How to Build & Leverage Better Supplier Relationships
Factories are a dime a dozen, but good factories can be worth their weight in gold. Anytime you find a good factory, value it equal to your best customer. If you can set your long-term goals to constantly identify quality factories and strengthening your relationships with them, you’ll quickly begin to learn about the world successful manufacturing and simplicity when working in China. I love using the example that why my sourcing company exists in China is because factories are inherently terrible. It is a fun example and one I am quick to point out when someone reaches out to me for help with an issue they’re facing with a noncompliant factory. I don’t, however, think this example is always true; good factories do exist, they just take the time to identify.
Once you believe a factory to be a good factory, it should be your mission to leverage that relationship to the best of your ability. Below, I have included a list of tips importers can take advantage of in an effort to not only improve your relationships with your good suppliers but also leverage them.
I should preface this list by saying none of these tips have anything to do with guanxi (face) or building guanxi. Guanxi is a term that is frivolously thrown around in China manufacturing literature to flirt the idea that non-native Chineses can easily establish a strong enough bond with another Chinese person to the point where they are treated like family while conducting business. And thus, can reap all the advantages the newfound relative has to offer. - This exists, but it is impractical to attempt to achieve for the sole purpose of improving your products. I believe a lot of articles lead readers to believe guanxi is similar to a magical underworld, only obtainable by Chinese natives and the individuals reading such blog.
My goal is to offer tips which are more achievable and practical for importers looking to build sustainable, long-term businesses where you can rely on Chinese factories.
Visit them. Visit them. Visit them.
I can’t stress enough the importance of showing up. If you’ve worked with a factory for over a year, are happy with their work, and have yet to pay them a visit, schedule a trip to China to meet with them during your next production. If you can plan it well, the ideal months to visit are during April and October, so you can schedule your trip during the Canton Fair.
If your visit coincides with one of your productions, try to arrive shortly before the production begins and share notes as to where improvements can be made. You can use this time to learn from the factory and work with them on defining the expectations. Also, being able to confirm an order and wire money while you are present ensures everyone has a high moral as your relationship thickens.
If you’re unable to structure your next order during a visit, it can’t hurt to meet with the factory in the interim. You can still learn about their manufacturing process, share ideas, and gain a better understanding of the factories goals.
Inevitably, you will be invited to dine with the factory owners, if you’re a good customer. While a language barrier may prevent you from communicating directly with them, now is your time to impress them as you work towards building a relationship with the owners. Sales managers and production managers can usually solve problems, but a boss can make the impossible happen. It all starts by working to get the bosses WeChat (Chinese version of WhatsApp) or email and focusing on building rapport with them.
Frequently, factory owners don’t like to be involved in the day to day orders, but if you build a friendship with them, you can hold on to it and use that friendship in the future, if ever necessary.
Hire someone to visit them to act on your behalf.
In the event visiting a factory is impossible, hiring a friendly face to visit the factory on your behalf may prove to be equally beneficial. Just last week I flew from Shenzhen to Yiwu to visit with a factory, posing as an employee of a client of mine. The factory was under the assumption I arrived that morning from Europe just to visit them and check in on the production, as per my supervisor's request. This was a bit of a white lie on our part, but the goal was to cozy up to the factory and ensure they had everything in order as to not miss their deadline. I also used this time to help prepare the factory for another order that would be taking place directly after Chinese New Year.
During my time in the factory, my goal was to identify areas of weakness which I could help them to resolve, and ensure they had the necessary resources to adequately complete their job. While we could have sent one of our quality control inspectors to perform an inspection, we felt the inspection was too impersonal at the time. We were happy with this factory and wanted to show it by demonstrating our level of seriousness by having me ‘travel’ there.
During my two day visit with this factory, I learned more about them than any audit could. I also arrived with a nice bottle of French wine, to show my clients appreciation for hosting me in the factory.
While I must confess, this was a bit of a western-face mission, the message I was able to deliver on behalf of my client was entirely positive, and resulted in a product that was finished on time and without delay. I was also able to secure my client's position at the front of the line in their production schedule for the New Year. This would not have happened without sharing a hot pot meal (a Chinese soup dish) and helping them improve their production line.
Share your goals.
Factories like to know that you are serious, and a great way to present this is to share your goals with them. It is not necessary to go as far as sharing your business secrets, but by bringing them in on milestones you are working on is a great way to keep them motivated toward your success.
For example, if you are speaking with a buyer at a big box retailer, you may not want to say which retailer, rather, explain your recent inquiries and what you believe this could mean for your future production. If you’re working with them to create a new product, it may not be necessary to reveal anything that could affect your intellectual property, but you could be helpful to provide the factory with an overview of where you believe the product will be in the next 9 months and 18 months.
An example of this is when one of our clients had their product featured on the show Shark Tank. As their sourcing company, we were under a strict confidentiality agreement to not share our knowledge of their success with anyone until a certain point. At the same time, we were required to prepare the factories to have this product ready at a certain time, and be ready to handle immediate reorders at a set timeline in the event the product went viral after the show aired.
This was a difficult feat because we couldn’t share with the factories that their product was about to debut on an incredibly popular national television show, or that it had a famous billionaire investor. So we had to get creative with how we explained the importance of the order, and what was at stake. - This scenario was a lot easier for us because prior to working with the factory on this order, we shared the client's goals with them. As the excitement was unfolding, we kept the factory in the loop by explaining the client's initial goals were panning out tenfold!
The factory trusted us, and in turn, trusted our client. And because we shared our goals with them at the beginning and then updated them on such goals, the factory helped deliver.
Always explain to suppliers why you won’t take their quotation.
Nobody likes to be left in the dark. If you don’t move forward on a factories offer, but you believe you may want to work with them in the future, explain your reasoning. While it may be easy to request 100 quotations from factories for a product you’re thinking about manufacturing, it is important to remember there are people on the other end of that quotation. And these people took the time to understand the costs of making your product in hopes you would consider them as a supplier.
If the project falls through, if you’re not happy with the factories quality or price, or something else prevents you from working with them, send them a two sentence email to explain why.
As you’re working towards building a list of good factories, think of your quotation request to order ratio and don’t let it get out of hand when you believe a factory to possess what it takes to be one of your good factories.
If a supplier is good, but they make a mistake, don’t shut them out.
Mistakes happen, and just because something bad happens, does not mean your relationship is ruined. Even the best chefs in the world make a bad dish sometimes.
How you handle issues can greatly define a factories willingness to want to work with you in the future. A good factory is not only a factory that produces for you, but one where you produce for them as well. When issues occur, ask the factory for their ideas on how to rectify the situation, and remember, everyone has bills to pay. If you maintain a mindset that your profit is the end all be all, then a factory may not see your relationship as long-term as you hope it to be.
Considering solutions offered by factories is key to working through any mishap. An example of this is a quality issue we had this past quarter with an order. A product we were working on with our client failed an inspection. The inspector found 90% of the goods to have a defect which was identified in the quality control notes as a major defect. The moment the inspection report was released, our client was quick to draft an email explaining how the factory should be held responsible for this, and the issue needs to be resolved immediately, and on the factories dime.
Before we shared our clients thinking with the factory, we got on a call with the production manager to understand the nature of this defect. They asked for half the day to look into the issue in order to get back to us. In the afternoon we received a call from the factory explaining that every sample, including the pre-production sample, had this claimed defect. Not only that, but the client's client confirmed this product with a “defective” unit in hand.
We took some time to review the previous communication with all parties, and learned that the defect in question was not a defect at all, rather miscommunication between us and the inspector, which resulted in a failed report that worried our client. - The report was quickly adjusted and all was well. Plus we prevented immediate fear from making the situation worse as we remained calm while we collected all of the facts.
All this took was listening to the factory, and giving everyone involved with the project time to review the situation. Had we jump to conclusions and pointed blame at the factory, we could have ruined the relationship with them.
Problems, miscommunication, and errors occur, but keeping calm and facing them as a challenge is a great way to improve your chances of success and does not ruin relationships along the way.
Factories want to work with good clients, so be a good client.
Nobody likes an overly demanding customer who needs everything and gives nothing. While it is easy for a factory to take any order as a trial order, just as you are testing a factories ability to meet your expectations, they too are testing the same for you.
Next time you work with factories with the goal of building a relationship with them, ask yourself if you are a good client. Just remember, order size does not correlate with how good you are as a client. If you have a small order today, focus on getting them to believe in your business so the future larger order can be simple and successful.
At Guided Imports we keep an active record of our supplier relationships, and a lot of the best ones began with relatively low orders. We make it a point to focus on factory relationship building in order to share them with our clients. I hope the tips above can help you culture your relationships with current and future suppliers, but if you need help, feel free to reach out to us at guidedimports.com.