One of the most difficult parts of starting a company is dialing in your supply chain. Before you launch any startup, you must have your suppliers set. Figuring this out can be a daunting process, especially if you are outsourcing abroad. You’ll face time differences, language barriers and much more.
When starting Yes Man Watches, I ended up having to balance the time zones of four different cities -- I was based in Washington, D.C., a buddy in San Diego designed our logos, an engineer in Budapest developed our computer-aided designs and my manufacturer is based in China.
You’ll lose a ton of sleep when connecting with suppliers abroad, yet to keep your costs down, I highly recommend it. Originally, I strived to keep engineering and production local, but after receiving quotes from across the world, it was on average 1/15 of the cost to go abroad.
If you’re connecting with an established supplier, the language barrier shouldn’t be a problem. Almost every supplier I’ve ever talked to will have sales reps that speak English. Though their English is far from fluent, as long as you can comprehend their main points, you will be set. (In my situation, I actually used to live in China, speak Mandarin relatively fluently and understand their culture.)
A huge aspect that is overlooked when first connecting with suppliers is realizing the way they conduct business. Each country has its own unique business culture, and to build a strong relationship, you should adjust your practices to make potential partners feel comfortable.
If you’re looking to start a company, realize your supply chain is essential. Here are three tips to utilize when starting your search:
Communicate. You wouldn’t hire someone without talking to them first, right? One of the biggest mistakes I see entrepreneurs making is trying to buy supplies without even talking to the potential supplier. There are plenty of sites such as Alibaba where it seems like you can simply order the perfect product. Never order something without first establishing a relationship. For every reputable supplier you find, there are 10 scammers.
Formalize. Send over contracts and non-disclosure agreements to your potential supplier. This will build their credibility. Also when sending contracts and NDAs be sure to note their turnaround time -- you’re most likely talking to a sales rep. If they can have your document signed in under five minutes you should know something fishy is up: Would you ever let your sales rep sign a contract or NDA for your whole company?
Cross-reference. This is the key to outsourcing -- never rely on one source regardless of how perfect the supplier you found may seem. Start by seeing if your potential supplier has their own website and if their email is @theirwebsite. From there, move onto searching for them on outsourcing websites such as Alibaba and Global Sources. Next, see if they attend trade shows or are a part of any trade organizations. Checking and double checking their credibility is the most important part of connecting with a potential supplier.
When screening potential suppliers be sure to judge their reliability, reputation and trustworthiness. You don’t have to meet your potential supplier face to face to have a good relationship. I have yet to meet my supplier in China and still have a strong connection. So start searching and screening potential suppliers and move closer to releasing your product.