Possible approach

Together with the customer, a tailor made approach for the sourcing process of our customer is designed. This approach consists of different levels of services : in addition to the sourcing process, a ordering and expediting process or warehousing can be part of the tailor made approach, such according to the customer needs. The different steps of the selected services will be discussed with the customer and finally be treated on a project basis. Fixed goals will be determined.

Below a possible approach for a full service agreement is presented. Through a rough market research a long list of suppliers will be established. You will notice the decisive role of the customer in the project, especially concerning the definition of supplier selection criteria and the determination of the preferred short list suppliers. After the contracting of the supplier, the ordering process will take off, in which the quality control of the goods is a distinctive service wtC offers. In case of cross docking , warehousing services can be provided as well.

1. Preliminary
  • The outsourcer will define a sourcing-project and appoint a sourcing team. The team will report to the Chief Buyer;
  • Together with the outsourcer the buying-portfolio will be analyses, milestones, timeframes and priorities will be fixed.
  • The required sourcing capacity will be adapted and fixed accordingly.
2. Sourcing Process
  • wtC will first roughly analyse the market for the new product(s) subject to the sourcing-project;
  • In advance, together with the outsourcer the supplier selection criteria will be defined, in which the future purchasing volume of the outsourcer in relation to the production capacity of the manufacturers and protection of intellectual property of the outsourcer are major issues;
  • Together with the outsourcer and based upon the results of the rough market analysis, for every product a long list of possible suppliers will be established;
  • wtC will visit major suppliers of the long lists to verify their technical capabilities;
  • For every long list supplier an information sheet will be presented, containing specific supplier information concentrating on supplier selection criteria. This sheet will eventually lead towards a shortlist for every product. The outsourcer will be involved in defining the basic query that will eventually lead to the information sheet;
  • n exact specification of the product(s) has to be established in cooperation with the outsourcer;
  • The shortlist suppliers will be sent the specifications and samples and will be requested to quote and to send in a sample;
  • If necessary and depending on the future volume, together with the outsourcer and intake-interview and a plant-survey of major shortlist suppliers will be held to check all information and to discuss the quotations and samples. wtC will schedule and arrange the trip including confirmation of appointments, reservation of flights and hotels within China, guiding etc;
  • Eventually, negotiations will lead to a final supplier selection. In any case, wtC will recommend a dual-sourcing;
  • Per product a trial order will be put in order to verify the operational quality of the selected suppliers. The ordering process procedure will be followed during this order;
  • wtC will finalize the sourcing process by producing a detailed report per product to be presented to the outsourcer.
3. Ordering and Expediting Process

During the regular ordering process, wtC commits as follows:

  • A pre-award expediting including an investigation and confirmation of production-capacity and availability of raw materials for every new purchasing order;
  • wtC will check all critical issues during manufacturing according to the checklist in order to secure the right final quality and a prompt delivery;
  • Before shipment, wtC will make a last personal check on the spot to make sure the contents of the container is according to the requirements of the purchasing order (quantity, quality etc.). For this purpose a checklist will be established;
  • wtC will participate, if necessary, in the shipping of the goods to make sure the goods leave in time and the balance payment can be wired;
  • In case of trouble shooting (financial matters, quality issues, legal matters etc), wtC will operate on behalf of the outsourcer towards the suppliers;
  • For every purchasing order wtC will provide the outsourcer with reports concerning all above mentioned checks.
4. Quality Inspection

For the indicated products wtC will inspect the quality. For this purpose:

  • A checklist as mentioned above 3 will be established. Depending on the product and the production lead-time, either a during manufacturing check or a pre shipment check will be executed. If the during manufacturing check is made, an administrative preshipment check will be made;
  • Together with the outsourcer and according to AQL, the quality checks will be defined. In case of rejections wtC will correct on the spot. In case of major rejections the outsourcer will be contacted;
  • If necessary, wtC will participate in the forwarding process to ensure a prompt departure of the goods and a safe payment of the balance;
  • In case of problems, wtC will operate as a trouble shooter, as mentioned above;
  • For every purchasing order, wtC will provide the outsourcer with reports concerning all checks mentioned above;
  • Together with the outsourcer, wtC will execute a yearly audit within the supplier.
5. Warehousing
  • In case the MOQ of the supplier does not meet the MOQ of the outsourcer, the remaining the goods will be stored in a warehouse in Shanghai. wtC will arrange all logistic matters;
  • wtC will consolidate shipments as much as possible, either from the warehouse of the forwarders to achieve a minimum freight.
6. Conditions

For the sourcing and order processing a monthly coordination fee has to be agreed. This fee guarantees you a steady sourcing and ordering process. If the time involved is changing dramatically, the agreement will be adapted accordingly, such in mutual agreement.

During the ordering process, probably due to seasonal effects, it is possible that there will be less purchasing orders during some months while during other months more orders might occur. Though the monthly fee will remain the same.

In the coordination fee of the sourcing and ordering process, a quarterly evaluation is included, such if necessary. This evaluation will take place in the office of the outsourcer or wtC, as preferred. The fee does not include any expenses for travelling, hotels, etc. Every month the expenses will be specified and invoiced.

The suppliers will invoice the outsourcer directly for the purchasing orders.

wtC will guide employees of the outsourcer, whenever they visit China and will assist them in the preparation of their visit to China.

wtC will concentrate its operations on China (including Hong Kong). On very special occasions, assistance in other Asian Countries might be given. On request, wtC will visit specific fairs to pick up information or products on behalf of the outsourcer.

The intellectual property of the outsourcer will be respected. This includes all technical specifications, designs, and names of suppliers. wtC is not allowed to pass over any information about this knowledge to any other company without prior written approval of the outsourcer.

In order to guarantee a smooth ordering process, the sourcing process and the ordering process have to be considered as one and cannot be split into two parts.

This draft considers a contract period yet to be agreed, e.g. one year. The contract period will be renewed automatically without a prior notice. If the agreement is ended in between, the coordination fee of the remaining contract period is due.

A possible approach - WtC (Way to China) Ltd.
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