Finding Suppliers in China

If you're making a product for sale, then the specific cost of manufacturing of that product will make all the difference to your bottom line. It's no secret that Chinese manufacturing can deliver a wide variety of products are very competitive rates.

If this is your first foray into the world of outsourcing manufacturing to China, you need a smart approach. Sourcing from China comes with its own set of challenges that need to be overcome. Here's how to not make it a problem.

Determine Your Needs

 

Sure, you know what you want to make but in China there are different approaches to each manufacturing contract. Basically there are big corporations that will take on the job or farm it out to a 3^rd party vendor. As a small business owner, you might want to seek out the smaller family owned business for the startup. This type of company will probably be in a better position to provide you with direct access and support. You will avoid the markup when a larger manufacturer subcontracts out your job.

Research All Angles

Before you book your first flight to China, you'll want to do a lot of research. Build up a database of potential manufacturers by searching trade directories, chamber of commerce listings in China, Export Development Corporations or business associations. This can happen when you research comparable products to yours online. You'll start seeing some of the same company names popping up. Clearly these are the dependable factories. They should be your first stop.

Pick Your Top 15 Suppliers

Once you've put a list together, start making calls or sending out emails to set up relationships. You'll want to find out all the costs associated in hiring this company from raw materials to transportation. Make a list of questions that you'll be asking of all of your suppliers and then you'll be able to narrow down the list to your top 15. These you might want to visit in person to make sure they can handle the job. It's going to take time to find the best fit for your company's needs but you're better off exhausting all the possibilities before firing up the assembly lines. Do not put your entire manufacturing assembly line on one company. Spread the work between two or three companies depending on your volume of work.

Get a Local Guide

If you are traveling to China you'll definitely want to find a local business representative to help show you around. Hopefully, this will be someone who comes highly recommended and who you've set up arrangements with before landing. The best guides are usually the government trade representatives between your country and China. You don't want to ask around at the airport for a guide!

Key Components of a Manufacturing Production Plan

If you’re in the business of manufacturing a product then you need to develop a thorough production plan. That applies to everything from making “widgets” to sandwiches. The type of effective production plan depends on your business model. It will help if you can hone in on what type of manufacturing production will be most beneficial to your business. Based on that answer, you’ll be able to make informed decisions about inventory, material purchases and transportation. Consider which of these production plan strategies apply to your business:

The Demand Matching Strategy

This type of manufacturing applies to a company who is only making a product to exactly match the demand for that product. A restaurant only makes a single meal when a customer orders that meal. They have all the ingredients on hand for the meal but don’t go into “production” until the order is placed.

The Level Production Strategy

In this plan, a company will make an average number of products to match a projected demand for those projects. This is a consistent approach based on tangible order numbers. If that restaurant sells an average of two dozen chicken dinners every night then it makes sense for them to prep two dozen chicken dinners every night in anticipation of the orders.

The Stock Making Strategy

This strategy involves making product before a customer would place an order. The benefit of this plan is the ability to make a master production schedule that will determine a specific set of goals per manufacturing run. You’re going to make 100 widgets every day to meet any anticipated demand over the year.

Once you have settled on the type of manufacturing strategy you’ll be adopting, you should plan out a production schedule. Don’t guess as how much time or labor would be involved in making a product. You should conduct test runs of the manufacturing process to get a baseline for those facts. That will help you estimate what a typical run of a product will cost in terms of time and work force.

The test run can also help you develop a schedule for ordering supplies. If it takes a single day to create a product and you plan on having a consistent five day run then you can figure out how much materials you need on hand to complete an order. It all comes down to a matter of organization and scheduling. Don’t leave anything to guesswork.

Buy American and Canadian Too!

The American Recovery and Reinvestment Act of 2009 was the landmark US$787 billion economic stimulus package intended to jumpstart the ailing U.S. economy. While it contained a variety of elements, one of the more controversial clauses was the "Buy American" stipulation. In order to qualify for government contracts, U.S. companies were obligated to buy only from American suppliers and manufacturers.

As both the U.S. and Canada rely heavily on exports between the two nations, "Buy American" was met with strong opposition from both American and Canadian business. Supporters of the clause argued that America needed to boost sales and manufacturing at home. Opponents noted that supply chains north and south of the border are so intertwined that all parties involved would be hurt, not improved.

After months of deliberation between the nations, a multi-faceted trade deal has been reached between Canada and the U.S. All though yet to be fully ratified (the U.S. requires an executive order while Canada requires each province and territory to sign, as well as the federal cabinet), the agreement reflects the spirit of cooperation that has long existed between the two neighbours.

Canadian companies will now be able to bid on procurement contracts in 37 U.S. states. Similarly, U.S. suppliers will receive reciprocal access to provincial procurement. As the possibility of future U.S. federal funding is quite realistic, the current deal contains a commitment to fast-track negotiations on possible "Buy American" stipulations.

As a result of this reaffirmation of the strong links that connect the two nations, talks in Canada of promoting "Buy Canadian" retaliatory actions have been suspended.

Rather than just looking at what's good for each other, both Canada and the U.S. have agreed that maintaining the long-standing friendship will have a positive payout for both countries.

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