What is sourcing and what does it involve?
Product sourcing is a term that refers to all steps involved in identifying, evaluating and purchasing products from a third-party manufacturer. Depending on your manufacturing needs, sourcing may also involve dealing with logistics companies, packaging suppliers and shipping services.
It's a process that must be handled with extreme care, considering improper product procurement can lead to massive losses or even compromise an entire brand's reputation.
There are four basic steps to product sourcing:
1) Research – Finding reliable suppliers takes time and research. You'll need to search local directories, read reviews online and ask around at industry events like trade shows or conventions.
2) Negotiation – Once you've found potential manufacturers, it's time to negotiate price. Here you'll need to know what comparable products sell for in your area so you don't end up paying too much for subpar workmanship.
3) Communication – Your manufacturing agreement should include detailed timelines and expectations from both parties. Remember that even though you may be outsourcing a product or service, communication is still key and can help ensure things run smoothly from start to finish.
4) Control – You're never really done with sourcing until you have a product on your shelf or in your customer's hands—and that means staying on top of delivery dates and shipping details as well as conducting regular quality control checks.
The benefits of sourcing
Many people wonder why businesses need to use a supplier in the first place. A lot of people think it’s as simple as going to a wholesaler and purchasing a product at the lowest price possible. Well, things aren’t quite that simple, and many fail to realize there are some big benefits of sourcing the right supplier.
If you want to succeed with your business and provide high-quality products or services, properly sourcing is necessary to turn around the trend of poor quality products flooding the market today. Finding a supplier that offers good quality is worth the extra time and effort because quality control will save you money in the long run.
You should take quality into account when you’re choosing which suppliers to work with. In fact, it costs way more to bring a product back into production than it does to source it correctly in the first place.
In other words, if you choose a low-quality product and find out later that it doesn’t meet your standards, sourcing another one could cost far more than just taking the extra time upfront to properly source products in the first place. Finding good suppliers is not an easy task and requires lots of research.
The different types of sourcing
One of the most common questions businesses ask is, how do I find the right suppliers?
There are four different types of sourcing strategies. Of course, some strategies may be a combination of the following.
First, there is traditional product searching. This consists of searching through catalogs or visiting trade shows.
Second, there is simple supply search (or value analysis). This consists of taking existing products and simply modifying them to fit your needs.
Third, there is reverse engineering. This involves taking a competitor's products and learning how they work in order to make products comparable to theirs but cheaper and more efficient for you company to sell.
Fourth, there is market segmentation (or mass customization). With market segmentation, you take an existing product and add different options to it so that customers can choose exactly what they want.
How to find the right supplier for your business
Keep in mind that every supplier is different and requires different qualifications. Because of that, there’s no one-size-fits-all process to follow.
The best way to find the right supplier is to research multiple companies and learn as much as you can about the specific services they offer, then see which potential partners might be a good fit. You should also consider things like price point, quality level, experience level, communication skills and more.
Understanding what makes a good partner will help you narrow down your search before making contact with any potential suppliers.
Developing a relationship with your suppliers
It's important to build a relationship with your suppliers, both to get the best price and ensure they deliver as agreed. If you develop a good relationship with a supplier, they're more likely to have your back if there are issues in the future.
Establishing a healthy relationship takes time, but by doing so you'll gain valuable information about what it takes to produce the products or services you need and eliminate potential problems down the road.
This will ultimately save time and money while improving quality.
If you are looking to start or improve the sourcing process, please reach out and learn more about how Factored Quality can help. Contact us for a product demo or follow us on all social media platforms to stay connected.