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Anyway you look at it, sourcing is a tricky business.
There is a mountain of hurdles, each representing a 'risk' to your business. Among them are:
- Finding a manufacturing 'partner' that understands your needs. Practically speaking, this will involve a mix of price, quality and ability to meet agreed deadlines.
- 'Partner' is an important word and a relatively new concept. In this ever increasingly global world all companies involved in the supply chain are linked together. For example, a manufacturer producing a poor quality garment or even producing a good quality garment but supplying it late will cause damage and possible irreparable damage to both your business and brand and also to the manufacturers business.
- Financial viability of your manufacturing 'partner'. For example, you put down a 30% deposit for a production contract and your 'partner' becomes insolvent before the contract is fulfilled. You have lost your deposit AND the gross margin on the order AND what is the impact on your reputation and brand?
- Cultural Differences - How do you manage these now? By email? Or telephone? We handle these issues by having our own trusted people on the ground in the countries that we deal with who are constantly talking to the people managing our customers orders in their manufacturing facilities. Have you ever had cause to ask a question of your Chinese manufacturing partner by email? If so, have you ever received an answer that gives you 100% confidence that your concerns have been addressed? We can get these answers.
- Commissions - are you aware that multiple layers of commission can exist in the supply chain? If you have a buying office in China are you aware that your employees could also be getting commissions for referring work to certain factories? What is your price audit procedure?
- Currency - hedging getting you down? Typically, Australian listed companies have no more than 6 months forward cover in place at any one time. As we have all learnt recently, we live in an ever-changing world economy, where the Australian dollar has fallen by 30% in less than 3 months. OOPS, there goes the rest of this years profit, unless of course the Australian dollar recovers. However, leaving it to chance exposes your business and your company directors to personal financial liabilities and risk. For some businesses it will be the 'final nail in the coffin'. Are your Chinese partners offering to do work in other currencies (for example Australian Dollars?) Some of ours do!
- Credit - Do your manufacturing partners offer you any credit? Some of ours do!
- Some of your manufacturers closing down? Time to source new ones? How do you do this?
- Travel - International travel and domestic travel within China can be exhausting, expensive and mean time away from your business and family. How well are you managing this function?
Did you know that we provide a no obligation, price check facility? That is, we will have several of our factories quote for some of your previous or future styles.
Does it sound too good to be true? Not really, we are just confident that we can provide what we say.
One case study this year revealed price differences from Nil to up to 30% savings PLUS our factories met a number of environmental and humanitarian standards AND a history of quality and on-time delivery.