In 2009 when we started International Partners Consulting Asia (INPASIA), an
international trade consulting firm, I knew exactly who our competition
would be. On one hand, we had the one man company – local person - that
can speak English and Chinese with no other professional skill or
experience than just communicating needs between parties (middle man),
and on the other hand, the - I’m too big of a company to deal with small
and mid-size companies (Procurement Firms). We knew that small and
mid-size companies were in need of professional procurement firm’s
services that were tailored to their specific needs and that had the
flexibility and quickness of execution of a middle man. We also knew
that eventually we also wanted to work with companies that were
purchasing more than 20 million USD a year from China.
For us to be able to make this happen we needed a straight forward process that could be tailored to each of our client’s needs.
In
the next few series, I will be describing our process in detail. By
this I hope I can get enough feedback and suggestions to improve it and
hopefully help others that are in the same business.
Overview of our Process
Understanding the client and the product – Requirement Analysis
During
our first interaction with our clients we talk a lot about the product
itself: its function, its specification, problems in quality, prices. It
is important that during this stage we are able to clearly describe the
product. How else could we ask and get what we want from the supplier?
The complexity of this phase not only depends on the complexity of the
product but also the knowledge the client has on the product and is able
to transmit to us.
Some of the most important questions we need answers during this first interaction are the following:
1. English name of the product: to avoid confusion during translations.
2. Specification: a technical description of the material being purchased.
3. Statement of Work: basically this describes what the product needs too, methods it need to use and how often it would be used.
4. Price and Payment Terms:
most clients are very reluctant to give target prices and sometimes if
they do, they give impossible to reach target prices. This hurts the
quotation phase as we try to find factories that reach that sweet spot
between quality and price and discard factories that don’t comply with
it.
5. Purchasing amount and Frequency: this is
very important for negotiating price as the amount of orders the client
is able to put in a year or the frequency of it means the factory can
buy materials in bulk for production, making things cheaper.
Optional information we request:
1. Pictures or video of the product.
2. Manuals.
3. Lab test or Certifications.
After we get all this information we create an RFQ (Request for Quotation) document that usually looks something like this:
After we have done our list of factories to contact we would send them this document in order to avoid confusion and get the information we need in an efficient way.
Some products are more complicated than others. Some require technical drawings others must follow certain standards. But I believe following this steps our consultants can gather all the information they need to understand the product.
Finally, some of the clients don't understand their products as well, so it's part of our job to investigate making things slower.
On our next installment we will be talking about Supplier Identification and where you can find suppliers for a wide range of products.
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