There is no better opportunity to learn from an industry expert. We need to find an opportunity from all the challenges we face in our life. And we got to learn that a company already practices it to the fullest. Here we present our interview with one of the buying experts from the Netherlands.
He works for the 85-year-old Netherland-based Wholesaler & Importer. Through his 28 years of experience in buying, he brought up various risks and opportunities involved in sourcing during the pandemic.
Our interview covers various challenges a wholesaler & Importer’s faces in changing customer experience, supplier selection, and Quality.
I hope our interview will add value to all the Wholesalers & Importers, and to the suppliers in understanding the customer’s expectations.
CUSTOMER EXPERIENCE DUE TO SHIFT TO E-COM
- What are the major challenges you faced in meeting the customer requirements and expectations during the pandemic?
Our biggest challenge is that our customers are closed. And some of our customers want to postpone or cancel their orders. Though we don’t entertain the cancellation of the orders we ask them to postpone it as it is none of our faults.
Another challenge is that we are insecure about a few clients who are closed for a longer time. We are not sure if they can pay us because they lost a lot of their income.
Besides, getting the whole quantity of the goods from the supplier was our next challenge. The major issue going on in the production area is the shortage of raw materials. The raw material scarcity led to an increase in price. For example, a part of our products are electrics, and there is a shortage of chips.
Also, since everyone is buying more consumer goods, there is a demand for logistics as well. I.e., availability of the container, etc.
Yet, the positive side of the pandemic is that our sales have increased. As the people had to stay at home, they couldn’t spend money on restaurants, holidays, clothes, etc., So, they spend on decorating their home and garden. Thus, it helped us increase our turnover by around 25%.
SUPPLIER SELECTION DURING THE PANDEMIC.
- What are the important aspects to consider before selecting new suppliers during this pandemic?
There is not much difference in this subject before or during the pandemic.
Before the pandemic, we select the suppliers based on the following aspects.
- Good collection
- Right pricing
- Suitability of the supplier to our organization (i.e., Their ability to deliver the required quantity of the products at the right time)
- Social compliance
As we are a BSCI member, we are committed to having 75% of our turnover from BSI-certified bodies.
However, we cannot travel during the pandemic. It is unlikely for us to select a new supplier without knowing them and visiting them. So, we didn’t choose any new suppliers during the pandemic. We stick to our existing suppliers in this situation.
- What are the challenges involved in selecting a new supplier in Pandemic?
Generally, while selecting a new supplier, we would like to visit them personally to check their working environment, authenticity, capacity, and capability. However, due to travel restrictions, we couldn’t do visit the factory sites.
Also, we gather supplier addresses and details through the trade shows that happen in Europe and the Far East. And now, the trade shows are also not happening.
Hence, if we want to look for a new supplier now, we will need to research online, ask our colleagues in China to evaluate a factory or ask a 3rd party inspection company, etc. to evaluate the supplier and check if the factories can meet our requirements.
However, we all know that checking online is never reliable as meeting them personally and evaluating them. So, travel restrictions and lack of trade shows are the biggest challenges for us considering the new supplier selection.
- How do you check the reliability, legitimacy, and capability of the supplier for longer term good relationship?
In addition to conducting Factory Audit and research about the supplier, we will get to know about them better only when we get to work with them. So, whenever we start the business with the new suppliers, we begin with small orders with less quantity.
If the supplier has both spring and Christmas collections, we prefer to start in the spring season because we do three times higher business at Christmas than in spring. If the supplier is not performing well, the impact will be less for us in Spring than Christmas. And if they perform well in spring, we continue the business with them. Yet this process changes as the supplier’s profile as well.
So, we believe a trial order is always the best option to check the factory’s capability and suitability.
- What are all the risks involved in placing an order with an unreliable, poor-quality suppliers?
Supplier’s vital role is to produce quality goods at the right time. If the supplier is not good, it will affect the product quality and delivery timeline.
By the time of placing the order itself, 60 to 80% of the goods are sold to our customers. We supply to more than 4000 customers who are across USA and Europe. Most of our customers have fixed delivery dates. The customers place an order of 5000 different items/orders.
Also, some of the big retailers penalize for late deliveries, especially for big orders. Hence, if we reject the goods due to poor quality, our customers will get their products later than the expected date. It may lead us to pay the penalty to our customers.
Besides, if our inspection partner or we did not find the critical legal issues, we may need to get into legal risk and recalls when the customer finds it after receiving it. Recalls are the worst risk of all that need to face.
CHECKING- PRODUCT QUALITY BEFORE SHIPMENT DURING PANDEMIC
- How do you measure or check the Quality Management System of your suppliers to ensure producing right quality from beginning to end?
You know everybody can have well-structured Quality Management System. But the real question is whether they use it in practice. The best way to identify is by placing a trial order and checking their performance.
Yet in the countries with our own team’s presence, we check the Factory’s Quality Management system through our team.
- For Indian Suppliers, which are the 2 main important aspects to Improve?
Recently, Indian suppliers are improving their Quality. Yet, there is still a scope of improvement in Quality.
Secondly, they need to stick to the delivery timelines. If they knew that they couldn’t meet the specified timeline, they must inform it prior.
- What are the future expectations of the customers?
Nowadays, customers are conscious of choosing the product which creates a good cause for the environment. So, I foresee more demand for sustainable goods. There will be high demands for proving that the goods are sustainable and do not have harmful chemicals or heavy metals such as Lead. Thus, there will be more regulations for making the goods sustainable. As the regulations are getting stricter, we would need 3rd party Inspection companies’ help on Lab tests, conformity, etc.
It is also applicable for packaging materials. Some of our customers say that they no longer want Styrofoam to protect the items. They are looking for eco-friendly Packaging with the same degree of protection that Styrofoam gives.
- As people are giving more importance to Sustainable goods, will it increase the price as well?
Yes, sustainable goods prices will be higher. Because the suppliers will increase the product’s price as it needs to conform to higher standards.
For example, some of our customers say that they accept the wood that is FSC (Forest Stewardship Council) certified. Only if all the parties in the production chain and value chain are FSC Certified, they will provide the FSC Label.
Hence suppliers should be checking a lot of regulations in Europe such as REACH., In Europe, Food safety, Toy Regulations are focused more on by the regional governments. As we are working with various customers from different countries, we take the most stringent regulation to ensure that we are covered with all other standard’s requirements.
The above 09 questions are quite less to learn from his expertise. Below are the key points of take away :
- During the pandemic, customers started spending much on Home Decorative and garden products than others.
- Good Quality products come from the right supplier. Hence it is essential to check the factory’s competency before placing the order.
- With any of the new suppliers, it is always better to start with small orders or trial orders. That will help the buyer to know the supplier’s QMS, communication, and suitability.
- Raw Material Quality check is the underrated process among a few of the suppliers. Sometimes, it may also cause huge financial losses. Hence suppliers should ensure that their raw material quality is verified.
- In the future, the demand for Sustainable goods will be increased. Thus, regulations for evaluating and certifying sustainable goods might also increase.
Feel free to share with us your takeaway or any new idea that you are going to implement.
