Phase 0 - Multiple Sourcing Options

Given all the global sourcing risks, it’s important to work with a supplier that can identify and execute multiple sourcing options. When things happen, it’s important to have a plan B, and the right partner understands the significance of a contingency plan. If tariffs are impacting one particular country, there are other places to go. When quality expectations aren’t met, there are other factories lined up. Using an experienced, reliable supplier that has the right network, processes, resources and infrastructure can make all the difference.

Phase 1 - Pre-Production

Once you have a supplier, the next phase is to evaluate the factories they use. A comprehensive factory evaluation starts with a physical inspection. While “walking the floor” it is important to take note of how clean the production environment is and storage areas for raw materials and finished goods. The condition of the equipment can offer insight into the quality of the operations and products that are produced. This portion of the inspection should also include a review of the products produced at the factory, as well as an understanding of current custom buying. The second element to a comprehensive factory evaluation is to review the procedures used throughout the manufacturing process and the documentation in place to validate them. Typically, this portion of the factory evaluation is conducted with top management in each of the functional areas. As mentioned earlier, social compliance should be reviewed and validated at this point. It is recommended that a factory review does not stop short at a review of just the factory, but a study of the upstream suppliers must be conducted as well. This is very important to ensure that the raw material sources that the factory works with are legitimate.

The third and final step in the factory review process is to evaluate everything you’ve learned and decide if you trust that your business is stable with that factory. It should come as no surprise that the majority of factories audited do not pass. This doesn’t necessarily mean that factories that don’t pass the evaluation process are not worth working with. A few minor corrective actions may be able to bring them up to a passing level. Now that an approved source exists and a sourcing decision has been made to work with them, the focus needs to shift to ensuring that all product specifics are defined so there are no surprises when delivered to the final destination. This is done through the use and approval of technical drawings, physical sign off samples, color range boards (light, standard, dark), and item specific sheets or spec sheets. These tools will prove invaluable during the next phase of the global sourcing process.

Phase 2 - Production

The ultimate goal of a well-managed second phase is to ensure that the customer gets what they want, when they want it. A perfect scenario would have “feet on the street” who are “walking the floors” when production is underway. Many customers can save money by working with a sourcing partner that has the resources to cover numerous, if not all, production runs. Before pressing the green start button on mass production, it is best to ensure, through a production line start procedure, that the initial production parts match the quality control tools established in phase one.

As production progresses, detailed communication plans should be sent from the factory to the customer. This can be done weekly through an open order report process, or even daily if an event occurs that may ultimately delay the confirmed ship date. Finally, advanced shipping notices or cargo bookings should be made at least two weeks prior to a communicated ship date. This will ensure that the cargo capacity will be available with the freight forwarder or steamship line directly. Also, this will allow for scheduling of a final inspection, which will be discussed below.

Phase 3 -Final Inspection and Logistics

Up to this point, there has been a lot of effort and communication put into the development and production process. Now is when the rubber hits the road. It would be a shame to have everything fall apart because of a quality control issue or a shipping delay. Prior to loading a container and sealing the doors, there should be a final inspection of the goods. The tools used during the final inspection are the same ones that were established earlier and are guided by acceptable quality levels depending on the full size of the production run. Assuming that the goods pass final inspection, they are then loaded on the container and delivered to the port of loading in preparation for their journey to the customer. This is when an outbound quality control report should be sent from the factory and kept on file. If the goods do not pass final inspection, a plan will then be put in place to sort out the defective product and replace if necessary. Assuming the proper measures were taken up front to ensure the quality of the goods, the percentage of shipments that do not pass should be very small. However, it is much less expensive and time consuming to fix a quality issue at the factory than on a U.S. loading dock, not to mention the dissatisfaction and lost business that may result from delivery of a defective product.

The logistics process contributes one third of the overall project management timeline. The only way to gain true visibility into this part of the process is to work with a steamship line or a freight forwarder that offers on-line track and trace tools. Continually working with a freight forwarder vs. one steamship line ensures access to many steamship lines that fall under their umbrella. This greatly improves the chance that a shipment will move according to schedule and not be bumped due to over-capacity. On a final note, working with a supply partner that is C-TPAT (Customs Trade Partnership Against Terrorism) certified is another way to ensure that product delivers on time. C-TPAT offers businesses an opportunity to play an active role in the war against terrorism. Essentially, this means that U.S. Customs recognizes them as a trusted importer doing business with trusted exporters, which ultimately leads to a reduced number of inspections which can delay delivery.

Getting Started

Getting the best value out of global sourcing requires time, resources and expertise. Many companies invest internationally and build experience over time. There are also sourcing partners that have the experience, people, and processes that are dedicated to understanding and managing all of the complexities involved in delivering a global sourcing solution.