Global Sourcing Process

Global Sourcing Process

Learning to source private label products for sale on eCommerce websites is not difficult once you understand each step in the process.

Global Sourcing Process Flow Chart

Where to begin?

Before you start sourcing you better know what you’re looking for. So a predicate for this process is to have a product that you are trying to establish a supply chain for. This can be a new product from your own product discovery process or it can be an existing product that you need to find new sources for or even an existing product you are trying to optimize the market pricing or quality on.

We try to gather all item-level information necessary for each step in the process. There is no reason to write a book about a product that fails level one price feasibility analysis so follow the steps carefully and only do what needs doin’ when it needs done.

Ideally, you will have a product information management system. (Sometimes called a PIM)

Once you know what you’re looking for then you need to get your prospective supplier list out. Maybe you already have some suppliers who are candidates for the item or perhaps you need to start from scratch. Either way, prospective suppliers should be entered into the database so that you can track the progress of each one individually. We would suggest adding them to a Supplier Group that shows prospective if you are not sure they meet your fully vetted requirements.

Global Sourcing Process Preliminary Supplier

The benefit of tracking all prospective suppliers is that you can compare systemically and you can share that information with anyone one your team. Better still your team can go find these prospects and can add them and then share the filtered list of potential suppliers for management’s fast review.

If you have enough prospective suppliers your next move is to confirm pricing feasibility. This is a quick RFQ (Request for Quote Process) that helps you understand the market prices at first glance. This is not a final price, but a price to compare against the selling price to be certain you have enough margin to make this product a go item.

Once your RFQ has some bids you can compare those bids. More advanced systems like Parsimony.com can even allow the supplier to log in to the system, enter the item bid, and upload the document that outlines the details of the quotation. Regardless of the system you use remember that the more effort your team can invest so that management can have a quick review and Q&A process to validate the feasibility of the market buy-side price vs. the market selling price of the same item is critical.

Remember that top-level pricing is just one consideration. Other factors must be weighed in as well.

Once you establish that the market price vs. selling price seems feasible now you really get deeper into the supplier due diligence.

This is where you would really get into the item specifications to be sure you are comparing apples to apples with each supplier.

And for each prospective supplier, this is where you want to get deep into their qualifications, history, capabilities, capacity, etc… Capturing even the screen shots of their current information will help you remember what they offered in the past, in the event the pages change.

We like to capture any available public data that can help us create a supplier profile to understand the strengths of each prospective factory. Not all factories are created equal. And the biggest factories may have limitations that create obstacles for you – like large MOQs or slow processes. The smallest factories may be responsive, but you don’t know about their credit worthiness and their quality levels.

Make no mistake when you wire money ahead of an order you are offering that factory credit. Their liquidity matters and China is more and more under pressure financially which makes the credit risks higher if you are paying upfront.

There are ways to mitigate this risk, but that’s a different topic for a different day.

One you believe you have some qualified candidates it’s time to request samples.

A request for sample (RFS) process is useful to systematize this process.

See the tabs above: GENERAL : SAMPLE DETAIL : OUR SAMPLE DETAIL : SUPPLIER SAMPLE DETAIL

The data entry screens are not the important part. The important part is the document that is shared with each supplier. The details and the specifications should be shared in a structured easy to understand format. This PDF can be edited easily using the screens above and output to get the details communicated to the potential supplier.

Assumptions in sourcing are deal killers. Don’t assume. Document.

Once you find an acceptable sample(s) and make a supplier decision you can follow the Master Sample process and the purchasing process to launch your new item. Follow the steps and find success; every time.

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