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The process of testing your products is also a good gauge for testing the suitability of your supplier – even legitimate suppliers have been known to take advantage of inexperienced buyers. So after you have checked the credentials of your supplier, your next challenge is to minimise margins for error – those parts of production where you may lose value.
Here are the most common ways of losing value when buying from overseas suppliers, after you have agreed on price and signed a contract:
- Material quality – if not specified in detail, lesser quality materials can be used than the ones you might have approved of for the sample. So work to understand the material composition of your products and their components and be very explicit in defining these requirements in your order.
- Quality in production – your order may be produced with fewer resources, less quality control and staff assigned to the job. All of these shortcuts in resources will translate to poor quality product.
- Additional costs – finalise product specifications prior to the agreement, these additional requirements are costly.
- Production turnaround – if your order is small it can be put to the back of the queue, so it can take two months or more to produce – meaning your products hit the market well after you had planned. It may be a small issue for the manufacturer but can have devastating impacts on your business, particularly if you have a seasonal product.
- Incoterms/Shipping terms changed – switch from FOB to Ex-Works, so you are then responsible for freight to port and export costs. Also recently a client reported that express air freight was switched with cargo freight – delaying her production and saving the factory about $1000
Like to know how to address these factory issues – get started with My Import Label