The most important and critical decision for an entrepreneur is finding a supplier. Whether you manufacture your own products or have a supplier to purchase from. After reading this, you will be able to get a clear idea about what suits best for your business.
There are few things you need to consider when choosing a manufacturer or supplier.
- Determine what kind of supplier you need
- Finding a supplier:domestic vs overseas suppliers
- Sources where you can find manufacturers and suppliers
- Requesting a quote after finding a supplier
- MOQ or Minimum Order Quantities
Determine what kind of supplier you need
There are few types of suppliers you can choose from:
- Manufacturer to produce your own products
- A supplier, wholesaler or distributor to purchase products
- A drop-shipper to supply products
You have to determine what type of supplier you are looking for. Just search on Google and there are a handful number of resources to find a supplier. The terminology might change according to the type of supplier you need.
Finding a supplier:domestic vs overseas suppliers
There are pros and cons on both sides. So, you have to be wise when deciding between domestic and overseas suppliers.
Pros of Domestic Sourcing
- Easy to navigate because there are no language, communication or time zone barriers.
- Can expect higher manufacturing and labour standards.
- Easier to verify the quality and reputation of the manufacturer.
- No need for shipping.
Cons of Domestic Sourcing
- Limited number of choices because many productions are not manufactured in Sri Lanka.
- Higher cost due to relatively higher labour and production cost.
Sri Lanka relies on product quality when it comes to manufacturing rather than the value. So they have taken very strict measures to ensure the products quality. From raw materials to packing materials Sri Lankan manufacturing meets the international standards. Many international brands have Sri Lankan manufacturers produce their products. This fact can prove the marketing appeal of being made in Sri Lanka.
Even though there can be some issues, usually there is high intellectual property protection that meets international standards.
Additionally, Sri Lanka’s payment systems and infrastructure also meet international security standards.
So finding a supplier domestically would be the best. The only drawback here is that there is no wide varieties of products manufactured in Sri Lanka.
So you only need to invest a relatively higher initial cost to purchase or manufacture products. But you can rest assured that product going to be in high quality.
Typically, when talking about overseas sourcing it refers to countries like India or China. Major number of imports of Sri Lanka are from these countries. So, usually finding a supplier from overseas is easy.
But when it comes to product quality domestic manufacturing takes the upper hand. There are more disadvantages than advantages of overseas sourcing.
Manufacturing and labour standards are relatively lower than domestic manufacturing. So the manufacturing cost is less.
Language and timezone barriers might make it difficult to communicate. It is hard to visit on-site and verify the manufacturing process. There are more to take care of like products importation and customs clearance. Shipping time has to be considered too.
Little to no intellectual property protection also a drawback of overseas manufacturing. Can occur issues related to payments and recourse.
When deciding between domestic and overseas suppliers, you have to consider the following factors.
- Your initial cost
- Whether your business is small scale or large scale.
If you have little amount of capital and is a small scale business, finding a supplier from overseas will be convenient. But the quality perceived from customers will be low.
Sources where you can find manufacturers and suppliers
There are few types of sources on finding a supplier or manufacturer.
In directories you can find profiles of larger number of manufacturers, suppliers and wholesalers.There are both physical and online directories available.
Online domestic directories
- SLT Rainbow pages – In addition to the printed directory there are digital versions such as Web, Mobile App, Directory CD are available.
- Yellow Pages Sri Lanka – https://yellowpageslk.com
- eGuide Directory – http://eguidedirectory.lk
Online overseas directories
We are now accustomed to find every little thing on Google. However, suppliers and wholesalers do not focus on search engine optimization. So it might be somewhat difficult when finding a supplier. Therefore, it is necessary to use the most suitable search terms.
3. Getting help from people in the industry
Your social network is important in this industry. With the experience and knowledge of the people who have already been in the industry, they can give you the best leads. You can seek help from online communities and referrals. This might be the most convenient and best way for finding a supplier.
Requesting a quote after finding a supplier
After finding a supplier, you have to approach them. Before you request a quote, you should decide the products and quantities you need. Do not hastily sent the request but carefully organize what you are going to say.
Here are some things you need to consider when requesting a quote.
- You may inspect samples before purchasing productions. So first, you need to ask for the sample pricing. Some suppliers might ask for the full retail price. S o you need to ask few suppliers for samples.
- After that, you have to determine the minimum order quantity according to your economy.
- Price of your products is very important. You must ask prices for different quantities to understand how discounts are given for bulk orders.
- The time that would take to prepare your productions also need to be asked.
- The most important thing is to ask about their payment terms. They might ask you to pay for the full order upfrontant you are a new business. Inventory is a major cost for e commerce startups. So do not forget to ask for their payment terms for future orders.
Apart from the above things, you have to keep in mind that not to send lengthy emails, ask for too much or too little. Keep your email concise and well-formatted.
MOQ or Minimum Order Quantities
It is possible for manufacturer or supplier to ask you to purchase hundreds or thousands of units as a minimum quantity for your first order. You have to understand the reason for them to impose a minimum. They might be only working with large scale business.
Suppose you are planning to test the market before going large scale or have limited funds. Then you can negotiate with them for a lower order quantity.
Finding a supplier is a difficult and critical decision. It may be a new experience for you. It requires patience and perseverance as it takes some time and great effort.