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Internet Sourcing: Easy To Do, Hard To Control

April 23, 2008

Over the last 10 years, on-line purchasing by the general consumer has become commonplace.This trend will continue to grow at double-digit rates for the foreseeable future. Most of the products are high-quality brand names that are recognized by the public. This buying process saves money, transaction time, and allows buyers to return products for a variety of reasons at the supplier’s expense. This is all part of the doing business in America.

Although this works adequately for the general consumer, common sense mandates that it is not a process that would be recommended for manufacturing companies looking to outsource products or processes. Yet, many SMEs fall victim to the allure of on-line sourcing only to find out it costs them money, time and poor quality for their end customers. This means that people often source without having seen the facility and often buy from trading companies, which use multiple sources for the same item. The results are inconsistent supply and quality.

At International Innovations(II), we thought we would test this on a real client. A specific customer of ours was looking for cable assemblies and harnesses used in the electronics industry. We did an Internet search and identified the most popular sources for these products. We were given prices that were very competitive, in fact they were over 25% less than the normal sources we have had relationships with for over 5 years. Next, we took the client on a tour of 4 “potential suppliers”, starting with the two found on the Internet and finally to our preferred source.

After visiting the first two suppliers, the manager of the client was very upset and stated that we were wasting his time. Furthermore, he felt that the suppliers he had just seen were a “mess” and he would not want his product made there. We calmed him down and explained that there was a reason for this and went along with our sourcing process. Once the final plant tour was made with the sources we have used, the client was satisfied that high quality products could be sourced at a competitive price from the PRC.

This real life event illustrates clearly what a client may have ended up with had they not engaged someone who knows the industry, market, and supplier base. Getting a good quote from behind a desk 8,000 miles away is easy. Controlling the costs, delivery, and quality is very difficult if you don’t know the suppliers. Sourcing critical products for your operations and/or end customers requires having strong contacts that can help find the right companies in Asia.

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