Looking for a new supplier or a factory can be a very stressful time for the procurement team in the company. Which country to choose? Where to look for the suppliers? How to find the right business partner that can live up to the expectations?
Below 5 tips that must be done correctly to secure that the selected partner will execute according to plan:
- First you must evaluate the scale of the project and the needed requirements to manufacture the wanted items. Then your first step is to locate a company that specializes in factory sourcing. Making sure you use professionals in the process is crucial. Using a sourcing company that can give you the best benefits in the region you are looking make sense. A meeting with them will clarify your needs and give you a good all-around assessment on the project at hand.
Professionals have the needed contacts to locate the best choices that are suitable for your needs. First screening of potential manufacturers usually gives an indicate on the length of the overall timeline to locate the new manufacturer. This varies a lot on the destination country and region.
- When 2 – 4 potential manufacturers have been located a supplier business evaluation should be done for every factory. This gives more info and details on the capability of the manufacturer to get the job done right.
Also, there you can see that the three most crucial entities match your companies as well. These entities are Quality assurance, Technical capability, and Commercial capability. When these are in line with yours, the first negotiations can start.
- Visits to every potential manufacturer is a must. Using your own translator is a must as well. Never ever use the manufacturers own translators, because the message you receive can be filtered a lot. This is the time to also check documentations, working instructions, export regulations, business ethics and sustainability etc.
This phase of the project is the most crucial and should not be done with haste. The more time you spend on doing your homework, the less surprises you will find in front of you. Interviewing management and possibly talking to present customers gives a good insight how the manufacturer handles things.
- When making the contract with the new manufacturer it is advisable to use layers that have expertise in international contracts. That way you don`t end up with a contract that doesn`t give you protection if something goes wrong in some part of the process and the manufacture is liable for their doings.
- After negotiations are done and the contracts are signed it is time to get the ball rolling. The final technical approval is usually given after the manufacturer has provided prototypes and they meet specifications. After all is clear on the quality and technical side of things, a rolling forecast of manufacturing should be placed. After that the manufacturer is ready to go.
All and all, it`s not rocket science. Just make sure your company has enough time for the whole process. You should easily reserve about 4 – 6 months for the whole process from start to finish. But it all depends on the region and the type of business being done. Background checks and verifying everything takes time but luckily professionals are there to help you in every step of the way.