Wednesday, February 18, 2015

Offshore Sourcing - Ensuring Your Success

Many Original Equipment Manufacturers (OEMs) are choosing to source the parts needed for production from offshore suppliers. If done correctly, this can help to keep you competitive in the marketplace, but one wrong step can have the exact opposite effect. Many larger OEMs conduct site visits with their offshore suppliers to ensure they meet the OEM’s criteria. Most small to mid-sized companies do not have the resources to do this, so here are a few ideas that won’t require a 12,000 mile trip while ensuring the best possible outcome.

Hire an Offshore Consulting Company: This is a neutral third party that can qualify the supplier based on your criteria at a fraction of the cost of time and travel.  As an added benefit, you can also have them inspect your shipments before they get put on the water. By conducting the Quality Control (QC) inspection prior to shipping you can eliminate any concerns and ensure quality at the source.

Use “Watch Dog” Agencies: There are many companies and associations that are interested in protecting this trade, and many of them offer industry reporting. These agencies can help to verify the reputation of the supplier prior to doing business with them. When possible, use multiple agencies’ statistics and opinions to qualify potentially new vendors.

Use only high ranked vendors: Many of the above online resources have their own vendor qualification processes that can you can use. Our Recommendation is to only choose suppliers that meet and hold the highest standards of set by these online sources for a minimum of three years. We also suggest you augment your own procedures to include these processes to help avoid qualification issues.

Age of the Business: Make sure the company you choose has been in business three years or longer. A standard practice for off-shore vendors is to simply change their identity at the first sign of trouble. If they have a minimum of three years of service it can help to ensure they are a stable and reliable source. 

Look at Ratings and Reviews: Check with internet sources that give OEMs the power of rating their offshore vendors. Alibaba, and Global Sources are good examples of this type of service. 
Ask for references: A common practice in qualifying domestic supply partners can also be a powerful tool in qualifying offshore vendors. Asking for references of domestic companies already using their services can tell you everything you need to know. Additionally,  requesting  banking and trade information can be a major qualifying factor.

Ask a Trusted Domestic Supply Partner: The majority of OEMs have existing relationships with vendors they trust that may have already qualified reliable offshore vendors for their own supply chain. Getting a referral from such a source can go a long way in pre-qualifying the vendor you may ultimately end up choosing.
By taking the time to implement these simple steps you can dramatically improve the chances of finding the right offshore supplier while mitigating the risks associated with a poor choice.

Glen Wayne

CEO, NAS Electronics Manufacturing

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