A post on Seth Godin’s blog (Hammer Time) got me thinking about China sourcing.
So, if it’s true that to a person with a hammer, every problem looks like a nail, the really useful question is, “what sort of hammer do you have?”
One study found that when confronted with a patient with back pain, surgeons prescribed surgery, physical therapists thought that therapy was indicated and yes, acupuncturists were sure needles were the answer. Across the entire universe of patients, the single largest indicator of treatment wasn’t symptoms or patient background, it was the background of the doctor.
Let’s say you are going to start importing from China. What type of advice would you receive from…
A product designer: make sure the product you order does not contain any design flaw that will prevent you from selling it in your country, no matter how well manufactured in China. And it is even better if we can make it simpler to produce.
A purchaser: let’s get several quotes, and let’s eliminate the suspiciously low offers. Then let’s get samples for 2 or 3 suppliers, and let’s keep them in competition over time. Let’s use the right mix of carrots (repeat orders) and sticks (penalties) to motivate them.
An engineer: let’s go to the factory, let’s make sure they can deliver what we need, and then let’s help them improve their processes. If possible, let’s even ask them to make a small production run before producing the bulk of the order.
An accountant: run credit checks on each potential supplier, and avoid the companies that have been consistently losing money (who might close their doors) and those that have grown too fast (who might not have had time to get organized).
A lawyer: avoid suppliers with no assets (they are less interesting to sue), have a contract drafted for your situation, and threaten to go to court if issues pop up.
A banker: use a letter of credit that lists your expectations in great details, and you’ll be in a position to refuse the goods in case of discrepancies.
A quality control firm: we offer standard services that fit most situations: factory audits to qualify suppliers; product inspections and laboratory tests to confirm that you will receive what you ordered. You should monitor quality at several stages of production, not only at the end.
A local agent: let me put you in contact with the right manufacturers. I have known them for many years and they are reliable. If there are issues, I will help you negotiate a solution.
A trading company: don’t worry, we guarantee you a level of quality. The production side is our business, and you don’t need to waste your time trying to figure it out. Just send us the orders!
Of course I am exaggerating, but there is some truth in each type of advice. I never saw an importer using all these tools together. I believe professional importers take the most appropriate tools and try to make the best use of them. I already touched on this in Transferring The Responsibility Onto The Exporter.
I’ll leave the final word to Seth:
The best way to find the right tool for the job is to learn to be good at switching hammers.