiting to be filled and your deadline approaching, your supplier may:

Rush through your final units to finish on time;

Run out of approved materials and use a substandard substitute;

Tell you production is complete to get final payment.

Before your order is completed and packed, perform a pre-shipment inspection to ensure there will not be last-minute, nonconforming products on board.

Ship safely. You cannot sell damaged or missing products.

Perform a container loading check to ensure:

Cartons contain the proper quantity, size, assortment, etc.

All products are packed safely and loaded carefully.

The container is properly sealed and recorded.

Elksourcing:Advices for Good Negotiations with Suppliers

Negotiate everything in life, from your diving suit to your wages, from the new car to the flea market shirt… In application to your suppliers you can practice the technics with lower profile suppliers and improve them in big spent suppliers.

There is no negotiation if there is no deal.

Know your own limits and how much you can give in. I remember perfectly how I failed negotiating a last-minute room in a rural hotel. They did not give in price, and we both lost. They lost a customer forever and probably did not recover a room at 08:30 p.m. Saturday evening, but I also lost since I had to drive 80 km. back to town. So there must be always a mutual agreement and be ready to give in sometimes for achieving your targets. In my opinion, people who never give in achieve short time targets only, and have more difficulties in building long-term relationship in negotiations (which is sometimes also positive to achieve longer targets). In terms of suppliers make your own target dates to certain agreements and monitor evolution of the negotiations. And make sure you update your strategy constantly with the market and your own company evolution.

Never start a negotiation without a preparation.

I learnt a lot from the Dutch about working with “facts and figures” since one needs to know the data, how much margin, how much purchasing volume, how big is your negotiator, in which situation you are (weak or strong) in terms of power of negotiation… and then:

Follow your preparation with a good strategy. Set up your own targets, and then benchmark them with your own reality and see if they are realistic. A simple example, if you want to buy your car to 20,000 euros netto when it is worth 40,000 euros brutto without discounts. I can give you recommendations on how to reduce the price but realistic target would be around 30,000. And most important within this value, set up a range, like for example +/- 2,000 euros, that you can accept.

Negotiating is being flexible.

If you work with purchasing volumes, you might be influenced by market, material prices evolutions, etc. Making a strategy for example is to focus in material compensations with negotiating extras, concentrating in sourcing from certain best price countries, by changing volumes. But you must bring your strategy to a lower level in a practical way, which suppliers change or introduce and which time of the year based on which assumptions.

Use a tactic (but applicable to your interlocutor). 

There are millions of negotiation tactics, but not all are applicable to the person in front of you, you need to know the background of the person, cultural, company profile, history from past negotiations, and most difficult during the negotiation catch up with behavioral facts that allow you to understand the other person tactic. That is the funniest part of a negotiation is what I call the “theatre”, like for example play a role that give one impression when the target is achieving the opposite. With suppliers I think it is important not to strictly stick to one contact person depending on the company hierarchy and decision level. Many companies know that and also the possible empathy with the customer and have rotation of sales executives to be more aggressive with the customer. Be careful with your negotiation schedule, starting from zero can be hard sometimes.

Avoid confrontation.

In Business it is very usual that in a negotiation with a supplier about price decreases, supplier might come up with unpaid invoices or directly complain about stretched cost target that create a difficulty in this current negotiation. It is requested as much empathy as possible: only by understanding your opponent you can deal with them. Back to tactics, there are some basic tactics to move forward in negotiations in these situations. But again spend time to listen to your interlocutor.

Listen before fighting.

Keep mental agility in order to avoid forgetting your topics, your poker-card or your argumentation, while listening carefully the story of your interlocutor and his/her argumentation. Listen but do not forget what you wanted to say. Not only people take it very bad the lack of education of interrupting people but also it might force you to show more aggressivity to interrupt and the opponent might take it as a defense/aggressive tactic and difficult any of your moves. Latin countries are good in interruption of conversation; this can be also positive in case of blocking points of discussion or making it more dynamic. Control the times of the negotiation while keep firm and determined intentions (for this I admire a lot Muslim people in negotiations).

Respect the cultural differences from your interlocutor.

It is not the same in business to discuss in Asia, Africa, USA, Middle East, North to South Europe or Turkey. Show respect during introductions, to presentation of the companies, or even their own methods of negotiation. Take some time to analyze their behaviors in the negotiation. But an important point, do not try to negotiate with locals in the local way, they might have done it for years and you are just a newcomer. There is a high risk to lose the battle, so do not reinvent the wheel, make your own wheel adaptation. Use your own tactics and negotiation approach.

Debate.

Make a good argumentation and debate as much as you can, debate, explain, discuss, show motivation to the topic…. and then be ready to summarize it in the least unexpected moment. This requires a lot of mental gaming, you can also take notes of progress done in discussions and when the moment comes then summarize the negotiation. Summary of agreement is key in long negotiations.

Be yourself.

Only by being yourself, the others will feel empathy for you which is an important point in negotiations and business in general. Therefore, with it you would be able to apply your negotiation approach and tactic, for example I change topic during negotiations in difficult moments keeping in mind the difficult point and bring it back when unexpected with a different argumentation; but just because I am really good on it. I show more respect to other tactics which I am not familiar with.

Negotiation in sourcing is 50% individual own skills and 50% learning by doing, by participating in negotiations by reading books and also by trainings. The more you live the more you learn.

And, finally learning from other cultures. In Europe we think we know a lot about negotiations, but my best teachers were clients from Muslim countries.

Good Luck! And always remember that there is no negotiation without a good deal.

Elksourcing:Inspection by Yourself vs. a Professional Inspector

There’s perhaps no better way to avoid receiving substandard goods than by inspecting them before they leave the factory. Inspection gives you the opportunity to find any problems and have them fixed before you receive the order. And there are a few different ways you can conduct inspection. One way is to personally travel to the factory manufacturing your product and inspect by yourself.

Inspecting on your own can work well for some importers in certain circumstances. But most importers don’t conduct product inspection themselves. Let’s look into the main reasons why inspecting on your own may or may not be your best method of ensuring your product meets your standards.

Why some importers prefer to inspect on their own

There might be several reasons why you’d choose to take it upon yourself to inspect your own product, such as:

You feel since you’re an expert in your product, you’re the best person to inspect it;

You think hiring a professional inspector to visit your supplier’s factory and inspect on your behalf will be too expensive; and

You don’t know what other options you have for checking the goods before shipping.

But as well see later on, these aren’t actually great reasons to perform inspection yourself. There are, however, a couple common advantages of personally going to the factory to inspect:

Inspecting the first order from a new supplier

Some importers find it beneficial to visit a factory to inspect the first order from a new supplier. This gives you the opportunity to meet with contacts at the factory and discuss any product inspection concerns or requirements in person. Some importers, especially those with a lot of experience with their product, will find they can more easily suggest solutions to quality problems by seeing them firsthand in the factory.

Training QC staff on special inspection procedures

Another valid reason for participating in product inspection yourself is to train inspection staff. Whether you’re relying on factory QC staff or hiring third-party inspectors, it can be helpful to observe the inspection process and provide feedback on-site. For example, you may want the inspector to use a testing procedure or standard other than the one they might typically use. And although not always necessary, it may help to explain the procedure to them directly.

Why most importers choose to hire someone locally to perform inspection

You may be tempted to visit your supplier’s factory to inspect each order before it ships. But most importers don’t conduct product inspection themselves. Instead they often prefer to hire someone else to inspect locally on their behalf. In doing so, they typically benefit from three main advantages:

1) Cost & time savings

Costs can add up quickly when traveling to a foreign country to visit a factory. Transportation, hotels, meals, gifts and translators are all potential expenses you’re likely to incur when traveling to inspect on your own. Inspections performed inefficiently can raise costs as well.

Aside from financial costs, time spent traveling and checking the product is another factor to consider for inspection. For example, an importer traveling from New York to Shenzhen, China would likely board a 13 or 14-hour flight to Hong Kong. Then they’d need to cross the border to Shenzhen and arrange transportation to the factory. Add in the time needed to inspect and return home and you’ll basically be occupied for a few days to a week.

Hiring a professional inspector to visit the factory for you reduces these costs significantly because the inspector is typically locally-based or at least resides in the same country where the factory is located. You might spend one or two thousand dollars traveling to and returning from China. But you’d spend much less time and money by hiring someone in China to visit the factory and inspect your goods. You’d simply arrange the inspection and wait for their report.

2) Professional experience with product QC

Some importers think that being an expert in a product makes them the best person to inspect that product. But unless they have a strong background in product quality control, it usually doesn’t make sense for importers to personally inspect their products every time.

Properly inspecting a product requires knowledge that someone only familiar with the product design or requirements may lack. For example, importers often don’t know how to effectively pull random samples or use an acceptable quality level (AQL) that yields the most transparency. They may also be unfamiliar with the types of on-site testing recommended or required for their product.

But experienced product inspectors generally do have the relevant knowledge. And importers can often hire inspectors with experience in their specific product type, such as electronics products, cutlery or electrical appliances.

3) Improved communication with suppliers

The last issue with inspecting on your own is sometimes overlooked but quickly realized –communication challenges. Communication can be difficult even when you speak the same language as your supplier and their factory personnel. There are a few potential reasons for this:

Sales staff often lack technical knowledge

You might find it difficult to communicate with a supplier if you’re talking to a salesperson with limited technical knowledge.

The salesperson is often responsible for relaying vital information to the production manager in the factory. Important product details, such as dimensions, tolerances, requirements for parts & materials and others could be lost in communication. The problem could be more complicated if your supplier is a trading company located in one city, while the factory actually making your product is in another.

By hiring someone locally to visit the factory for inspection, you can typically rely on that person to communicate issues with factory staff. They can help you clarify product requirements and other misunderstandings that often arise between importers and their overseas suppliers.

Misunderstandings caused by cultural differences

It may seem that cultural differences can only lead to harmless missteps in etiquette. But a lot of importers find cultural differences to be a real challenge to their success.

In East Asia, one of the main issues you’re likely to encounter with suppliers is their reluctance to deliver bad news. Suppliers here often want to avoid confrontation or disappointing a customer. So instead of telling an importer directly that their order will be delayed, for example, they often wait until the importer discovers this on their own.

Another example of cultural differences that can lead to problems is the concept of saving “face”, which can make some people reluctant to admit when they don’t fully understand something. A fear of seeming incompetent can keep some suppliers from asking important questions or asking you to clarify aspects of your order. Hiring a local inspector to visit the factory can help limit this and other communication problems.

Conclusion

Every importer is different. What works well for one might not work for another. Across the variety of importers, some may feel personally inspecting is the best way to handle their product QC. And it can be, particularly when dealing with a new supplier.

But generally, importers don’t conduct product inspection themselves. They realize the value of hiring professionals to handle most of their inspections. Not only is it more convenient, but it usually saves money and time when compared to personally inspecting each order. It also takes away the hassle of travel and eliminates any chance you’ll miss any defects for lack of inspection experience.