After having worked with literally hundreds of foreign (mostly American and European) companies that outsource their product manufacturing, I have become convinced those who put in real time and effort at establishing a good relationship with their overseas product suppliers have far fewer supply problems than those who just phone it in.
And I would venture to say that Jacob Yount agrees with me. I say this because Jacob recently did a post, 7 Ways to Keep Your Supplier Motivated, setting out what you should be doing to solidify your relationship with your foreign product supplier, though Jacob dubs this relationship building supplier motivating. The below are my two favorites from Yount’s seven, with my own comments in italics.
1. Educate / Show. “The client who shares knowledge with vendors is a client who motivates vendors. This form of education gives vendors more knowledge of the product post-factory life. Vendors and people in general can be very content to stay in the dark, even with situations on which they are very hands-on (i.e. not much incentive to self-educate and find out what’s what).
But take note; any education and guidance you give is not in vain. The factory appreciates this, will see you as a sincere customer and this will lead to more effort from their end to help the supply chain succeed.
Not to mention as a double bonus, any education you give on the product; the target market, who uses the product, how the product is used, etc…leads to better manufacturing and fewer problems.”
If this is all Yount had written in his post, it would have been enough. If I had to choose the one thing that differentiates our clients that have great relationships with their product suppliers it would be education. The clients that believe the more their suppliers know about their (mutual) product are the clients that get the consistently best product and service from their suppliers.
2. Clarity. “A lack of clarity is frequently a sign of an inexperienced buyer. Indications that a buyer is a capable buyer with partnership potential, keeps the supplier motivated. Also keep in mind that . . . folks do not always take the initiative in asking questions. Many times, your vendor may incorrectly fill in the blanks and keep trucking along . . . down a wrong path of course.”
All true. I estimate that around half the time an American or a European company has a problem with its foreign supplier (be that supplier be in China, Vietnam, Thailand, Malaysia, Mexico or wherever), the problem stems from miscommunication. In China Contracts: Why Even Bother? I listed clarity as one of three reasons to have a good contract in the language of the foreign company with which you are doing business:
1. The first reason is to achieve clarity. Having a well-written contract in Chinese will assure you that the Chinese company with which you are doing business truly understands what you want of it. Put simply, it will put the two of you on the same page. For example, if you ask your Chinese supplier if it can get you your product in thirty days, it will answer with a “yes” pretty much every time. But if your Chinese supplier signs a contract mandating that its failure to ship your product within thirty days will require it pay you 1% of the value of the order for each day late, you will know that the Chinese company is serious about the thirty day shipment terms.
For the remaining five, I urge you read Jacob’s entire post here.