China quickly emerged from the onslaught of COVID and regained operational efficiency fairly quickly. It is still one of the most favoured procurement destinations for several product sourcing companies in the world.
However, since there are language and social barriers involved, these issues combined with the new social distancing and lockdown norms can lead to several procurement mistakes.
So, mentioned below are some of the most common mistakes that companies need to avoid when sourcing products from China.
Mistakes product sourcing companies need to avoid during China sourcing
• Foregoing supplier audits
When sourcing from an overseas location, most of your procurement budget is going to be dedicated to product sourcing and inventory. In the recovering market, organisations need to emphasise operational efficiency and work with suppliers that offer excellent performance. If possible, arrange site visits to view how the organisation develops their products and treats its employees.
So, it is only fitting that companies conduct a thorough supplier audit before securing a contract. Compare them based on their prior performance, quality of raw materials, expertise in your specific product, and experience in exporting to your destination market. When you have a better idea of the manufacturer’s competence, you can adjust the order size accordingly and avoid product defects.
• Improperly defined specifications
Language and cultural barriers introduce several unnecessary issues that arise due to the communication gap with the suppliers. A lot can be lost in translation if the particulars and specifications are improperly defined, and you can end up with a product you did not need or cannot serve to your customers.
Develop your product sourcing plan to avoid two common mistakes – define your product expectations and only provide the technical details to the supplier. The key to sourcing products from China is to find competent, credible suppliers that can serve the desired product according to your defined specifications.
• Cost over quality
The traditional sourcing procedure with an increased focus on cost efficiency and expense management is nothing but obsolete in the current market. When logistics disruptions occur, only resilient supply chains stay functional. Price cannot be the only factor organisations can consider when sourcing from China.
Sever ties with incompetent suppliers even if they offer products at a lower price.When the price seems too good to be true, maybe it is.Instead, shift focus on suppliers that maintain healthy relationships and maintain the global product standards, even if the cost is a bit more than what the competitors offer.
Transacting with Chinese suppliers can be extremely challenging due to the difference in legislature and safety compliances. It is easier to work with manufacturing facilities that have experience in exporting to your destination markets.
To maximise the benefits of working with Chinese manufacturers, product sourcing companies need to optimise their sourcing strategy with the help of procurement intelligence and expense management tools. An experienced sourcing agent can act as a liaise with a retailer and help you navigate the risks of overseas procurement.