Over the past decade, we’ve seen many Original Equipment Manufacturers (OEMs) source the parts needed for production from offshore suppliers. This can help keep a business competitive – but choosing the wrong supplier can have the opposite effect. Some OEMs will conduct an on-site visit with a potential offshore supplier to determine if the OEM’s criteria will be met. For folks unable to take a 8,000-mile trip, we have six ways to better vet an offshore supplier.
- Hire An Offshore Consulting Company
- Utilize “Watch Dog” Agency Reports
- Only Use Highly Ranked Suppliers
- Look At Ratings And Reviews
- Ask For References
- Ask A Trusted Domestic Supply Partner
A neutral third party, an offshore consulting company can help aggregate suppliers based on your criteria at a fraction of the time and cost. As an added benefit, they may offer inspection services. By conducting a Quality Control (QC) inspection prior to shipping, you can address concerns quickly and effectively.
There are several watch dog agencies that offer industry reporting. These agencies help verify the reputation of a supplier, so you can learn more about them, prior to giving them your business. When possible, use multiple agencies’ statistics and opinions to qualify new suppliers.
You should choose only those suppliers that meet the highest standards set by international associations and watch dog agencies. The best suppliers will have a minimum of three years of history doing business, while maintaining a reputation for excellence. Unfortunately, a standard practice for some offshore suppliers is to simply change their identity at the first sign of trouble. Having been in business for at least three years demonstrates they are a stable and reliable source.
A common practice in qualifying domestic supply partners can also be a powerful tool in qualifying offshore vendors. Ask for references of domestic companies that are already using the supplier’s services – additionally, you can request banking or trade information to determine stability and legitimacy.
The majority of OEMs, distributors, and Contract Manufacturers (CMs) have existing relationships with domestic suppliers they trust. Those domestic suppliers, in turn, may already have qualified, reliable offshore suppliers for their own supply chain. Getting a referral from a domestic supplier can simplify your pre-qualifying efforts.
With these six steps, you dramatically improve your chances of finding the right offshore supplier while mitigating the risks associated with a poor supplier.