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Op-Ed: The Checklist for a Transparent Vendor Relationship

I’ve been in apparel sourcing for 30 years, working with fortune 500 companies and specialty brands. For a number of years, I lived in China where I was on a mission to bring transparency to the supply chain because there were far too many issues with quality, deliveries and price that affected the TCO (total cost of ownership) of the actual product. What I found was the issues arose from the distant, transactional interactions which results in a hands-off nature of many brands’ management style.

The fact is, attempting to manage from a distance ultimately means you have to believe whatever your supplier tells you. Too often, if you are not present in their office or at the factory, suppliers will not inform you about all the issues on the table. On the other hand, if you have a regular presence with the supplier and the factory has the proper systems and personal integrity, there is a chance you will detect problems or inconsistencies. Getting involved early and staying involved can help you avoid production nightmares.

Complicating matters, even for companies with local offices and staff, are cultural differences and differences in business practices, which could ultimately damage the integrity of your brand.

To mitigate these issues, I began a rigorous review of the relationship, management structure, systems, policies, procedures, working documents, staffing and training or lack thereof for each vendor and/or factory.

One case in particular will illustrate how being present and asking the right questions headed off big problems. First, I had to deal with the supplier’s capacity, which was stated to be 350 units a day but turned out to be 250. Initially, they justified production delays by saying the workers needed time to train on the new styles before output could increase. Instead of being reactive, I took a proactive stance, assisting with the training. Ultimately, I was able get production up to 600 units per day. It came at the additional cost associated with frequent trips to the factory with extended stays that amounted to tens of thousands of dollars. That, though, was only a fraction of the millions of dollars it would have cost if production had been delayed.

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Going forward, I insisted on full-time quality assurance staff with most vendors. I frequently visited the vendor for regular reviews; I was also in the factory, working with external staff and managers to review our policies, procedures, six sigma, Kaizen (constant improvement) and lean operations for quality assurance. I became accustomed to regular reviews with consequences to work with the external staff to improve their operational performance.

From these experiences, I learned that you have to ask questions, investigate circumstances and stay involved. Below is my checklist of questions to ask before starting to work with a new supplier:

  • Does this factory really have the available capacity? A “yes” from the factory isn’t enough. You need to investigate on your own.
  • With outsourcing all too common, you must ask where is the production allocated and if the allocation is the actual source of the production.
  • It’s important to know who owns the business and what their values are. Does the vendor or factory care about the product (quality, delivery and end consumer) or are they overwhelmingly concerned only about growth and profits?
  • What is the infrastructure and makeup of the company and factory making your production? It’s important to do a proper review of the building, equipment, maintenance records, training, expertise and experience of the staff. Additionally, you’ll want to review the cash flow, planning, budgets, systems, employee structure and performance measures.
  • When, where and how is your key contact involved? Are they merely there for communication? How competent and experienced are the people who are actually completing the tasks?
  • If you’re working with an agent, how does the agent/supplier/factory allocate your production? Do they actually vet, validate and always visit the actual production factory?
  • What happens between sample and full production? You should ask if production will come from the same factory and how they will ensure the bulk production is the same as the approval sample.
  • What happens if you change the product just before production? You’ll want to ask if that affects the ship date, if the factory can still handle production and if they now plan to outsource.
  • Ask questions that will indicated if your inspectors are focused on their relationship with the supplier or the inspectors? Think about what may be in it for them. How do you detect when a factory is outsourcing part or all of your production?
  • What happens when the factory that was selected cannot meet the KPI’s (number of sewing lines, number of sewers, daily output, etc) for the delivery? Is there someone from your company who checks the performance?
  • Is there proper vetting, validating, and visiting of suppliers and factories in place?

Jeff Clark has 30 years of experience, a breadth, depth of insights and expertise in providing apparel, footwear and accessory solutions to international brands (Fortune 500, specialty brands/retailers, and innovative start ups). He lived in the manufacturing countries to be closer to the heart and soul of the product, understanding the people, the cultures, the languages, the business practices, the strengths, the weaknesses, the opportunities and the threats.