[Floor Talk 2] Right Customer Vs Right Supplier

Posted on 18 April, 2014


Author: Peter Lou, VP Operations, UT Metal





Right Customers Vs Right Suppliers


 



In the last article, I wrote what I think of your China sourcing strategy.


It's purely from a Chinese manufacturer's point of view and I guess it's helpful.



Here is the link just in case you missed it out.


http://www.ut-metal.com/News-Events/floortalksone.html






Now I am assuming that you are do sourcing in China by yourself.

 


The key idea I want to communicate is:

You need to follow a process.



And ensure 100% that you are the right customer and you are looking for the right China suppliers.




You can not just pick up your sketches/drawings, browse a website, send a few emails, and see where it takes you.


 

That's what we're going to talk about today.



Let's start looking at yourself first and make sure you are ready.




Who are the right customers



It might look fresh to you.


Yes ..... we only care about the right customers.



Sometimes when a few customers come to us, I always try to manage expectations. We even encourage them to keep or maintain their domestic supply chain while setting up the new China connections.



These group of customers are not ready yet and they are not the right customers for China suppliers.




"When every time the client is ready, then right suppliers will appear."


That's true.



If you are not ready, you are likely to be rejected by over 90% of the good China suppliers.


You need to ensure that you are the right customers.




A right customer is able to understand themselves clearly.



Here are a few questions to ask yourself:



  • Are your project timelines too urgent?
  • Are your product design ready or fully completed for manufacturing?
  • Are you looking for a supplier with strong engineering capabilities (to develop new products)?
  • Are you finding a supplier to have a wide range of designs that you can choose from?
  • Are you focusing on low cost? Or on high quality? (you can not say both)
  • What sizes or how big should your right suppliers be? 


............



These are homework for you.



If you can answer these questions, then you are almost ready now.



A right customer is able to choose the right level of China suppliers.



Below are some levels of the Chinese factories around us.


China factory levels


This is important to continue our discussion on this topic. You will see China factories falling into these 3 levels, with huge difference on their performances and prices.





Who are the right suppliers



If you are ready, the next step is to pick up and confirm the right China suppliers.



Let's look at how to find the right China suppliers.



It is basically in 2 steps:


  • Identifying potential suppliers (Trade shows, Google search, B2B,etc)
  • Narrowing down your list to 5 suppliers and confirming the last candidates to 2-3.



On this topic, you must have plenty of experience and I do not want to spend much time on this.



The key issue is that you are finding the suppliers that are with a proper size to fit your needs.


We still get a lot of the inquiries for 10 pcs or 20 pcs of products here at UT Metal, we would say, " please try Aliexpress.com or some other B2C platforms, they sell much low volumes".




Here is my understanding on the size of the right suppliers:



1.  If your purchase volume or value is very small, go with a agent or a trading company and they will take care of your productions at a level 1 factory and (hopefully) follow production closely.



2.  If your volume or value is large enough, go with a level 2 supplier directly at a scale of 150-300 workers.



3.  If your orders are considerably large, then a few of level 3 suppliers are good. They will be fighting actively for your business.





Motivate your suppliers to respond




When you find some suppliers on the internet, the next step is to send your e-mails out and motivate them to respond to you.



Not all will reply you.



Most China suppliers get too many inquiries daily and they will choose which ones to respond, especially when most of the sales people are junior or even the fresh graduate.



They will ignore your inquiries sometimes.



So please ensure your e-mails are getting to their attention, with first message short and a very clear CALL TO ACTION (please get back to me if you want to discuss more information about our requirements).




Please do not blame us too much on this.

We care about your big plans but it's hard to understand your needs in such a short time.




If you have all your product specifications ready, consolidate in one document,send across and get their feedback. You should ask a few questions at this stage to test them and see if they are answering them professionally or not.



Here at UT Metal, all is straightforward and there will be a clear statement of CAN DO and CAN'T DO. But not all work in this way.



If someone always says "it's fine" this is not always a good sign! It may means "it's fine to this sales people and not to the engineers". It's your interest to ensure the communication should be done on the engineering and production level.



Not just among these junior sales persons.



And then ...Make sure you are responsive and fast in responding to their questions.

Some will propose questions ..... this is a good sign anyway.



It's important and I am sure if you are ready, you should have a team to handle this job quickly, and to he point.



Complete this screening process in just about one week. Call them if you can and tell them that you are spending time getting to know them. From there you will then know if you are dealing with a right supplier then know how to plan the future.



Responsiveness is a good way to keep arousing their attention before your inquiry will have gone cold.



No joke.





Some of the big mistakes to avoid.




Mistake One .....  Too tight schedule



If your project is too tight, do not go with China sourcing.

You will end up with nightmares.



When we see such customer demands, we will usually reject and do not want to take their orders.



Everybody is not willing to take the job that go beyond their capability.




So do we.



While China has some amazing pricing, it is not known for short lead times. You know manufacturing is often complicated and every process takes time.



Here at UT Metal, we initially work to our standard lead times.We do help some urgent shipments but not all.



If you are not our key customers or if your product is new to our staff, you are not likely to be on this list.



Some suppliers will take your order anyway and if so, you need to be pretty careful.


It would be lucky for you if it ends up with timely deliveries.

You can not just place the PO,sit back knowing the hard work is going to done and wait for the order to show up on time without a lot of drama.




Mistake Two .....  Price just too good to be true.



Sometimes the prices are just too good to be true. In China, some suppliers know full skills to increase the price along the way if they want to do business with you.


Or, some other suppliers simply don't know what the costs are and where to get them manufactured. ,



So, how to do?



Contact more and get quotes from different suppliers and get to know what's the "market price".  Keep to the average and prepare a few questions to double confirm. 



Make sure if you are focusing on the above-average quality, then choose the highest quotes.

Every cents count and it's worthwhile.




Okay for now. Am I talking too much on this?



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