October 19, 2021
When attending a trade show, you often get the advice:
· NOT to believe the “facts” and photos shown on brochures.
· NOT to trust generic quality management system (QMS) certifications (such as ISO9001).
· NOT to trust everything sales people tell you.
So, what can you actually do to verify a potential manufacturer for your product?
To start off, you need to know whether you want to deal with the factories directly or rather via a wholesaler or an agent. If you are not sure about what you want yet, check out our related blog entry here.
Then make Google your best friend for the first background checks. Once you find a potential supplier’s website, there are things you can do online to check for a supplier’s authenticity:
Apart from using search engines, there are many trusted directories and B2B portals that make it easier for you to search for suppliers. Those websites help you to filter according to your needs and indicate which manufacturers are potentially available for you. Using a service like this makes it easier toverify suppliers to you as the authenticity is already checked by the directories.Some of the websites below might be useful for you.
There are websites that specialize to connect you with manufacturers, like Maker'sRow or ThomasNet, who focus on US-manufacturers. Other providers, such as Global Sourcing Specialists (GSS), are specialized to support startups that need mass production or smaller-scaled manufacturing to match with factories from anywhere in the world. At China-based Alibaba, for example, you can filter the website by industry to find a match that's best for your business. IndiaMart offers a similar service and an alternative if you are looking for a non-China-based portal in Asia. B2B portals, such as Kompass, make it possible for factories and manufacturers to promote their business and you can specifically filter the factors that are important to you and your product.
If you think finding a manufacturer or supplier’s website is too time-consuming, you can use services like Matchory. They utilize AI to help you find your ideal supplier within a fraction of the time.
If you would like to find out even more, you can also use services that verify your chosen factory. These factory verification reports prove a variety of factory basic information, such as what kind of business a supplier is actually licensed to carry out or when the company was established. Some providers can even go beyond the basics and look into specifics such as a factory’s legal activities as well as their owned trademarks or patents, which indicates a factory’s professionalism as well as innovative spirit.
At Shiftery, we also offer tailor-made verification reports for Chinese factories. For more information about our report, click here.
US Specific:
If you are looking specifically for a supplier in the US, the NAICS codes are another possibility to search for product suppliers. NAICS stands for “North American Industry Classification System” and almost all industries and products are attached to a NAICS code. So if your potential product supplier is listed here, it indicates a businesses’ authenticity. Therefore the system is also indirectly verifying whether a business is a fake or real. It, however, does not indicate anything about the supplier’s quality or specific fit to bring your product to life though. The NAICS directory can be found online here.
Once you get in touch with a potential supplier or manufacturer, you should make them demonstrate their knowledge and experience.
Ask technical questions about the product to test the supplier's knowledge of the product. You also may ask about the features included. Only positive replies by the supplier might, however, not indicate their professionalism. Their realistic view on what really is possible to produce might be very helpful for your product’s development. Only agreeing to your request, without having alternative ideas might indicate that the supplier only wants to get your order as quickly as possible. You should also keep in mind that cultural differences, such as “losing a face”, might influence a suppliers response towards your request.
Ask the supplier for customer references from buyers, including the reference company name, business address and contact number.
Check the payment terms. Until you have established a stable business relationship, use reliable methods. Whereas credit card payments or a letter of credit or escrow with a mutually agreeable escrow agent were typical safe payment options in the past, services such as PayPal or AliPay have made safe payment transactions even easier, especially for small scale businesses. Generally speaking, you sometimes only pay 30% deposit upfront when placing an order and settle the remaining 70% after the goods have been inspected and are ready for shipping. This, however, varies and is up to your contract negotiations.
To test a supplier’s experience in the production field you are looking for, you may also ask the supplier which trade shows they have attended in the past 2 years. Verify with the trade show organizers (by visiting their website or by sending them an email) that the supplier has attended the trade shows – for more benefits read chapter 5.
Consider visiting the supplier even if they are overseas, especially if the value of goods you are planning to order is high. The cost of a trip where you ensure you work with your right suppliers will lose significance if you plan to spend large sums of money for the production.
This will give you a chance to inspect the manufacturing facilities and quality of products firsthand and might save you much money if you detect scammers that way. Also evaluate the supplier’s reaction when you inform them about your planned factory visit. A defensive attitude is often an indication that should be a cause of concern. If you are unable to visit the manufacturer in person, consider hiring a third party agent to visit the supplier on your behalf instead.
At Shiftery we are providing virtual reality (VR) factory visits that will make it easier for you to get a clear picture of how the factories look like – this way you save the time and money to visit the supplier but nevertheless, you will be able to have a closer look at the factory. VR visits are therefore a sustainable and CO2-friendly alternative to on-site visits. We offer on-site quality checks at you request within China as part of our Service Portfolio already. Reach out to us any time for details.
The opportunities that the internet provides you with are endless, but that also makes the supplier sourcing process opaque. Sometimes a face-to-face meeting with prospective suppliers and the ability to touch and feel the products with your own hands works wonders.
Therefore, trade shows remain an important part of product sourcing, even in the post-COVID-era. Building a personal business relationship adds value to your supply chain, especially if your product is large in value where a trusted relationship is almost as important as the product’s quality.
You should take the opportunity to visit trade shows to scan the market and to build networks with potential suppliers. Also, it will indicate market prices which could benefit you during the price negotiation process.
At trade shows you will also learn about the latest trends, which might also bring you new ideas for your own product development.
To summarize, there are many ways to verify good and reliable suppliers that are neither easy nor extremely difficult. Eventhough you want to get started right away, you need patience and a systematic approach to make sure you establish a trusted basis with an authentic manufacturer that you can, ideally, build a long-term business relationship with. In the end it is often worth it to consult a specialist, especially if you are new to the topic. Being it either only for certain tasks like contract setup and quality checks or the whole sourcing process. Knowing that you have someone by your side to support you in this important business decision will also help you to ease your mind as task such as regular checks in the sourcing process will be carried out by the provider. Nevertheless, this decision will also heavily depend on your labor resources and monetary capacities. As sourcing and product development is essential for your business success, you should consider that a professional setup or help in certain areas might save you money an dtime due to the specialist’s experience in the long run.
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