Six Simple Secrets every Purchasing Manager needs to know to Reduce Cost, Improve Quality and Deliver On Time Products Procured From Overseas

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1. Select a good supplier you trust and can work together with.

It’s easier said than done unfortunately! Good China-based suppliers are often in demand, not shared willingly and do not have the time to market to you as they are focused on meeting their clients’ requirements. But they do exist – the challenge is to find the right supplier located in the right city near the right port.

SourceWorxs has access to a very large number of steel fabrication suppliers based in China with whom we have worked together with over decades. These suppliers are familiar with the Australian clients’ expectations and have been supplying to the Australian market for a very long time.

While most of these suppliers do not speak English, we can! We’re also in a position to help you navigate the Chinese manufacturing environment and business culture.

2. Be aware with whom you’re dealing with – factory or trading company?

While Ali Baba remains a great resource in connecting you with suppliers in China, how can you tell if they are an actual a trading company or a factory? Are they even legitimate?

If you’re purchasing widgets or pink fluffy slippers for example where there are very few risks of things going wrong and where the value of the goods are small, any losses sustained may be worth the risk. What happens then when your purchases are much larger in value?

Most steel fabrication parts require much more supervisory attention during its design, manufacturing, QA and packing processes. They also happen to be more costly which means that when problems do occur, they tend to be more expensive to fix as well.

Problems only start when your supplier which you’re trying to engage with to fix problems start ignoring your phone calls or emails, or worse, simply ghosting you, never to be seen again? What happens then?

Problems like this are common as trading companies do not always have total control over their production. When things go wrong, a trading company can very easily accept your final payment by simply providing you with some photos and simply disappear.

SourceWorxs are in a better position to undertake checks on the legitimacy of your supplier by being able to verify that the supplier or factory actually exist. It’s no more than a drive to the factory in most cases. It’s that simple.

3. Don’t just rely on a single supplier for a specific part

China based steel fabrication factories which are prepared to accept lower volume orders are not usually based in large cities or run large factories. Most are family-owned businesses who operate on lower overheads.

The problem with this model is that they often do not specialise in any particular industry. A factory may for example, produce kitchen stoves this month but may switch to fabricating electrical enclosures the month after. This means that they may have different priorities and may not stock your part or may have capacity issues in meeting your order on short notice.

SourceWorxs will usually select a smaller number of suppliers to act as the ‘primary’ and ‘secondary’ suppliers as a risk mitigation measure. The best is to always plan and order well in advance.

4. Protect your IP

Protecting your IP in the manufacturing context is critical in an increasingly competitive environment. How do you do this while trying to manufacture the product in factories offshore?

At SourceWorxs, we pride our integrity by ensuring that we protect your interests through the following measures:

a. We never issue whole assembly drawings to a single supplier to manufacture. This risk mitigation strategy reduces chances of a potential supplier copying your design. As part of our service, we will be reviewing drawings and translating them into Chinese and it is at that point that drawings are divided up and issued to separate suppliers.
b. If necessary, we will draft confidentiality agreements in Chinese on your behalf to ensure that your IP is enforceable in China. While there is widespread misinformation in the media about this, there are laws in China pertaining around theft of IP as evident from the numerus cases which we hear about in the media here.

5. Engage someone competent on the ground in China to undertake inspections on your behalf

On-site QA checks by someone reliable and competent forms the backbone of any secret to success when importing from overseas. This means checks on your product while it is being manufactured, after it’s been manufactured and when its being packed is critical.

SourceWorxs offer a range of services such as on-site assessments of suppliers, checks at manufacturing milestones, QA checks, packing supervision and container packing.

6. Pay attention to packaging

A lot of Purchasing Managers simply assume that the manufacturer will pack your manufactured product in a manner which will protect it until it arrives into Australia. That’s not the case in China! Manufacturers will spend as little as they can possibly get away with in packing your product because they are not responsible for it once it leaves the factory in a container!

SourceWorxs will be able to design and supervise packaging on your behalf. This means that we are able to hire labour to put together any assemblies in a warehouse, pack the product properly and ensure that the pallets used are correctly sized and don’t fall apart. Pallets which fall apart are an OHS risk when you need to unpack them in Australia.

We will also be in a position to ensure that containers are not overpacked! Steel components are exceptionally heavy and we can ensure that the weight limits for containers do not exceed the legal requirements. The reason for this is because the laws pertaining to overweight containers travelling by land between the point of origin (the Chinese factory) to the Chinese Port are hazy at best and not enforced to a large extent. This poses a problem as strict limits do apply for containers tarvelling out of an Australian Port on Australian roads to your office.

There are now 2 different requirements which must be complied with:

a. Effective from 1st July 2016, Safety of Life at Sea (SOLAS) amendment covering container weighing regulations, a packed container will no longer be allowed to be loaded on board a vessels unless its Verified Gross Mass (VGM) has been provided by the shipper to the ocean carriers and/or port terminal representatives prior to the load list cut-off date.
b. Weight limits when they arrive into an Australian state. Australian road transport regulations allow for a maximum road weight limit of 42,500kg, which covers the combined weight of both the truck, trailer, container and cargo.

SourceWorxs will be in a position to ensure that these limits are complied with or risk your cargo being held up in an Australian port, or worse, subjected to fines and forced splitting of cargo which will result in additional delays and costs. We are able to do this as we will be in a position to conduct a containerisation exercise for you using Solidworks to ensure that weigh limits and packing are appropriately and properly done.

 

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