Find and manage an overseas factory with a good sourcing agent
The original article is post By Elaine Grant in business.com http://www.business.com/guides/how-to-find-a-sourcing-agent-1210/
Are you looking for an overseas factory to manufacture your products? Rather than searching for a factory yourself – a task akin to the proverbial needle in a haystack, especially from afar — look for a good sourcing agent or sourcing company to do that work for you. A good sourcing agent, either in the U.S. or in country, can:
1. Locate factories that have equipment and talent that matches your needs.
2. Determine which factories or suppliers will meet deadlines and provide efficient service.
3. Negotiate good prices.
4. Place orders, handle currency issues and pay suppliers.
5. Inspect factories for quality and ethical practices.
6. In some cases, inspect your finished goods before they’re shipped to you.
Here’s what you need to know about choosing a sourcing agent:
Action Steps
The best contacts and resources to help you get it done
Visit trade shows
A good sourcing agent will have a deep understanding of your industry and of the country in which you want to do business. As a result, your industry’s trade shows may be the best places at which to locate a sourcing agent. Like the quality of products made by a colleague in the same industry? Ask him or her for sourcing agent recommendations.
I recommend: Find trade shows by industry or geography in the searchable online directories at biztradeshows.com or tsnn.com (registration required for the latter site). Global Sources Trade Show Center specializes in exhibitions for importers of Asian-made products.
Decision time: a U.S.-based, global, or in-country sourcing agent?
There are advantages and disadvantages to both domestic and in-country agents. A domestic sourcing agent may be larger and broader in scope – for instance, if you want to manufacture products in several countries, a domestic sourcing company with access to, say, factories in China and Vietnam may provide you with a single point of contact. On the other hand, local representatives can help small companies get started for relatively affordable prices; they’re often paid on commission, as opposed to larger domestic companies, which typically work on contract and expect a portion of the fee up front. In either case, ensure that representatives are fully bilingual.
I recommend: Visit Business-in-Asia for an excellent checklist written by an experienced sourcing consultant and Asian diplomat. The Outsourcing Network is one sourcing company with representatives in both Asia and the U.S. Global Sources maintains offices worldwide. To look for agents in specific countries, check out the trade promotion offices of those countries. Find a comprehensive list at Globus & NTDB.
Get the best prices
A good sourcing agent should get bids from several different factories for you. In addition, make sure that the agent doesn’t have financial ties to any particular factories. Also be aware that in some countries, sourcing agents receive commissions or kickbacks from the factories they choose; this practice can compromise their objectivity, to say the least.
I recommend: Global Sources produces multiple industry-specific sourcing magazines that can keep you up to date on Asian sources of, for instance, apparel and textiles or electronic components. Subscriptions cost about $75 annually. Visit the discussion forums on Alibaba.com to meet individual sourcing agents and representatives from small sourcing companies in China and to get advice on local customs such as kickbacks. Search for “importers” by product category on the Thomas Register. Get training or consulting on global sourcing from Bendorf Associates.
Maintain ethical practices
These days, it’s important to ensure that overseas factories aren’t employing underage workers or treating their employees poorly. You’ll need to inspect factories before you sign a contract, but you can also do business with sourcing agents who make a point of doing business responsibly.
I recommend: Search the sites of companies in your industry that have a reputation for ethical practices; some produce corporate responsibility reports in which you may be able to learn who their suppliers are. In the footwear business, for instance, Timberland adheres strongly to ethical practices. If you’re in the jewelry or gift business, check out Mercado Global, a nonprofit sourcing company dedicated to improving the lives of the women artisans who make products for their clients.
Tips & Tactics
Helpful advice for making the most of this Guide
Have a sourcing agent sign a non-disclosure agreement before you give him or her information about your new product.
Once he or she has signed an NDA, give the agent as much information as possible, including specifications, measurements, and drawings, about the product you want produced.
Once you’ve chosen a factory, start with a small product run and inspect it before it leaves the factory.
Once you’ve chosen a factory, start with a small product run and inspect it before it leaves the factory.
