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Global Sourcing Spotlight: My Six-step Process to Finding the Right Global Partners

I often get frustrated when companies underestimate what it takes to find a global partner. They tell me that all it takes to find the right partner is to gather some quotes, and then accept the one with the best price.

When I hear comments like that, I think about what it really takes. I’ll ask them, “Have you been to China, Taiwan, or Vietnam? It just makes a difference when you visit your suppliers in person." How much better do you understand pizza when you’ve eaten it in Chicago, or when you chow down on barbecued ribs in Texas? Let me tell you, when you’ve traveled around the world and done business in other countries, and with other cultures, it’s completely different—and it’s no walk in the park.

I remember my first trip to China. I did not even know the cost of my hotel room, never mind what I would pay for the products I was sourcing. Until I got the hang of it, getting around the city was nearly impossible. Here’s a tip: Don’t try to rent a car and drive around these countries on your own. It doesn’t work; in fact, it is downright scary.

But think about it: If knowing what your hotel costs per night and getting around are difficult at first, it’s even more daunting to find and negotiate with the right companies, people, and products. Especially when you are just getting started, it takes a couple of trips with the right people and connections to act as your guides for getting down to business. Take my word for it.

But once you find the companies that build what you’re looking for, the work really starts. Here are the steps I take when selecting and qualifying the right sources:

1. I find the right source in the right place. No, not everything you need is in China. You don’t just go to China, find what you want, and do a mic drop. China is certainly a great place to start, but to have a well-rounded supply chain, expand your horizons. I have to deal with companies in Thailand, Hong Kong (practically China, but not quite), Korea, Taiwan, Singapore, Vietnam, the Philippines, Malaysia, and India. There will be more to come as well.
2. Next, I match the sources to the commodities I am sourcing and find the best suppliers in each country. These are companies that can meet my needs.
3. I qualify these sources. It’s not just scattering a bunch of quotes around the world and giving my business to the cheapest quote. Even before I send out the quotes, even calibration quotes, I make sure that these customers meet my needs in all ways. I have developed a comprehensive survey that my potential sources must complete in order to qualify. I check out their customer references. I verify their qualifications and certifications, such as ISO, QS, TS, and UL. I attain their financial data and public information. It does no good for me to qualify a company that is about to go out of business.
4. I actually visit the facilities and audit them in person. I’ve heard stories of some companies in Asia that superimposed their company name and logo on the side of someone else’s building. Thankfully, that doesn’t seem to happen anymore, but I don’t take chances. I want to be sure this is a viable company. I want to see it with my own eyes.
5. Once all the work is done, I create a matrix of my approved global sources and determine which products and goods I will procure from each company in each country.
6. Finally, I send out qualification orders and validate the supplier base in terms of quality, service, and on-time performance.

Once I’ve established relationships, it’s important to keep them going. I do this by developing strong connections with the owner of the global supplier and its top management team. I make certain that we know, trust, and most importantly, respect one another. We have to develop and maintain a strong working relationship with all our global vendor partners. This is a critical step for the future success of your global supply chain.

With relationships strong and your global supply chain up and running, it’s time to put some feet on the street, so to speak. I recommend that you hire a small team of locals to handle your relationships in the parts of the world where your global suppliers are located.

Follow my lead and I can almost guarantee you’ll be able to figure out the cost of your hotel—and so much more.

Bob Duke is president of the global sourcing division at American Standard Circuits.