Is this Chinese Vendor a Trading Company or Factory…they say they have 50 Workers? Basic guidelines to sourcing a new sewing vendors from a Canton Fair.

Attending the Canton Fair to source new vendors capable of delivering brand innovation and competitive pricing is a time-consuming task, but one that may be necessary to build a robust supplier matrix.

Preparation before attending the Canton Fair Phase 3 – 1-5th May 2016

It is important before attending the fair to identify what you are looking for so to remain focused on the objective.  The Canton Fair is huge with various product categories; it can be easy to get side tracked.

Below are a few basic preparation points;

  1. Pre-register, the Canton Fair has online preregistration, by taking a few minutes to preregister will save you a lot of time especially if it is morning of opening day.
  2. Always bring your passport, two passport sized photos and lots of business cards.
  3. Do your homework on how to get in and out of the fair as transport may be stretched; I suggest using hotel shuttle buses where possible.
  4. Know which gate you need to go to for registration.
  5. Understand what parts of the fair you want to visit before you arrive.
  6. List all the types of product you want to source, bring specifications, fabric samples or garments if available to cross cost with different vendors.
  7. Bring a notebook, stapler and pen to write notes about each vendor and pricing. A camera is also helpful to review or share what you found.  Remember to write the booth number next to the supplier business card if you want to revisit their booth.
  8. Finally, it is always useful to show the vendor your catalogue or some form of media that will showcase your business. Building meaningful and remember-able relationships is a two-way street.

Begin the sourcing process…

Find the area specific to your required product category.  Visually identify potential vendors from the garments on display, the marketing media presented and the message communicated by the representative of the business.  At times, this can be daunting as the signs affixed to the booth may not be from the vendor, rather the third party that booked the space and on sold to that vendor.

Once a possible match to your business need is found, begin asking business-specific questions.  One of my first questions other than what is the price of the selected items, is; “Is your organisation a factory or a trading company?”.  If the answer is we are a factory I then ask a barrage of questions to ensure they are who they say, one of which will be; “How many workers do you have?”

There will be a wide variety of responses to the question of which many are legitimate, what you need to identify are those that are not.  Numerous times I have been told 50 people, this is the representative telling me something I want to hear rather than saying they are a trading company.  My preference is only to deal with factories, not trading companies.

However, there are multiple smaller factories in operation with 50 people or less that are operating as trading and factories.  Their function is to serve as a sample room and to manufacture small, fast turn around orders.  They cut internally and subcontract sewing to small factories or outworker’s homes in adjacent proveniences.  As cost rise in traditional manufacturing locations, and skilled workers become harder to find this is becoming standard practice.  From a cost and quality perspective, depending on the partnership and control, this setup can be very workable, the biggest challenge may be reportability for social, ethical compliance depending on the level of downstream vendor reporting required.

The easiest way to know if the vendor is a trading company or factory is to get a copy of the business license, it will be clearly stated in the name, you can then decide if you want to progress with that vendor, is dependent on the value they bring to your business.

Price checking at the Canton Fair is standard to understand if pricing is competitive with your current supply base or margin objectives.  The challenge with pricing given at the fair, it can be a lure or the item may not be correctly costed as all business requirements surrounding the cost are not yet known by the vendor.  Don’t be surprised if down the track pricing increases unless you are very specific about your need and business requirement.

Be upfront with the vendor on all your business needs, so a cost indicative of your businesses need is quoted.  If you don’t, you will not get pricing that is comparable with existing vendors which may influence the selection process.  Eventually, all costs will need to be paid; the question will be by who, when and at what cost to the business.

Vendor Initial Assessment

Now you have attended the Canton Fair and talked to potential vendors.  You have received preliminary pricing and other assessments.  Prepare a full price matrix comparison by the total cost of ownership, analysing existing and new vendor’s price versus capability and initial quality assessment from samples received.  From the assessment decided which vendors can potentially add value to your business.

You are now ready to start the due diligence process on the selected vendors.

Vendor auditing…doing your due diligence

When auditing a vendor, it is recommended to look at the vendor’s facilities before entering the showroom.  Showrooms may have a product that is old, subcontracted or not representative of the current quality standard thus misleading.

While reviewing the vendor’s facilities, it is recommended that a checklist process is followed to ensure you look at all relevant departments, features and maximise the audit process.  Here are some of the key points that I always follow;

  1. Initial feel, go with your gut. If your gut says it is not ok even though visually it looks suitable or there is an immediate need, follow your gut and walk away.
  2. Sample room and development ability. Are the pattern people experience with your market and product to achieve fit?  Does the sample room have enough workers to obtain the sample output required for your business need and factories existing customers?
  3. Look in the raw material store, get a feel for the type of fabrics the factory is use to working with, it will give you an idea of the factories capability. Also, look for stillages of WIP, indicators that work is being subcontracted so to understand the full operations of the supplier.
  4. Ask and talk to the person who would be managing your business, do they speak the necessary language, do they have product experience, and do they have the ability to influence key management to get and maintain the necessary outcome? Good factory but unskilled control of your order will end negatively.
  5. Fabric, what do they do when the fabric is received, look at the inspection process and especially shrinkage control related to allowable tolerances and pattern adjustment to ensure final measurements will be within tolerance.
  6. Cutting, check that there are relaxing bins for knit, fusing machine temperature and pressure is monitored daily, the laid fabric is on grain and my favourite look at markers to ensure panels are on grain and do not overlap. Once the cutting is complete look how are the cut panels are bundled and number to control batching and shading.
  7. Sewing, ensure machine type match the product you want to make. Does the size of the line match the order size you want to place, 300 units on a 50 machine line will result in bad quality and unhappy workers, 20000 units placed on a 10 machine line will take many weeks to complete, does the layout match your business model needs?
  8. While it is best only to review factories when workers are operating machinery, travel schedules or circumstances don’t always make it possible. In which case if no workers are at their station, visually check for WIP to ensure the factory, is operational.  There are ghost factories and they are dangerous due to possible financial or ownership challenges.  Again if it doesn’t seem right walk away!
  9. Look at product construction through WIP. Do ask who are the quality supervisors and staff on the work area floor are to understand how many and what the points of control are.  Look at a product that has been final inspected by the factory, check that the stock is A grade before looking so the factory doesn’t tell you it is faulty.
  10. Look for signs of deception and fraud, check signs and even letterhead to make sure business names match business cards. Ask to see the business license and again check if the business name matches, check who is the legal owner, where is that person and what role does that person play, if they are a key decision maker but always at KTV this is never a good thing.  Ask are all factory facilities owned by the business owner on the business certificate, sometimes facilities may be owned by different companies, family or relatives, it is always wise to understand the potential risk.
  11. Double check pricing with an open cost break-down to understand the costing structure. Go through each point so you can understand their business methodology and where they make their margin.  Compare the quality of a counter sample the factory produced to price and overall acceptability to your brands market level.

Vendor signoff

If you are satisfied with the supplier audit, the pricing is competitive, and terms and conditions have been signed.  Move forward with a separate quality, social compliance audit and any other customer, business or market audit depending on the need of your business and destination country.

Ideally have a team sign off on a vendor, not a single person.  When the vendor is approved, move forward with a trial order and build production gradually through the initial understanding period.

Conclusion

Attending any fair or exhibition, you can accumulate hundreds of contacts to find a single viable business partner.  Each contact needs to go through a process of elimination, within the vendor selection procedure.  Vendors can be fast-tracked to achieve goals, but each point of control still needs to be completed.

If I find one viable vendor through the process of attending a fair, I will be delighted with the result.

If you would like to learn more or wish to discuss other supply chain challenges, please email us at info@idgc.co

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