Source chinese manufacturers with efficiency

As I used to be a sourcing agent in China I have been sourcing and procuring for years. The topic I am talking about today is about how to source in China with efficiency. Whatever you source with a one time search like  a consultant for a deep sourcing approach or a light surface sourcing both can apply to those advices below.

Today, with all those B2B platform you may find online helping you source manufacturers, the difficulty is not anymore to find a source but to sort them out.

Indeed, Alibaba, Globalsources and other Made-in-China are a nest for potential sources but the work start when you need to select only one. For example if you type “Tablet PC” you will find hundred or thousand of vendors but in the end you will place order to only one.

Time is money and efficient sourcing in China is important as it will directly impact the cost of your sourcing activity. We may think that sourcing only include search, identify and qualify chinese manufacturers but actually it starts much earlier than this at the documentation stage before contacting all those potential sources.

Asian manufacturers via B2B platform also received hundred of requests everyday, and most of time they can not deal them all, so you need to make the difference between all those requests they receive.

In this blog I will explain how to operate to maximize your efficiency and minimize time when sourcing manufacturers in China while keeping having interest from chinese manufacturers. This is particularly usefull if you intend to develop new product in China with manufacturers.

1./ Prepare your case carefully before contacting one before sourcing in China

It sounds obvious, but I can guarantee you that preparation is a must do. It will consumme slightly your time upfront but will save yours highly later. Imagine the time you can save avoiding reply question from 20 or 50 suppliers in the same time…

What I mean by preparing your case is to have all the documentation and instrutions in place.

a./ What to include in your sourcing case

• The most important : a READ ME FIRST file (This should be the page with the assignment) that explain why you are requesting a quotation: indicate who you are, who you source for, what are the assignment of the quote, your own rules for quote such as Incoterm pricing, what is the deadline to reply, the do and don’t, the people who shuld answer this form (I particularly insist on this to make sure to receive accurate quotes), indicate your process of supplier selection etc…
• Clear list of specifications of your product (material grade for exampme)
• Drawing with measurement, tolerances
• Pictures if any with comment on it ideally
• If you have already an understanding of the market, I would advice you to mention a target price (it will show them you know the market already), however you should mention that target price may also be discussed and optimized
• Quantities (I recommend to ask for sample price, MOQ price and a quantity of your wish), try to be honest when asking for this. Manufacturer are less and less naive about people arriving with big quantities and buying small in the end
• Planning for your procurement (let them know what is your planning : in rush or in 6 months is not the same)
• Payment terms (if you are expecting paying with L/C you have to let them know in advance)
• Include an empty form to fill by the manufacturer at your own format and include a form partially filled in with information so they can use it as a template or example form about how to fill (you have no idea how many people are not able to fill properly a form)
• If your specifications have flexibilities, then you should give this freedom and opportunities to the vendors to propose other products (indeed, sometimes they don’t have the product you want but they may have a substitute that may fit your need)
• Give details on packaging as it may influence highly your pricing
• Indicate your acceptable defective rate (and don’t put 0% because this is totally unrealistic in Asia, most of chinese manufacturers, especially small companies are between 5% and 15%)

b./ How to deliver your request for quotation

• Create a zip package with all the documentation inside as an archive (or put it online on a server to download if the size is to big to be sent
• Sort properly all the document in distinctive folder (one folder for specifications, one folder for pictures, one folder for drawing, and if you have multiple references to quote then separate in each folder, methodology similar than Russian Doll). Remember that you have to mash the work of the supplier who is probably already very busy, so you have to make them save time too by making everything clear

2./ Locate chinese manufacturers by sourcing in China

Sourcing can be done via many different channel. Among those channels:

• B2B Platform such as Alibaba (be aware than to appear up in the list, chinese supplier are paying keyword to Alibaba the same way Google do), Globalsources, Made in China
• Google search
• Visiting tradeshow (Globalsources, HKTDC, Canton Fair are the main ones)
• Personnal network or relationship / recommendation and referral
• Chinese web (my favorite)
• Specialized ress

3./ Identify the right chinese suppliers when sourcing

It is no use to contact suppliers who are not usefull to you. On this base you have to know what you are looking for. I personnally source at parts and components level and do the assembly myself because I like to control the quality much sharper and have traceability, but most of importers will source end product factories to buy a ready to sell product.

On this base, make sure the profile of manufacturer you would like to work with. I already talk about what to look for when sourcing in China for chinese manufacturers on this “How to select chinese manufacturer” topic.

4./ Sending request to chinese manufacturers

Once you get ready, you should do the following:

• Prepare a template email with a few point to customize on a vendor base
• Make sure you have the email of the right people (not a info@ or contact@ if possible)
• Send your email with a professionnal e-mail address to show you are a serious buyer
• Make sure you have a return receipt activated on your email so you can track partly who received and who didn’t so you can track back who had a wrong email
• Include all the email addresses present on the contact page of their website. Sometimes, their email addresses are not existing anymore or simply full. On this base multiply your chances to get an answer.

5./ Push to get reply from the chinese vendors

It is true, chinese manufacturers are usually very busy, especially if you go to small companies. What is also true is most of people in China are still communicating highly by voice call ! Yes it is true, they like to call and spend long minutes on phone. Why ? I suppose this is because writting on phone or email is quite slow. If you receive email from chinese companies in chinese you will notice the content is usually not very long.

I personnally hate communicate by voice call because it increase the misunderstanding risk (and I suppose to be a a parameter of why there are still so many problem of quality in China and why quality control in China is still essential), and it doesn’t allow to keep track record od the exchanges. I much prefer to communicate by email, Skype or even text message..

So, since I like e-mail and they sometimes don’t read them enough fast, the best is :

• Call them in direct and ask them to check their email and to reply asap
• Send a text message to their mobile phone asking them to check their email and reply asap
• Keep sending email to the address you can find on their website

Do and repeat those actions as long as you don’t get what you need.

6./ Gather sourcing related information, organize and sort them out

Now you are starting to receive quotation and you need to compare all those apple vendor, so you need to compare apple with apple. To do so, the best would be to :

• Use an excel file and work per column for vendor and row for criteria
• Make a final line where you would put a score for each vendor accoridng to the following criteria:
  • speed to answer
  • form filling cleaness
  • respect of requirement
  • respect of instructions
  • which one understood straight awas vs the one who needed more information (if you estimate your archive was clear enough, you should classify which vendor looks to be smart and which one doesn’t look to be). If they waste your time asking questions whereas the informations is included in your archive then you can pretty well assume they will also waste more of your time in the future or will be unprofessionnal
  • Incoterm
  • Payment terms
  • Pricing

7./ How to know if you made your job properly

Here are a few indicators of if you prepared well your sourcing case:

• How many vendors where asking question for getting more information about your requirement. If a large part of them did, it means you were not enough detail oriented or not enough explaining well your requirement
• Price is widely spreaded : this is due to lack of accuracy on your requirement making the chinese manufacturers to not understand well your requirement.

8./ What you should avoid while making sourcing and request for quotation to supplier

As much as possible try to avoid the following:

• Don’t give details that can compromise your project (is it necessary to show the logo of your customer or brand for quote? instead of having Company LLC printed or engraved on your product, you can as well replace this with AAA or ABC, it will not influence the cost too much unless you quote for a tooling)
• Don’t show your design packaging at the beginning: not only it can be copied and reused by other competitor or vendor themselves if you don’t place order, but they also in some certain cases (especially if you are trading company or an importers) identify the final customer, which in this case could be contacted by those suppliers you don’t know
• Supply high resolution picture (I advice you to make some low resolution picture and to watermark them with your name on it to avoid the suppliers to reuse them for themselves on B2B platform and for marketing)

What is your experience about requesting price from suppliers?