It is good for importers to read about best practices. Many first-time buyers have never heard of letters of credit or quality control plans. They often find it useful to follow a “how-to” guide.
On the other hand, it is much easier (and funnier) to draw a list of the most common mistakes made by purchasers in countries like China or India. Maybe it’s the way my brain is wired. Or is it because “trouble is my business”?
My list of the “top 10” sourcing mistakes:
1. Looking for the lowest price
If you purchase something below market price, you are taking very high risks. Either quality will not be up to your standard, or you are about to get scammed.
2. Letting the supplier ship without checking product quality
Once a production batch is on a boat, it’s too late . Verify quality yourself, or pay for quality inspection services. And do it systematically, at least for the first 5 shipments (after that, you can do random skip-lot QC).
3. Failing to realize that pre-production samples are selling tools
Many buyers who are surprised that samples are not representative of bulk production. But getting an order and a cash deposit is one thing, and manufacturing the goods is another thing! Your job is to check whether production is up to the P-P samples…
4. Displaying obvious distrust towards one’s suppliers
One of my clients does this. Her suppliers hate her, and they often get into arguments. You need your suppliers (1) to have a good image of you, and (2) to know that you care about them. If not, nobody will look after your production in the factory.
5. Not keeping two weeks of padding in the shipment schedule
There will be delays, with a certainty comprised between 30% and 90%. So plan for it. Bonus: even worse than failing to plan for delays, is pushing the factory to reduce production time.
6. Paying everything in full while one still needs leverage
Some purchasers get a really good feeling about a supplier, and agree to wire 100% of the order amount in advance. Then the manufacturer has no incentive to hurry up or to produce up to the standard. If quality issues are uncovered (and that’s only if they allow for an inspection), the factory might refuse to rework the goods.
7. Accepting to be left in the dark regarding your own supply chain
Do not rely on a middleman, upon which your whole company’s success rests. Qualify the factory, if possible get to know/approve the sub-suppliers. You will make it up many times in the long run. It is so basic, but so many people get this wrong.
8. Forgetting to describe an essential product attribute, or even the entire packaging
If you don’t specify your expectations in detail, a factory technician will take the decision for you, based (most probably) on cost savings. And you will not even be able to protest when you notice it.
9. Hoping that an unsatisfactory manufacturer will get better over time
Based on a recent unscientific survey, it looks like it is a bad idea to give a second order to a factory that just produced substandard quality. Rather than rolling the dice (when the odds are 90% against you), nurture a backup manufacturer.
10. Not registering one’s trademark when buying from China
Do you want a competitor to force your manufacturer to stop production? Do you want a supplier to sell your goods on the local market? Then register your IP. I am not a specialist, but you can read more here.
Other candidates that nearly made it in the top 10:
Not having a contract
A contract that can be enforced locally is definitely very useful. However, game theory teaches various strategies to adopt in “non cooperative” situations, and you can adopt them. For example: “take little steps” (i.e. issue small orders), “verify constantly” (i.e. QC) and “use a third-party” (i.e. a letter of credit).
Trying to manufacture small quantities in China
It will usually push you in the arms of small trading firms that deal with small workshops. The result in 90% of cases: quality disasters and/or long delays. But there is a solution, if you can purchase non-customized items: produce them in coordination with a non-competing importer. Hard to pull off, I admit, but worth giving a shot!