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Are YOU A ‘Hands-On’ Or ‘Hands-Off’ Buyer? [Podcast]

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Are You A Hands-On Or Hands-Off Buyer

In this episode…

Many importers are new to sourcing from China so we’ve been creating a mini-series of episodes that explores the sourcing process with advice and best practices from Sofeast’s CEO Renaud Anjoran.

In this series of episodes, we’re exploring how to do your own sourcing from China, from finding suppliers for your products to getting them made.

We’ve moved onto soft skills, and last time we spoke about building rapport with your suppliers. Now, we’re going to look at how closely to follow production – either closely as a hands-on buyer, or with more distance as a hands-off buyer. Either approach might benefit you, but it depends on a number of factors, such as product type, the volume of SKUs being purchased, whether or not you’re developing a new product from scratch, and more.

Listen and decide if you’d be better served by being more hands-on or hands-off.

 

Just hit the play button to start listening..!

Listen to the episode right here 👇👇👇

🎧 ‘Hands-On’ Or ‘Hands-Off’ Buyer? – Sourcing from China (Part 6) 🎧

 

Show Sections

00:00 – Greetings & quick mention of Covid in China

To learn more about the Covid situation you can read these posts:

01:42 – Introducing the topic: How closely to follow production?

02:41 – What is a hands-off buyer?

Hands-off buyers usually are unable to follow up closely on every single product being manufactured for them, oftentimes because they are buying so many SKUs (think supermarkets, large stores, or promotional giveaway items) that it’s simply impractical to do so. They often don’t purchase ‘their own products,’ rather focusing on buying existing off-the-shelf or at least white-label goods with only a little branding or adjustments. The goods may not be extremely high-value, so the price is critical and they aren’t likely to be sold with a lot of margin, so quality may not be as much of an issue. These buyers usually don’t have much of a relationship with the suppliers, dealing with them transactionally (focus on price) with just a final inspection done before goods are shipped.

08:33 – Buyers who should be more hands-on, but aren’t, and the risks they face

Some less-experienced buyers are also too hands-off, not because that’s necessary like in the case of those large retailers, but because they have too much trust in their supplier

11:29 – What is the typical sourcing process for hands-off buyers?

  • Supplier ID and screening – they might check the supplier’s Alibaba page to get a general idea about them, or may send an auditor to check the factory for large and costly orders. They may also do a quick legal records check, call the factory, and ask other customers for factory audit reports.
  • Cultivating a backup supplier/s – maybe, although mostly for keeping pricing pressure on current suppliers.
  • Negotiating terms – these buyers are usually experts at this as they tend to be more on the purchasing than the quality side of things. Driving down prices and getting favorable payment terms will be a focus.
  • Documenting requirements – they tend to be poor at this. Sometimes they don’t make their requirements of quality standards clear even to their quality inspector or have approved samples in the factory. This may stem from their quality team being overworked due to large number of SKUs being purchased.
  • Following up on production – they tend not to get a lot of cooperation from suppliers. When paying the lowest cost, you often get suppliers who provide poor service.
  • Inspections – they usually only perform final inspections on orders and even then only on those that they consider might be riskier. Oftentimes, they will skip inspections altogether if they consider there is low risk.
  • Relationship with suppliers – usually not great as no time or effort to build rapport. In fact, the relationship may often be more adversarial.

17:59 – What is a hands-on buyer?

Some industries, medical, automotive, etc, require buyers to be hands-on. Where safety and reliability are paramount, this makes sense. Any company that develops fairly complex new products from scratch, however, will need to be hands-on regardless of product category. You may invest a lot of money and work with the supplier on product development and manufacturing for a long time, many months, so you need to follow a hands-on sourcing process to select one that won’t let you down.

23:32 – Benefits of being hands-on.

If working with the right manufacturer you will have fewer accidents and unpleasant surprises.

There are 2 key benefits:

  1. Quality issues and other nasty surprises are reduced
  2. You get to know your product, production processes, and supplier a lot better

Basically, the risks of receiving products that don’t reach your requirements will be reduced which is especially important if you are selling products that have more value, complexity, or safety issues. Therefore, being hands-on and investing the time and money to source, develop, and maintain a good manufacturing partner early on is a good long-term investment.

Being hands-on doesn’t always mean doing a lot of work yourself as you can use companies in Asia, like Sofeast, to support you in sourcing, product development, following up and project management, etc. But the point is to be involved in the project throughout and keep control and transparency over it.

Hands-on buyers want to make expectations very clear – transparency and control allows them to align better with the manufacturer, have visibility to forecast risks and issues and take steps to fix them, and allows them to hold the supplier accountable for mistakes.

30:06 – Is there a risk of the supplier taking advantage of long-term customers who’re reliant on them?

Hands-off buyers often have the goal of being able to walk away from one supplier to another as easily as possible. So that means low investment, not paying a lot for molds, etc. Hands-on buyers who have built a long-term partnership with fewer suppliers can’t do that. If the supplier knows you have invested a lot and rely on them over other suppliers, if being unethical they may try to lock you into working with them by keeping hold of your molds and refusing to provide design files for products they helped to develop. This can lead to you overpaying, suffering from poor service, quality, and delays, as you cannot switch suppliers (easily).

However, if you do not invest in your relationship, as many heads-off buyers don’t, your overall risk is greater due to having so little control over the entire project from the start.

35:10 – Wrapping up. 

Related content…

These resources will also help you understand how to build relationships with suppliers or improve (or end) those that you already have:

And, if all else fails and you need to ditch your current supplier and switch to a new one…

 

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