Have you ever had a bad experience with a business? A poor meal or customer service that really made you angry and never want to return?
This can happen with sourcing products from China. The difference is you will not know any products were bad or poor quality until well after the order placed, paid and shipped to you. Returning the products will cost you and your business dearly.
The best thing to do is make your vendor selection beforehand, their products and the quality of both. This blog is going to walk you through the five characteristics of a better vendor of your products.
The only thing worse than a bad supply of products from a Chinese supplier is not following good vendor selection process from the start.
It is quick and easy to search the Internet for ‘vendor selection.’ It is better to look for ‘vendor selection criteria.’
Sourcing Nova’s purchasing agents work hard to find suppliers for your products. We have said it before, but it deserves repeating:
Our goal is to find you the best supplier not the cheapest.
Supplier management matters in our specific industry, but supplier selection matters even more.
The easiest way to understand our goal is that it is like a perfect marriage relationship. You want a spouse that compliments you and your lifestyle across the board: standard of living, goals, education level and the like. You and your spouse each bring 50 percent to the relationship with the idea of making both of you better as you grow together.
Sourcing Nova’s purchasing agents take this approach with supplier evaluation. We want each side to find success equally. After all, as much as Sourcing Nova is checking vendors, vendors are checking the buyers and evaluating them as well.
Some people unfortunately choose a spouse with bad habits – drug use, alcoholism, infidelity and the like. You will never be able to ‘manage’ your spouse that will make you happy and satisifed in the relationship.
You cannot make this relationship work. The best thing you can do is stop that relationship in favor of another. The same is true about ‘vendor selection.’ No matter what you do, there is a disaster on the horizon. Moreover, changing to a fresh supplier from a poor one is an expensive proposition. Do the hard work of vendor evaluation from at the beginning. One that suits you and your product vision.
Find the most suitable supplier
There is no perfect person for a husband or wife. You look for the best person to match to you and your product design. Sourcing Nova does the same thing when looking for a supplier. Our top priority for you, particularly if you are looking for a private label manufacturer, is to find the best possible vendor to match your specific needs. Anything less will lead to issues and potentially financial ruin.
So, what is the solution?
The solution is Chinese manufacturers that share the buyer’s plans, goals and business.
This is where the buyer meets the manufacturer. The buyer already has the platform and customer base to move products.
Sourcing Nova and its purchasing agents bring you both together in harmony. Soon, each of you are meeting your business goals because you compliment one another.
Sourcing Nova wants a ‘good’ vendor that will work with the buyer and their needs. We are looking for vendors that have the best of everything. The first thing is making sure the manufacturer is always working to be better at what they do.
A supplier who is not “good” is not going to help the buyer or provide the buyer with the tools to rise above the competition.
Many purchasing agents use KPI, key performance indicators, as a part of vendor selection process. A poor supplier means the KPI, strategies and performance systems are worthless.
So far, this is all great and wonderful. However, the question remains:
What makes a ‘good’ vendor of Chinese products?
Here are the top five characteristics.
1. Complete corporate management system
A lack of reasonable rules and regulations is common for some Chinese suppliers. Better vendors have these in place. Those who lack rules and regulations have serious problems within the factory. These suppliers are immediately rejected.
Sourcing Nova reviews the supplier’s corporate management systems during an on-site inspection. Why? The corporate management system is over many things. The business objectives, strategies, management organization and regulations for each department are all under this system.
This part of the inspection checks to see how satisfied people are working there. We also learn who to contact if there is a problem.
There is no one management system that will work well with all buyers. This means when Sourcing Nova is evaluating the management system, we are looking to see if corporate management system is working and has good results. The fine points of the system are not important since all suppliers are different.
The focus is not on the corporate content. The focus is on the company’s attitude about doing the right thing and the results.
This means three things in particular.
1. The scientificity and rationality of the system
The enterprise management system should match the actual situation of the entire supplier. The goal should be to have the supplier working in an efficient and stable manner.
Following laws and regulations of supplier and their industry is important. Suppliers who do not follow these will have trouble and could close. This is why Sourcing Nova will not do business with these particular suppliers.
Here is a specific example. A customer wanted mobile phone chargers, a very common order.
The customer later asked us to put a Samsung or Apple trademark on the chargers.
This is a serious violation, and Sourcing Nova will not do this.
Our vendor selection criteria ensures they are not committing these sort of violations as well. Suppliers who do not follow rules and laws of intellectual property will bring problems to customers later on.
Sourcing Nova checks to be sure the content of the management system is a key part of the supplier’s culture. This is something that the entire factory, including all departments and employees, follow. The actual characteristics vary, but it comes down to strengths and weaknesses. These can be factory size, output, labor pool and the like.
A supplier that follows this system means they understand their strengths and weaknesses. The supplier makes up for shortcomings by concentrating heavily on their strengths.
We also evaluate their systems for stability. Corporate systems that change with regular frequency means the workplace can be toxic.
Sourcing Nova wants to be sure that the system is working and working well. If it is not, what steps are in place to change it? After all, a system that is not running smooth will have serious problems.
2. Effectiveness and execution of the system
Management systems help vendors meet their specific goals. These are in place to leverage advantages for the suppliers to achieve their specific goals – turning profits.
The corporate management system is very important for the supplier. The labor force should see this system as their code of conduct.
The corporate management system has to have everyone involved and work together.
Sourcing Nova starts the inspection with the management of the entire supplier. Management who do not follow the structure, rules and implementation makes the workers not want to follow rules either.
We see this as a red flag. Supplier management not enforcing their own policies may not follow the buyer’s contract.
This is something that your purchasing agent will not tolerate. Your products and business success matters. Poor management is a clear sign of poor product quality. We will give this vendor assessment a pass and move onto the next possible candidate.
3. Atmosphere and mechanism to comply with the system
A positive working environment and full compliance is the best for the vendor. Compliance means learning and training for the labor force. Management should also provide the correct guidance and training opportunities for the labor.
The supplier has a system for everyone that checks on the implementation on a regular basis. A monitoring system of the implementation and constant improvement mean the best supplier.
2. Excellent leaders and high-quality managers
The better suppliers have management and leaders in place of superior quality. Good management earns and keeps the respect of everyone and provides good instruction. This way, management earns the necessary respect of the employee chain.
Some Chinese vendors leave the family of the founders to run the business. These managers never earn respect from the labor pool and other employees. The management does not understand the business or the manufacturing process. This makes for a toxic work environment.
Employees may act in a passive-aggressive manner.
If a situation needs immediate attention, the new management may not know how to communicate the need to the employees. They lack the understanding on how to translate a goal into a task.
If they do give the task to the production line, there is a chance the work will lie on a back burner. Lower-level employees may put other tasks and jobs before that one.
3. Stable grassroots employees
There is a considerable labor shortage within China and has been for about 10 years now. There are two reasons: 1. Older employees leave and go home to help with infants and pre-school age children; 2. The rapid economic development and job opportunities outside of manufacturing mean many younger people would rather work somewhere else. Some prefer to work as couriers or in food service delivery over working in manufacturing.
It is important to remember the intrinsic value of an older employee labor pool. They have the skills to keep the factory working and making products of good quality for the buyers.
New workers need to learn the goals of the supplier when they start. An unstable workforce, brought on by poor management, job satisfaction or high turnovers, means the supplier efficiency and product quality goes down. The more serious problems mean in poor normal daily operations.
Sourcing Nova notes how many new workers are in a factory and use this as part of the vendor selection criteria.
Corporate culture construction
There should be a set of shared values among the entire body of the vendor. This creates a strong cohesion and is an important part of the stable labor force.
All employees matter to the success of the company. This is important. Employees all have a sense of identity within the company. Everyone works together towards a common goal, and all know their importance for doing so.
The company should have a clear mission. There are fair benefits for all. Reasonable rewards and demerits. All employees should have insurance and retirement benefits for themselves and family.
Frontline production and living conditions
The company makes the experience of the employee enjoyable. There are activities scheduled for all such as football matches, picnics and the like. This shows a much more stable workforce.
Employees should not be stuck in the vicious cycle of work, sleep and eat. This does not yield positive outcomes from employees.
Companies that offer incentives outside of work have a much better labor force and pool.
Provide training opportunities
Training should be in place but focused on the employee. There should be a ladder of opportunity for employees to learn new tasks and skills so they can advance their career.
There should also be plenty of positions for employees to transfer into after learning new skills.
After all, skilled labor was at one time unskilled until trained.
Promotion Incentive Mechanism
People want to know they are doing a good job. A good management structure should have a rewards system in place for the employees. The rewards should be easy to earn with a bit of hard work. Promotions and incentives will find and keep the best possible labor pool.
Good rewards and praise keep employees happy and engaged in their shifts.
4. Good site management and planning ability
If you really want to see if a vendor’s facility is worth their salt, check the restroom facilities. If you really want to see if the vendor’s plans are good, check the semi-finished or finished products.
The facility is where the products are made. Everything works together – the human, raw material, equipment and remaining resources. When everything works together, the products are of the best quality.
The supplier makes products that are what the customer wants, has little waste from raw materials and are inexpensive. This means product production for the customer, implementation of plans and management tasks.
Management methods and plans vary from supplier to supplier and person to person. At least, there should be PDCA and the 5S methods in place.
PDCA means Plan, Do, Check, Act. It is a way for continuous improvement for on-site management. PDCA is not linear. It is circular and constant improvement for all.
PDCA works like this:
- Find an opportunity for improvement
- Make a plan
- Test the results
- Implement the results
The 5S method is a Japanese model. It is a way to keep the workplace safe and operating at optimal capacity. Each ‘S’ is a Japanese term.
- Sort (SEIRI)
- Reorganize (SEITON)
- Clean (SEISO)
- Maintain (SEIKETSU)
- Sustain (SHITSUKE)
Suppliers should have on-site management skills but flexibilty for different management methods.
5. Advanced production technology and excellent equipment
Competition among suppliers comes from technology and equipment. Both are necessary for a stable supply, price advantage and exceptional quality.
Better suppliers will have both on hand and functional. Without, they will not meet procurement needs of a high quality and low cost for the customer base.
Proper procurement starts with a solid foundation. The best Chinese products start with a good vendor. A better business partner for products leads to a better purchasing experience. Mediocre vendor selection will never provide the quality and quantity a customer will want. This means headaches and heartbreak in the future. The quality of the supplier is more important than managing the supplier. How can we help you today?