We recently interviewed Jürgen Weckherlin, a consultant in the field of procurement who specialises in increasing productivity and reducing costs, and got answers to several questions that explore some of the best practices for buying offices in China and Asia.
Do you have a buying office overseas? Keep reading for the advice he shared...
Q: In what processes of a typical buying office is there typically the most room for improvement?
A:
I only pick 2 processes:
-
Have a clear and standardised filing system from start of development, to sample making and bulk production. Each department should use the same system.
- Communication: Make sure to set-up email rules. No email overkill. Structure emails in points….1,2,3,4…….write emails in a way that everybody understands what you mean, want, and what needs to be confirmed.
Q: What basic performance indicators do buying office directors usually look at, when it comes to supplier quality?
A:
Supplier quality for me means that the supplier understands the product, and is able to help improve the product quality.
On top comes keeping all deadlines and deliver a product which is up to the defined standards, complete and in full.
To translate this into KPIs:
- Shipment in time
To translate this into KPIs:
- Shipment in time
- faults detected prior to failure
- Non defect inspection
Q: Buying decisions are, in large part, risk management. What risks do buyers of consumer goods need to keep in mind?
A:
Having a financially stable supplier who can deliver the goods in time and at the correct level of quality is key.
For instance, if the development stage is not going smoothly and is disrupted, imagine what a bulk production with this supplier will mean?
Suppliers need to have an efficient sampling capacity and need to understand your product needs. If you find that this isn't the case and you're having far too much back and forth with them, then it's probably better to forget this supplier and find a better option.
Q: What, in your experience, is the single most important thing a buying office can do to prevent purchasers from getting commissions from suppliers?
A:
100% prevention of kick-backs, under-table money, etc, is almost impossible in China and other SEA countries. People are very creative there when it comes to this!
One way to reduce or prevent them can be to have your own nominated suppliers for your main components with a clear pricing structure (including discounts when qty’s getting bigger per component). Good nominated suppliers will show you records of all the factory orders to make sure that the factory has ordered the correct product at the correct quantity in time.
Also helpful is to ask the factory for open costing from the very beginning, including your nominated supplier's costs.