These days it is not hard to jump on a world trade website such as Alibaba or Trade key and source products. These websites are a great tool for connecting with thousands of suppliers and comparing prices as well products. The problem is, when you buy from suppliers you find on the internet it can be very difficult to oversee quality control standards and even follow labor laws. I have personally sourced products on the open market for over a decade and have seen trade websites grow with the digital age. You can now choose from thousands of suppliers and millions of products in the comfort of you living room. That does not mean all of a sudden China decided to build more factories, it simply means more people have become suppliers or sourcing agents. This actually makes it harder to find the exact factory you are using and follow the supply chain of your production. Just like the old days, supply chain management is just as big a deal as the factory who assembles your product. It is absolutely essential to know where your products are coming from, who is sourcing them, who is assembling them and what the total cost of each component is before and after tariffs, packaging and freight costs. The key things I will address in this article are how to find a reliable supplier, identify a good factory, and control your quality standards. I will share stories and use examples to illustrate the importance of these points.
When I first started sourcing products the only “easy” way to find a reliable factory was working with a domestic agent, who does international sourcing. These are people with offices in the US who either have team members on the ground in China, or frequent the country on business. Many of them do not own their own factory, but rather work with a core group of factories that are reliable to them. The “hard” way was to buy a ticket to China and explore factories. This is not easy because factories are private and hard to find, the language barrier is almost impossible to overcome and their is no way to control the quality of production. On top of this you usually have to higher third party assistance. I learned this the hard way.
The first time I sourced goods out of China I found a factory on a world trade website, started conversation and everything seemed to be just fine. I needed a black hat with a red bill and sent over a picture clearly explaining that I wanted a red hat with a black bill. We went back and forth for a few days and eventually she came back with an image of a black hat with a red bill. I asked her to ship me a sample which took another 2 weeks. When I finally received it, everything looked good. I proceeded and ordered 3,000 black hats with a red bill, only to receive 3,000 red hats with a black bill! I had gone through the ordering process over email with a lady, saw the sample and what they sent for production was not even remotely similar. I immediately contacted my rep name Wendy, only to find out she had been let go. After a month of going back and forth, the factory owner decided to stop replying. I was eventually stuck with an angry client and $7,000 in hats, but I learned some very valuable lessons. The most important of these lesson was; it is imperative to hire a quality control company to monitor the production line and approve the order. If I had done that simple thing, which only costs a few hundred dollars I would have made roughly $21,000 instead of losing $7,000.
I wish I could say that my little hat issue was the only time I was left with a bad taste in my mouth. Unfortunately I still had several lessons to learn. At this point I knew that I had to have a third party on the ground assist me, but I had no clue what I would encounter after production. About a year after sourcing soft goods, I decided to try and import some promotional products such as glassware and stationary for my clients. The sampling and production went smoothly, but the freight process went terrible. Not only was the export paperwork filled out incorrectly, the commercial invoice did not reflect the price I paid for the goods. When the goods arrived at the port in China, they sat there for almost a week until I was notified to submit new paper work. After the product finally made it to the states, a US customs agent decided some things did not match up and held my package for another 10 days! After another irate client and losing about $10,000, I learned that paying attention to other peoples details was ultimately my responsibility. This lesson taught me that I needed to have a customs agent who can review the paper work assure me that my product was being imported and exported correctly. This became increasingly more important as the years went on and the projects became more complex.
Eventually after 5 years in sourcing, I was ready to start my own product line. I had designed a line of watches: Flex watches. We were the first of many companies to introduce the a watch with interchangable concept, where you could remove the watch band from the watch face to mix and match the colors without using any tools. There were many components to this product and it took a lot of trial and error. I found out the only real way to trust a product is research and testing. Initially we purchased components from China and assembled the watches, but we quickly realized that china was not a good supplier for watch components, but rather Japan. As time went on we tested more and more components until we finally had it right. Over the years we picked on many great skills that would have ultimately saved me a lot of time and money. After being tired of relying on other people, my partner and I started a sourcing agency that consists of him traveling to China and me selling clients on overseas production. We use english speaking agents on the ground to translate, monitor production, use a courier and a customs agent. Through this process we finally figured out how to find a good supplier. It comes down to trial and error, but most importantly referrals. When looking for your next supplier make sure to follow my 10 tips for sourcing:
- Always ask for a reference if you were not referred.
- Always submit a tech pack that has specifics of your project.
- Never start production without a “production sample”.
- Make sure to have bilingual quality control personnel.
- Only pay 30-50% deposit until your order is ready to ship.
- Double check production with photo samples before it is packed.
- Use a courier to handle your products from factory to port.
- Double check your paper work with customs.
- Have your product professionally tested.
- Don’t assume anything. Every detail matters.
If you follow these ten easy steps, you will most likely uncover any problems before they occur. In sourcing an ounce of prevention can go a very long way.