How To Navigate The International World of Sourcing

by • June 24, 2016 • Merchandising + TrendsComments Off on How To Navigate The International World of Sourcing1676

Lanie Denslow, World Wise Intercultural Training & Resources Expert, explains how sourcing products locally and globally can increase the bottom line.

Whether you are new to ASD Market Week or attending for your tenth year, the world of sourcing products directly may still be foreign to you (no pun intended). Since ASD is home to SourceDirect, we’ve created this primer to explain how sourcing may help your bottom line.

Why Source?

Sourcing your own product has benefits beyond simply obtaining your product at a good price. You will create relationships that will provide industry intelligence. Pricing helps increase your profitability. There are additional benefits that come through working with all of the people involved in the supply chain that is part of sourcing. You will have the opportunity to create a network of agents, factories plus financial, legal, and logistics advisors. These relationships can be as important in building a successful sourcing company as finding the factory to produce your product.

Overview of the Sourcing Process

The first step is selecting a product. Be sure to select something you like that interests you and that you would use. It is important to clearly understand the benefits of the item and the problem it solves for potential buyers.   

Next, create a detailed description and determine an ideal schedule. When do you want to have a finished product ready for sale? With that deadline in mind, you can work backwards and learn if it is possible to meet that deadline.

Select your advisors (legal, financial, logistics) and identify a supplier (factory). Evaluate possible choices and then make a selection. As part of that process, you will negotiate purchase terms (costs, delivery time, samples to be made, inspections). Consult advisors to determine if Purchase Orders or detailed contracts will be the best documentation for your situation.

Alliances & Partners


You should think about the sourcing process as a way to create an alliance of people who work together to create the product you wish to sell. Take the long-term view.  Taking the time to create strong relationships is one of the most important things you can do to lead to successful sourcing.  

The key element is the factory (supplier) that will make the product. Be aware that there are cultural differences that influence how people do business. Try to learn in advance what some of those differences may be. Over time, suppliers can become trusted partners who do more for you than just make products. Treat them with respect and professionalism.

Identify the Product

When you identify your product, consider what you like and what you believe will give you the best returns. Know how many units you can afford to have made.  Suppliers usually have a minimum order requirement. Sometimes it is calculated as the number of pieces that must be ordered. In other cases, it is a minimum dollar amount. Be sure to check before proceeding in negotiations.

Develop detailed Specifications

In order for the factory to clearly understand what you want them to produce, you must create detailed specifications. When you request a price quotation (RFQ), the more information provided, the more likely you are to receive an accurate price estimate. Having a standard, detailed RFQ allows you to obtain and compare pricing from multiple factories.

A Tech Pack (an extremely detailed drawing or set of drawings) shows all the elements of a product, along with measurements and materials to be used. A version of this can be part of the RFQ. Requesting samples allows you to see the quality of the work, to see if the specifications you submitted were clear or need to expanded or refined. It also gives an idea of how responsive a supplier will be.

Request for Quotation (RFQ) and Creating a Tech Pack

product sourcing

The RFQ is a document explaining all the details creating the product to be produced. If you are modifying an existing product, or repeating an order of an existing product, a photo should also be included. If there are changes, these should be shown in a drawing. Specify materials, performance standards, and packaging. Exact measurements, placement of labels, and decorative elements must be included. Think of this as a very detailed pattern that the factory will follow to produce the goods. It is essential to be precise and clear.

Factory (Supplier) Selection Criteria

There are several issues to consider beyond which factory has the lowest prices. Be sure you understand:

  • -Do they already produce your product or something similar?
  • -What is their capacity?
  • -Do they already have multiple large clients?  
  • -How long have they been in business?
  • -Do they have experience sending goods to your country?
  • -What are their delivery requirements?
  • -Are they willing to share references you can check?

Requesting Samples

Request samples to insure that you will receive the product that you ordered in your agreement. Obtaining and checking samples is critical. Ask for samples in your RFQ and check that is included in the pricing. There may be special fees for samples or for setting up the machinery to make the samples

When you receive the samples, have a system for tracking them. Log them in, make notes on any changes requested and keep track of new ones. When you make the final approval, note that on the approved sample to compare to the merchandise received. Document all steps in the sample review and approval process.

Want to learn more? Register to attend SourceDirect at ASD today!

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