Verify and evaluate suppliers in China!
In an earlier video, we talked about how to narrow down a list of potential suppliers to a select group of highly qualified candidates.Now go ahead and contact this short list. This starts the RFQ (request for quotation) phase. The feedback from this initial contact should allow you to further narrow down the list to the top 2 or 3 based on pricing and non-price attributes.
The next step is to validate if the suppliers are legit. In my opinion there are two essential types of verification.
Type One is the Factory Audit. This is to verify that the supplier has a quality control system in place and they have the production experience to supply you with the goods they say they can make for you.
Type Two is an Operational Audit or Due Diligence. This is to confirm that the supplier has a good reputation and is financially strong enough to stay in business long enough to complete your order. In other words, they are not likely to disappear with your initial payment.
There are professional service providers available who conduct these types of verification at very reasonable prices. I highly recommend you engage professional support if you don't have the skill set in-house to audit factories in China on your own. Contact me and I would be happy to recommend the 3rd parties I use for verification. But for your reference, here are some other tools you can use on your own or in conjunction with those 3rd parties.
It doesn't cost you anything to ask for references. If a supplier can't give you a few happy clients to visit with…this is a big red flag.
Confirm that you have the right to visit the production line and check on your order. If they come up with a bunch of excuses why you can't visit, it either means they don't have the ability to produce your product and are scared that you won't like what you see if you visit or it could be as simple as that they are a trading company and worried you will cut them out of the supply chain once you realize they provide little value. Speaking of trading companies, sometimes, especially if your order is small, it makes sense to use them, but I hate trading companies that say they are the factory when really they are just brokers.
Ask to see the suppliers Quality Control Manual. If they don't have an ISO compliant, written quality management system…run away. If you want to see what a Product Quality Manual looks like, you can check out china company verification at the link below:http://www.cnbizsearch.com/search/cc/
Having verified that your suppliers are legit, the next step, and our next video, deals with negotiating the price and then moving into production.On that note, as always, I sign off-wishing you successful sourcing in China! And if you found the information in this video useful, consider returning the favor: subscribe to my YouTube channel, hit the "like it" button and post some comments. Or check out my blogs and monthly newsletter. If you have any questions, feel free to reach out via Linkedin, find me at the China Sourcing Academy or visit my company's website.
