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February 27, 2016

The Same-Supplier cycle

by mikediliberto
Having been involved in Chinese and Asian sourcing and manufacturing for more than ten years, I have a lot of experiences to share, and I’ve never been shy about meeting up with fellow professionals to swap stories over some food or drinks (hopefully both).  A while ago I met up with a fellow Thunderbird alumni to discuss challenges he was experiencing in his Shanghai representative office.

Our conversation started with an opening line that I have heard more times than you can imagine: “I keep telling our staff that we need to find more suppliers, to diversify our supplier base and get better prices. Yet time and time again, our China staff resists. They take too much time or make up excuses and before we know it, the only supplier that we can place our orders to are the same ones we found so many years ago. Every. Single. Time. For years now, our office has been giving almost all of our orders to the same five suppliers, and the kicker is, those suppliers aren’t even that good!”At one time or another, many of us have fallen into the same-supplier trap, and digging out takes work.

The reasons for getting stuck in the same supplier trap range from benign to downright criminal. In this multi-post series, we will explore the reasons that firms get stuck and our strategies for getting out. Before we begin though, it is important to highlight that your existing suppliers are your suppliers for a reason, and some of those reasons are good reasons to keep them around. Like every other relationship, the vendor-client relationship is based around having a common outlook on pricing, lead times, workmanship, and many other factors. We’re not talking about finding new vendors for it’s own sake, but rather to help in solving the sourcing challenges that so many foreign firms face when operating overseas.

Reason # 1: Not having any context

Of all of the causes of the same-supplier trap, this one is simultaneously the most innocent and the most frequently occurring.  We take for granted that we, as westerners, have many years of experience and context in our industries, which allows us to search for what we need much more effectively. Tacit knowledge is invaluable but hard to train into people quickly.

I remember one time we needed to find some furniture sliders. These are a fairly common item in our industry, we use them in place of rubber feet for fixtures that will go onto carpet and need to be moved easily.  It’s a fairly simple piece of hardware, basically a teflon-coated disk mounted to a short threaded rod, which allows these sliders to thread into the bottom of the fixture in place of feet.

So we handed the request to find furniture sliders to one of our team in China, and she dutifully got to googling (Well, Baidu-ing, Google is generally not available in China, a formidable challenge considering how many searches of the internet start with Google; as with everything you only realize how much you need it when you don’t have access to it at all).

A few hours later and I check in; “Did you find the furniture sliders?” I ask

“No, I couldn’t find them”

“Why didn’t you come ask for help?”

“You weren’t around.  I figured I would send you an email later”

I roll my eyes and pull up a chair. I desperately wanted to yell out “This is why it takes a week to get a single thing done when I’m not here in China!” but I managed to keep my internal monologue internal, at least for the time being.

“Ok” I said “Lets do this together.  Show me how you’re searching” If China has taught me anything, it’s that I would probably be a good professor.  Of what I have no idea, but filed away in my mental plans for a future retirement career, “professor of something” is high on the list.  Being patient and teaching are definitely skills I’ve honed, especially during my years living in China.

She pulls up the Alibaba website, and I watch as she types in the Chinese word for “Furniture” and “Sliding”.  0 results.  She turns around and looks at me “See, told you.  Maybe this type of thing is not available in China” My head was spinning; she’d obviously spent less than ten minutes before giving up and moving on to some other thing.

“Nonsense.  Here, lets try in english” One thing you will find is that Alibaba english (alibaba.com) and Alibaba Chinese (1688.com) return totally different results, and for the most part, I’ve found suppliers put a lot more effort into their English language presence; not always but in general.

I reload Alibaba in english and type in “Furniture Slider” and smugly click the search button.

0 results

Damn, I thought.  I really thought that would work.  I tried a few other things “Teflon Furniture Slider”, “Teflon carpet feet”, “Fixture glides”. Nothing was working.  My mind was racing. I mean, COME ON there has got to be a supplier of these types of things here in China.

Now, luckily I’ve been in the business long enough to know that Teflon is just a brand name for a coating called PTFE.

Time for the hail Mary pass:  I type “PTFE Sliders” into the search box.

BAM! Hundreds of results and lots of photos fill the screen that look like exactly what we are looking for.

So, I click on a few links, and tell my Chinese associate to call up each of these firms and find out if they have the part we are looking for. I forward her the drawings that we received from our client back in the states, and I even cut out the one page we needed which showed a detail view of the slider.

Once again I leave and stop back in a few hours.

She looks somewhat defeated as she tells me not a single firm has hardware that we can use.

In disbelief, I ask why. (Internally I was yelling “OH COME ON!)  She goes on to explain the the thread shown in the drawing was 1/4-20 but all of the suppliers that she called only had metric thread.

I shake my head again and tell her to go back, call the suppliers again and see if they have something similar that we can use. She returns a blank stare.  I quickly edit the drawing to show “M4 or M5” where it previously said “1/4-20” (In the short list of things in your China toolbox should be a way to electronically alter a PDF; I have a copy of Acrobat Pro on my macbook that has paid for itself many times over; iAnnotate on my iPad has paid similar dividends).

Finally we get a few samples on order; at least one of them will hopefully be from a real company (I am working on a follow up report on how to tell the real suppliers from the brokers and agents, stay tuned)

She comes up to me a while later, looking serious, and says “Mike, I still don’t think any of these samples will work for us”

I was taken aback for a minute and asked why. “Because, our drawing shows the threaded part is 25mm but all of the samples are either 20mm or 30mm; I’m just not sure they will fit”

And so here we have highlighted one of the primary points of failure for so many enterprises in China, insidious in simplicity yet devastating in consequence.  So what can be done?

Which brings us to one of our most fundamental lessons:

Building quality product starts with good design and good information.

With that mantra in mind, where we see the greatest return is in providing project kickoff documents that are far beyond the typical “here’s a rendering, please give us a price” fodder that most US offices fling over the fence to their “guy in China”. Rather, we encourage our people to look for and identify components of our project that will be particularly challenging, and start researching those things.

I recommend going a few steps further and even performing some basic company research, and provide the links to potential suppliers as a part of the kickoff document.  Alibaba and Global Sources are, in my opinion, the two best places to start. Remember that the items and contexts you may believe are common knowledge are likely not to be common knowledge overseas; I used to think furniture sliders would be common knowledge, but as you can see, now I know better.

Another really important thing keep in mind is that your ability to search is likely to be better suited to the things that you need to find, compared to your Asian sourcing team.  Primarily because, as previously mentioned, the majority of suppliers put more effort into their english language presence compared to their local language presence.  Also, Google is a really powerful search engine, at least for English language queries, and for mainland China, Google is a tool that is not accessible to your team members located there.

Lastly, It’s extremely helpful to contact the Chinese offices of global material suppliers.  Almost all suppliers of branded plastics, fasteners, power supplies, and the like have at least an office in China, if not several.

The bottom line is, start your projects with far more information than you would while in your home country, to make up for lack of context as well as to give everyone a head start on your expectations for the finished goods.

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