Sourcing Inputs from Offshore Countries: What First Time Importers Should Know

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Sourcing Inputs from Offshore Countries What
First Time Importers Should Know

• Kevin Smith
• President
• Smartrend Supply Ltd.

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Agenda

• Introduction to Global Sourcing
• Linking Your Company to Factories in
  Low-cost Countries
• Successful Sourcing

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Global Sourcing Defined
The process of identifying, evaluating,
negotiating and configuring supply across
multiple geographies in order to reduce costs,
maximize performance and mitigate risks.
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Reasons to Outsource

• Reduce and control operating costs
• Improve company focus
• Gain access to world-class capabilities
• Free internal resources for other purposes
• Resources are not available internally

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Developing Low-Cost Labour Markets
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Linking your company to factories in low-cost
countries
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Common Concerns

• Language and cultural barriers
• Controlling quality / inspections
• Difference in business practices
• Financial risk
• Security of intellectual property rights

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Where to Begin?

• Use manufacturer directories to identify
  potential suppliers
• Global Sources www.globalsources.com
• Alibaba www.alibaba.com
• Work through your international government
  offices - pre-qualified sources
• Canadian Consulate Offices http//Geo.internationa
  l.gc.ca

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Communication Methods

• Email
• Keep it simple
• Answer promptly
• Messaging Services
• MSN
• ICQ
• Skype
• I-Chat

• TIPS
• Ask the same question more then once
• Do what you say you will
• Messenger meetings should be scheduled in both
  the AM and PM

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Ask the Right Questions

• Are they the actual factory or a trading company?
  
• Is there someone that speaks English at the
  factory
• Who is going to talk with the engineer regarding
  the specifics of your project? Can you talk with
  him/her yourself?
• What experience do they have with outside QA?

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Ask the Right Questions

• Do they have an export license?
• Have they worked with clients in your
  country/industry before?
• Will they give you any client testimonials?
• Will they give you regular reports on production
  including photos?

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Importance of Relationships Guanxi

• Business is cultural
• Cooperation
• In China business is done China style
• You are not just a client, you are a friend
• Problems with orders, requests, details

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Going Direct vs. Sourcing Firm
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Successful Sourcing

• Sourcing Strategy
• Your Team
• Selecting Items
• RFQs
• Sampling

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Create Your Sourcing Strategy

• Define objectives and scope
• Time, budget, resources

• Best reasons to outsource
• Focus/enhance core competencies
• Realizing the lowest total cost or best value
• Addressing issues within your marketplace
• Recognizing the impact on internal operations

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Assemble Your Team

• Create a Global Sourcing team
• Should consist of a representative from such
  departments as
• Provide your team with the vision, tools, and
  support to help them succeed

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Develop a List of Items for Consideration

• Labour Intensive
• Multiple Processes
• Tooling
• High usage, Low complexity
• Build confidence with supplier
• Medium usage, Medium complexity
• Once confidence has been established

Be aware of the items sensitivity to engineering
changes
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Compiling the RFQ

• Basics
• Drawings
• Ensure the latest revision level
• Specifications
• Material, Manufacturing Process
• Finish, Color
• Samples
• Annual Usage

Include the weight of the item when samples are
unavailable
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Compiling the RFQ

• Advanced
• Characteristics, control plans, inspections
• Evaluate current supply against drawings

Get down to the deepest levels of details
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Advanced Quote Package
Wherever possible, use video to illustrate it
breaks down cultural and language barriers in a
way that documents cant!
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After the RFQ Submission
Collaboration Let the supplier collaborate on
product design, recommend material options, and
manufacturing processes
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Paradigm Shift

• Product Globalization

Activities aimed at re-defining the manufacturing
criteria of a product to meet the capabilities of
multiple nations
Most likely your product was created with
domestic manufacturing in mind, in order to be
successful you must not only open your team but
your product to global manufacturing capabilities.
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Sampling

• Determine your acceptance criteria
• Critical dimensions
• Functional/performance
• Aesthetics
• Expect a few rounds of samples
• Identify improvements, explain reason
• Reinforce the positive

Engineering, QA, Production
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Successful Global Sourcing
Lessons Learned 1 Sourcing can have a greater
impact then lower product costs 2 Consistent
communication is key ask the right
questions 3 Assemble a team and prepare them
to work differently 4 Provide suppliers with
the benefit of your companys knowledge 5
Collaborate with your supplier, rather then
dictate
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Questions