Engaging in foreign trade procurement is always a challenge for the experienced traders and the novices. They are all confused on how to procure goods in the right manner from other countries. This is a matter of that has been addressed by purchasing staffs that aim to help such traders with high-quality products and excellent prices. Leelinesourcing, a professional sourcing agency company with ten years of experience in purchasing comes in to help. We will offer you satisfactory answers to sourcing questions, and share some purchasing experience with the novices.
To reduce the purchase cost, you need to implement the following strategies:
(1)You should try your best and ensure the suppliers offer reduced preferential price in an annual or quarterly framework. This is possible through negotiation and signing of a strategic cooperation agreement. If this is not possible, ask them to at least keep the price unchanged for a certain period of time.
(2) Involve your own R & D staff or the customers’ R & D staff in new product development. This should be done together with your suppliers’ engineering staff. Consider the use of less expensive materials in design (on the premise of ensuring performance). You also need to apply standardized parts and integrated design to reduce unnecessary parts. This helps save the total material costs of the product while minimizing material loss during the production of parts. In addition, the impact of material and component design scheme on the assembly efficiency of the products of the enterprise (the assembly cost is implied here) should also be considered. If it is possible, consider the use of recycled materials and reuse the packaging materials. Besides, you can also drive suppliers to switch to more advanced production techniques that reduce costs without compromising performance quality.
(3) In a broad sense, the purchasing cost also includes the administrative cost and material quality cost. You can simplify the procurement process as much as possible and reduce the costs of human resources and materials in daily purchasing activities by maintaining and developing cooperation with the suppliers. For example, you can use the EDI system to simplify order sending and material confirmation process. The information is then shared with suppliers through the EPR system. You also need to strengthen supervision of the commodity security system and the management of IQC and IPQC to avoid problems with material quality. Poor quality materials might halt the production or lead to a large number of defective products making you lose customers.
How to ensure product quality?
You should cooperate with the quality assurance personnel of the company. This is done by strictly evaluating and supervising the supplier’s quality system documents and actual operation status. You should then combine this with the ISO document system and other quality systems. In addition, you should strictly follow the quality review processes when developing new supplies. Make sure you evaluate the current suppliers’ quality level and status periodically driving them to improve quality continuously. However, make sure you balance quality and costs. You also need to avoid unlimited and unnecessary improvement of the quality level.
Finally, a good procurement process should also ensure a good supply of the materials and inventory management. This is how to do it:
(1) Review the supplier’s internal supply chain status and operation level. This includes logistic issues from the raw material channel to finished product shipment.
(2) Supervise suppliers to ensure they set up a rigorous scientific internal supply chain operation process and strictly implement it.
(3) Establish safety stocks through supplier management inventory and other inventory agreements to avoid material shortages. Inventory quantity should be controlled as properly.
The three points above are ideal for managing current suppliers. When developing, selecting and evaluating new suppliers, a rigorous scientific evaluation criterion is more important.
The evaluation of suppliers can be divided into
1.The overall situation of the enterprise
What is the size and overall strength of the business? Does the management have long-term development goals and specific strategies? How is the overall personnel quality? What about the technicians, middle and upper management? What about the level of internal management? Is there a unique and advanced corporate culture? What is the financial position of the enterprise and commercial reputation in the industry?
Nowadays, personnel quality and attitude of an enterprise are increasingly becoming key factors in supplier evaluation. Without high-quality and sincere service attitude of the relevant personnel (production, quality assurance, technology, research and development and customer service, etc.), it is difficult for enterprises to offer high-quality products and services to customers. We also have to factor in certain ideological aspects and personal quality of these enterprises.
2.Production cost evaluation criteria
A. The cost of raw materials: Buy raw materials directly from the factory to save the purchasing cost.
B. Internal production costs: In the case of quality and accuracy, try to apply low – cost production equipment. Low cost of ancillary materials (e.g., low utility or energy-rich areas).
C. The management structure is more streamlined, and there are fewer senior foreign managers.
D. Good logistic conditions and geographical location (help reduce transportation costs).
E. Low margin requirements (domestic factories are relatively good).
The quality assurance personnel of your company shall take the lead in evaluation according to ISO and QS standards.
4.Supply chain stability evaluation criteria
Is there a stable raw material procurement channel? Is there a sound internal production organization and planning system? Is there good communication and cooperation between the production department, purchasing department and customer service department on production and shipment? Is there a specific production and shipment response plan for an emergency or special case? (Example: a customer insisting on the shipment in bad weather).
Besides, you should also note the basic principle in selecting supplier: Do not choose a supplier that has a bigger scale than your company except for the special case such as purchasing raw materials.
In conclusion, the selection criteria of suppliers can be simplified into two points:
Is he willing to cooperate with me?
Does he have the ability to cooperate with me?
From the information above (reducing procurement cost, improving product quality and finding cooperative suppliers), you can see it is quite hectic finding a good procurement supplier. It is a rigorous process that requires cooperation in all aspects. If one thing goes wrong, the whole procurement process will go wrong and result in unnecessary losses.
However, a purchasing agency can make product sourcing a lot easier.
Luckily for you, you’re in the right place. Leelinesourcing is one purchasing agency company focusing on purchasing products for customers. We have 10 years of experience as a purchasing agent and have provided procurement agency services to thousands of customers that are happy.
We provide a variety of sourcing agent services such as supplier search, credit verification, cross-price check, price negotiation, product photography, labeling, FBA transport and product branding.(Related content: The services Leelinesourcing offers)
If you want more information, consult us through:
Email: [email protected]
Or our website: https://leelinesourcing.com/
If you have any more questions about FBA, please do get in touch so we can assist you in getting the right information. Leeline sourcing company is involved in different sourcing business that will help your company’s grow, and make your international business better. No matter how big or small your orders are, we will help you source quality and affordable products, and we will ship them directly to you.
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