Top tips on creating a Profitable Sourcing Strategy

POSTED ON September 29, 2021

Sourcing products from a low-cost country such as China can make a huge difference to your top and bottom lines. However, your success depends a lot of how to create and implement your sourcing strategy. It must be based on careful planning and evaluation. Here are some tips that will help you create a profitable China sourcing strategy.

Tip 1: Look beyond the Production Costs

Although it seems quite logical to choose a sourcing destination based solely on how low the production costs are, but in the long run, it may not prove profitable. Apart from the labor and production costs, there are many other costs involved when sourcing from a foreign country. Your sourcing strategy should take into account all these additional costs such as taxes, tariff costs, shipping costs, agent costs and many more. Before you decide to source from another country, a thorough cost benefit analysis is important.

Tip 2: Do not make decisions solely on the basis on what you read on Internet

Thanks to the advancement in technology, you can now hold virtual meetings with your suppliers sitting anywhere in the world. However, do not make decisions based solely on that hour long virtual meeting. The best way to establish the credibility of the manufacturer is by visiting their manufacturing facility. Although it would mean extra expenses, time and effort, but it is all worth it, especially when your order is large or involves new product development. If you cannot personally visit the country, make sure you have a local representative such as a sourcing agent or project manager the facility on your behalf.

Tip 3: Try to enter into longer contracts

In the long term, longer contracts tend to work out better in terms affordability and efficiency. When you choose to work with a supplier for a longer time, they get to understand your requirements better and can adjust better. If required, changes can be made to the contract at later stages to suit changed requirements.

Tip 4: Be in control of Quality

  The easiest and safest way to source from China is to take complete control of quality. The first step in this direction would be to visit the facility, as discussed in point 1. This will help you decide whether or not the factory is equipped to produce the quality you expect. The next step is quality inspection during and after the production. It is best to seek services of a sourcing manager China or a third quality inspection agency to ensure that you receive only the best quality products. Ideally, you should have a quality management plan in place and your representative should make periodic visits to the factory to ensure that your quality control plan is running efficiently.

Tip 5: Constantly monitor supplier performance

Even if you are working with a reputed supplier, you need to ensure regular performance assessments. When sourcing from another country, there are many variables involved and a lot can go wrong, if you don’t follow up regularly. So, you must keep in touch with the supplier and keep track of the project progress. If you have a project manager working for you, they will have processes in place to monitor supplier performance and tracking the project progress. 

Tip 6: Be Reasonable about prices

When devising a sourcing strategy, quite often, businesses focus on getting the lowest prices. Affordability is the biggest reason why businesses look towards China for sourcing the products, but one must remember that you get what you pay for. The cheapest goods might not be the best quality goods, and you may ultimately end up losing a lot more business. So, when you devise your sourcing strategy, you must keep in mind that getting the lowest price should not be your sole objective. The idea should be to find a supplier that prioritizes quality and has a proven track record of working on projects similar to yours.

Tip 7: Set clear Requirements

Before you craft your sourcing strategy, you should have the requirements clearly laid out. You must have the detailed specifications ready and you should be very clear about what you want in your product.

If you are looking for an experienced China sourcing agent or project manager, you have reached the right place. We have the experience and expertise it takes to make your sourcing project a success. Get in touch with our team now to discuss your project.

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