6 Tips for Using Overseas Vendors
Global sourcing isn’t just for large corporations with deep pockets and sophisticated systems that monitor the flow of goods through the supply chain. Many small business owners source worldwide, not simply as a way to get competitive pricing but also to purchase on-trend, quality-made products.
Having been privy to sourcing successes and snafus of multibillion-dollar corporations, I know that the capabilities of small business owners often equal and surpass those of much larger companies. You don’t have to abandon your approach to doing business locally in order to pursue better deals globally.
Small businesses such as brick-and-mortar or e-commerce retailers looking for products made to specification can succeed in global sourcing by embracing their hallmark single-mindedness, creativity and ingenuity. Here are six global sourcing secrets that hold true whatever the size of your business.
1. Align sourcing activities with business priorities. Don’t buy stuff just because you can get a low price. Make sure that everything about the product being sourced and the program arrangements negotiated with the vendor—brand messaging, aesthetics, functional attributes, quality levels, development-to-production lead times, delivery windows and pricing—are all in sync with company priorities and merchandising plans.
Note that fashion vendors tend to operate and communicate differently than those that provide a basic product or commodity. Match each vendor relationship with its sales and merchandising direction, whether focused on fashion or basics.
2. Share your inspiration. Designers are often inspired by unique finds discovered in vintage stores or artistic havens. They want to recreate this emotional connection among manufacturing team members. Sharing helps communicate the aesthetics, feel and function of the desired product and prepares the way for prototype design and product development by the vendor.
Words can be misinterpreted but messages conveyed by handling and examining three-dimensional objects tend to be universal and clear.
3. Remember that a picture is worth a thousand words. Precise communications with vendors can occur when you use pictures instead of words. Intricate product details are explained via digital images. Technical sketches show dimensions, placement of functional materials and artistic embellishments, and more. Photos of prototypes and samples help to point out flaws to be corrected or design features to be modified.
Images can be transmitted via email or shown and discussed during video conferences. These digital approaches often cost a fraction of travel expenses associated with in-person visits.
4. Stick to timelines. To make sure that shipments arrive on time and contain products you have specified, develop and adhere to a sourcing calendar. Plot a timeline that indicates the start and completion dates of all tasks, such as merchandise planning, design presentations, product development, manufacturing and shipping. Put in deadlines for approvals at each phase of development (such as prototype reviews, color matches and quality tests) and the release of purchase orders that authorize production. Using this approach, you can monitor and control the availability of products according to your selling seasons.
5. Trust measurements, not memory. Don’t make the common mistake of making sourcing decisions based on your memory of how well things worked last year. You’ll tend to downplay the fiascos, like when a troubled vendor suddenly found capacity that averted a crisis. Similarly, you may remember the low price you negotiated for a certain product. But you may have forgotten that you had to place a minimum order and it took you months to sell through the inventory.
Instead of relying on memory to make decisions, establish measurements relevant to your business, such as industry certifications, order-to-delivery timelines, quality, minimum requirements and pricing. Track performance and rank vendors based on these indicators and make selections based on rankings.
6. Don’t hesitate to get help. If you want to deepen your global sourcing efforts but are too engrossed in sales and day-to-day operations, find talented people who have direct experiences with the product lines, regions and countries, factories and logistical set-ups that you plan to use.
Hire a sourcing professional or consider using third-party service providers to handle all or a portion of sourcing duties. Services may include vendor evaluation, product development, quality testing, field monitoring of production activities, shipping and customs clearance. Industry associations such as the American Production and Inventory Control Society (APICS) and the Fair Trade Federation are great places to seek additional information and guidance.
Have you tried global sourcing? What worked for you? What didn't?
Julie Rains is a senior writer at Wise Bread, a leading personal finance community dedicated to helping people get the most out of their money. Get daily money tips by following Wise Bread on Facebook or Twitter.
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