Sourcing with Steve
India is amazing and is packed with potential. This short series is designed to share some of the process and learning of the international sourcing process. This mini-series is focused on India.
At my first stop the factory in the state of Rajasthan had me take a seat and then they wanted to have a short welcome ceremony with myself and my colleague who was traveling with me.
To get to factories it can take a long period of time. Typically I will only schedule one factory per day and then I schedule other meetings at night.
So the process is to go early to the factory often leaving at 7am and then come back to hotel for late afternoon meetings between 4 and 6. The hotel meetings can be a combination of pre-qualifying factories before investing time in a trip, meeting with logistics, supply chain management or other types of meetings to develop or reinforce relationships.
Relationships Are Currency
The most important lesson I have learned about sourcing or doing business in general is that relationships matter. Even the process of finding the right resources can come directly from your current network. We asked a number of global contacts prior to our journey for help in making contact with professional level organizations that are capable of industrial scale capacity with extremely high quality. We’ll talk more about those specifics in part 2.
As a business principle we focus on finding people to do business with who share our values and our vision of a shared future.
We do not try to make things work that are not workable.
In short: We do not do business with a**holes, liars or cheats. There are good people in every corner of the world and as long as the business is mutually beneficial there can be a long term outlook.
This does not mean that we lose our fiscal discipline. Our buying decisions are dictated by our selling capabilities which are heavily influenced by our sales channel competitive landscape.
One other important point is that I am a capitalist and do not take a political position about sourcing. In other words, the sourcing decisions are based on what will work best for my customer first and foremost. This means that as much as I may see a tangible benefit for a local factory or community with our ability to purchase at volume – that benefit is secondary to the economic win for my customer and the viability of the margins for my company. Otherwise it’s all an exercise in vanity.
Don’t lose site of the the laws of economics. The customer will buy high quality products and they will generate word or mouth and positive reviews on products that are literally “note worthy.” If the product or experience is not note worthy they will not make a note of it – therefore creating a broken link in the supply chain.
If the customer is happy and the brand owner has a margin then you have the potential to reward the factory with continuous business that is sustainable and long term. Only then are the foundations in place to make a lasting impact on that local community.
Sometimes we observe entrepreneurs who tend to get those steps backwards thinking about the good they can do in the factory community and pushing the rock up the hill instead of the other way around. That will not work long term. Customers must come first. Always.
We follow the golden rule and treat everyone the same way we wish to be treated. So our customers should expect excellence and our supply partners and factories should expect no less.
As I invest so much time in the car we will often have very productive conversations on the drive to and from a factory.
I recommend asking the factory to organize the transportation and during at least one leg of the journey you can invest time in getting to know your counterpart that represents the factory.
So I start with basic questions like:
- How long has you been with the factory?
- What is your professional background?
- What’s the factory history?
- How many employees does the factory have?
- What are the hours of operation?
- What is the current total capacity?
- What is the available capacity?
- Does the factory have customers in my primary geographic market already?
- What is the % of export vs domestic business in their operation?
- What are their best sellers?
- What products do they see emerging as new trends?
- What specific skill or factory attribute sets them apart from other factories?
Those questions are just the beginning of the process to understand a factory and begging the vetting process.
There is a personal aspect and there is a technical aspect to every factory discovery. Both are important. Both must meet the expectations of the buyer, which in this case is me.
Long drives give the conversation and relationship time to build and can also be an enjoyable experience to learn about differences around the world.
That’s it for Part 1.
Part 2 will dive into the factory visit and establishment of quality as a cornerstone of your process.