How to Verify Your Vendors and Why You Should

Our world has become a lot smaller, particularly in an area like manufacturing and retail, primarily because of the international economy. What used to be an isolated process in American production, now is a lot more diverse and complex, making a competent sourcing company invaluable. That said, there are a few things you need to avoid in order to ensure you and your manufacturing sourcing company can succeed.

Understand the Law

Most underdeveloped or developing nations do not have the same laws as it pertains to manufacturing component’s materials or the labor used to make them. In part, that bolt that costs less than half an American made counterpart is that inexpensive because of labor laws and prevailing pay scales. Understanding the laws where your sourcing company does business can help you avoid legal entanglements as well as public relations problems.

Evaluate Your Vendors

Your sourcing company will do a good job vetting the vendors you will work with, but they are not perfect. Once you have identified a promising sourcing market, investigate the key players and evaluate quality, adherence to deadlines, timely delivery, etc. make sure you know the type of company you are going to use for your products so that you are not surprised with delays or cost overruns that harm your market viability or eat into your profit margins. You also should keep on hand a list of alternative suppliers, in case the one you are using falls through.

Assess Your Price

Make sure that the price you negotiated is actually the best price you can get. Look at the pricing structure at each phase of getting it to your facility. That means examining raw materials, manufacturing costs, transportation costs, and any associated fees. No matter what your sourcing company recommends, do not agree to anything in writing until you understand the contract you will be working under and all of its cost potential.

Verify the Materials

It was a shock a few years ago when a major box hardware retailer found out that many of its foreign-made business supplies contained toxic materials. In the company of the manufacturer, standards for safety and quality did not come close to what we expect here in the USA. Make sure you understand what is going into your products in terms of raw materials before you agree to any work contract.

Your sourcing company will be a major asset in helping you identify ways to get your products to market quicker and less expensively while not sacrificing quality. That does not mean, however, that you should not do your homework.

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