5 Unique Questions To Define Before Sourcing From Overseas Suppliers
By George Tewson
MerchSprout Founder
When refining customer needs before sourcing new components from overseas suppliers, we always determine five essential questions from customers and suppliers. This post will discuss the five questions, their ideal answers, and what you should be looking for when sourcing new components from overseas suppliers.
When sourcing from new suppliers abroad, it can be challenging to determine the suppliers’ ability and their capability to fulfil your order to your specifications. But first, you need to understand your specifications. With this in mind, the first question you should ask is not actually from suppliers. Its actually from yourself, the importer:
Question number 1: Do I Know What I Want?
Ok, so why is it that we would start instead of asking suppliers questions, we would ask ourselves?
If we don’t know what we want, how can suppliers attempt to make what we need?
Sounds a lot simpler than it is.
When we say do you know what you want, it cannot be an idea of what you want. It has to be a tangible thing; it cannot just be a ‘kind-of’- It needs to be defined; it needs to have specifications.
Is it an off the shelf item, or is it a bespoke item that needs tooling? Do you have an idea of cost, is that reasonable? Have you done your due diligence and understood what market you are going in? What are the expenses that you can attribute to each of the processes moving forward? What is the goal, and by when?
These are all questions to ask yourself to understand what you want.
Once you have an understanding of what you want and you have documented it. You want to compile it into a single document, with the standards and compliance regulations it needs to meet. These regulations and instructions are contained within the RFQ. We have discussed RFQ’s at length here:
The Secrets Of Sending RFQ’s To Suppliers
Once you have compiled the initial communication document with the supplier, you will get questions back no doubt. However, you will still better understand the facilities capability if you know the potential component’s manufacturing techniques. First, you learn this from your research before inquiring with suppliers.
Hopefully, we have a full documented correspondence and plan set out; containing how, why, when and where you will contact suppliers.
Initially, you will be providing your potential suppliers with the RFQ document; they should be responding via the RFQ response form discussed in the article linked above.
Once you have made a shortlist of suppliers that look to be ticking the boxes around your expectations on price; It’s time to inquire some questions around their manufacturing techniques:
Question 2: Have you made products like this before?
When you have a shortlist of factories, ask them about the potential products. Inquire if they make these kinds of products currently, ask if they now work together with any other manufacturers or brands.
Ask specific questions about their manufacturing techniques. Some suppliers may be trading companies, so you may be able to catch a potential saving here. When asking details about the facilities, ask what machines they use, where they are based, and how many current products they make. Ensure you document this information as it will come in handy later (we will discuss this later).
Don’t forget that as this is the first contact, you will make with your manufacturing partner and that what this is; a partnership. You want to be accommodating, friendly, but firm. Don’t be heavy-handed and disrespectful. But equally call people out on queries. It’s a delicate balancing act finding the right supplier that is not only capable but fair too.
There may be some questions that start to show suitable suppliers and poor suppliers. You should know the answers to the problems you are proposing:
For example, if you know that you will be using plastic extrusion machines, with accompanying tooling; the supplier should tell you what tool steel they use to make the tooling. Please take this information (or all the information for that matter) and research it. If any red flags come back, you know that it needs more clarification or, quite possibly, these are not the manufacturers for you.
When searching on places such as Alibaba, there are equal amounts of middlemen, trading companies and wholesalers. While these entities can have their benefits, if you are looking for a manufacturing partner to get into bed with, you should aim to get as close to manufacturing facilities as possible.
Question number 3: Are you a Trading Company or a Manufacturer?
As you want to get as close to the manufacturing source as possible, you want to determine if the company you are dealing with is the manufacturing facility or a company is buying and selling stock.
There is a fundamental reason for ensuring you are dealing with the manufacturer (other than raw cost), and it boils down to quality.
If you find that you have issues in production down the line, then it becomes exponentially harder to fix quality issues the more layers of communication you have to go through.
A good indication of supplier vs trading company is ensuring to ask if you can visit their factory. I agree that this is difficult, but even in Covid times, there are ways that you can audit facilities if indeed you want to determine the manufacturing capability. Please have a look at our services here that allow you to get to Chinese manufacturing facilities. Also getting into facilities with a purchasing agent who speaks Chinese and can guide your manufacturing journey, in every single job that we have conducted the service that we have offered has paid for itself.
As part of the auditing service, quality control systems will be uncovered. Still, before any feet on the ground, it’s good to weigh up the capability of the facilities quality assurance and their fail safes.
Question Number 4: What quality control systems do you have in place?
You want manufacturers to own their mistakes. To find their mistakes, they need to be employing useful quality control techniques.
The best way to uncover this is to ask about their current manufacturing capabilities. If they state they are making existing components for other companies, ask what quality assurance techniques they employ. Inquire how they test components, where the tests occur, and, what happens to parts if they fail tests.
These are all relatively standard questions. Again document this information, as when it comes time to get auditors into the manufacturing facility, you want to cross-reference this information against the real-world situation.
A good question to ask and can sometimes catch facilities unaware is: Do you have a dedicated quality manager, and if so, who does he report to?
Ideally, there is an independent quality manager, and they need to report directly to someone higher than the shift manager. There is a simple reason for this:
If a quality manager reports to a shift manager, the shift manager probably has a KPI to get stock out the door. Regardless of quality. Supply out the door means money in the bank. Facilities should have a separate line of escalation for quality employees, independent to the linework.
If you are not happy with the facility’s quality assurance techniques and want to make some adjustments to satisfy your needs, get them to agree to this before sending the production funds. In every case, you want to agree on everything before production. The only way to legally bind this agreement (as much as possible) is with a contract. Which leads us nicely onto our final question:
Question number 5: Can we document everything in a contract and sign, before production fund transfer (including applicable IP)?
All your agreements need to go into a document and apply this document into the contract. This allows misunderstandings to be removed, and if you are conducting this agreement overseas, get this contract translated into the applicable language, ensure that all the necessary points are documented in it, and most importantly, (which is why the question is asked at this point) only work with suppliers willing to sign into contracts.
This is especially true when working with components that have IP.
When sourcing anything from facilities overseas, the bottom line is to do your due diligence at every point in the sourcing stage. If you want quality product out of your overseas suppliers, you really want to ensure that you are indeed starting your journey with a quality mindset. Ensuring that you have asked as many questions as possible. Getting a real understanding of your potential suppliers.
Take away
If it’s too good to be true, it probably is. Remember that there are always other suppliers, its sometimes hard to walk away from an agreement, but trust your gut. If you are not happy with the suppliers’ answers, it’s better and possibly cheaper, in the long run, to walk away.
Auditing facilities, in our opinion, is a must, it uncovers lies that have been told in the questioning, and more importantly, it puts your mind at ease.
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