Sourcing from china how sourcing agents can help you reduce costs

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Several western companies are increasingly looking at China sourcing agents to handle their outsourcing projects. This is because sourcing agents are usually based in China and are familiar with the requirements of conducting business in that country, including quirks of its business culture. We can also help you get the best price for your products because we know all kinds of factories, not just the ones with a website or with a presence on B2B e-commerce sites.

Businesses keen on importing from China also save money indirectly if they hire sourcing agents. For one, we help you cut down the time taken for your outsourcing project to start. We also save you money because we have local knowledge. For instance, we will never commission an order right before Chinese New Year because factories shut down for long periods during that festival as all workers go to their hometowns to celebrate, which can lead to losses for businesses that do not account for this.

If you are a business owner, hiring a sourcing agent will also save you money because you will not have to make costly visits to China to identify suppliers, conduct background checks on them, commission sample runs and hire someone to supervise production or conduct pre-shipping checks. That is because we do it for you, and we are transparent about our fees.

So how exactly do sourcing agents work? I’m going to outline below a case study of how we helped a client outsource manufacturing in China.

The background

A few years ago, family-run Company A had a small factory in Germany that manufactured brass door knobs. The knobs were popular, and the factory was finding it hard to keep up with demand. The business owners had not increased their factory’s production capacity for years mainly because of the lack of available space. Neither was the family keen on moving to a bigger location elsewhere because of the capital costs involved. The company eventually took the decision to outsource manufacturing to a factory in China because of the cost savings it brought them. But because they were a small family-run business, they weren’t keen on hiring a separate team in China to handle what would evidently be a long term manufacturing project.

That is when they approached us. I will now outline the typical process followed once we take over as sourcing agents for clients with manufacturing requirements.

How Sourcing Agents work

  1. Understand client’s requirements: Sourcing agents act as representatives of their clients on the ground. For this, we needed to first get an overview of our client’s requirements and their expectations from the project. We attempted to understand these requirements by asking questions like: What do you want to produce? Where will the product be used? What quality standards are you looking at? What is your Minimum Order Quantity or MOQ? Is this a one-time order or repeat order? Have you faced any manufacturing problems while producing these knobs in your home factory? What is the mode of production and so on.
  2. Ask for existing product drawings: We asked Company A for the product drawings of their door knobs. Our production experts checked if the drawings were in a format acceptable to Chinese factories. They also analysed them to find any problem areas and offered suggestions to fix them. They looked for any potential for design tweaks that would reduce costs. All this is done with the sole objective to facilitate efficient manufacturing, decrease costs and improve quality, all of which leads to a happier client.
  3. How to find a manufacturer: We then created a detailed specification of the client’s requirements and sent it to multiple suppliers with a request for quotation or RFQ. Once the responses came in, we reviewed the bids to check if the pricing was reasonable and assessed them on different parameters such as price quoted, proposed raw materials, proposed payment terms. Sometimes we even assess suppliers on our experience with them if we have worked with them earlier.
  4. Client sent quote: With the information we now had, we sent the client a detailed finalised quote where we also discussed potential issues and risks. These included potential deviations in dimensions, limitations of desired finish and any possible implications of that, better alternatives to desired raw material and so on.
  5. Factory audit: Once the client accepted the quote, we conducted a detailed factory audit to ensure that it had the production capacity to manufacture the order or any increase in order, and whether it had processes in place to maintain quality standards. We reviewed a number of factors including the number of workers and other staff in the factory, factory revenue, number of machines and their maintenance, working conditions for workers, safety procedures and documentation.
  6. Sample/Tooling stage: Once the factory cleared the audit, we gave the go-ahead for sample production. There was a die-cast mold to be made in this case, so we worked with the supplier to develop it. We discussed the product’s appearance, critical dimensions, areas where things could go wrong, and the product’s performance. Once the sample was complete, we inspected it, confirmed whether the same process and raw material would be used for mass production too, and then sent it across to the client along with a detailed report.
  7. Production: Before mass production started, we reviewed the entire production process with the supplier again, and pointed out any possible improvements. We ensured that previous suggestions regarding improvements had been incorporated. Once production started, we conducted in-process inspections to inspect the quality of raw materials and product. Once the manufacturing process was complete, we checked its packaging and conducted a pre-shipment quality check.
  8. Shipping: We contacted a freight forwarder to arrange pickup and delivery. We ensured the packages were loaded on pallets so that they are easier to transport by machines and are not thrown around by loaders. We handled all customs documentation, including ensuring that the correct HSC code is given. Once the goods were picked up, we monitored its journey all the way to Germany through ports and customs in both countries, till it reached its final destination.