A question we’re asked by SMEs who are trying to source electronic component suppliers in China is if it’s possible to find someone who can source suppliers who’re the ‘best’ in the market and also get the ‘best price’ possible.
How realistic is this?
We source suppliers for some of our customers, so here’s our take on this…
Can you get the best price from the best electronic component suppliers?
In short, here’s the bad news: The “best suppliers” will rarely give “the best price”.
The “best suppliers” typically have a lot of systems in place to prevent mistakes. They design their components for better reliability & durability. They put resources into the monitoring of processes and of end-of-line product quality. All of that translates into a higher price. However, since their on-time delivery and their average quality is better, they might represent the lowest “total cost of ownership” for your company.
3 ways a good sourcing agent, firm, or consultant should be helping you
Let’s focus on whoever is sourcing your electronic component suppliers in China for a moment.
Here are 3 ways in which they should be helping you find the right supplier:
1. They will put in the work to get you a ‘fair’ market price
A good sourcing agent or firm here would:
- Know the electronics industry in China inside out,
- Contact several suppliers for each part,
- Have a structured way of comparing their offers.
By following these steps they’ll get you a fair and reasonable price within the context of what other suppliers are charging for the same type of component right now.
The term ‘best’ in the context of price may not mean the cheapest, as the sourcing firm or agent will consider wider aspects of the potential suppliers, such as their ability to deliver good parts consistently, their reliability test results, the fact that their components are already certified, and so on.
But, of course, the goal remains to get you a reasonable price from a really suitable supplier, not merely the cheapest price on the market from a supplier who may far from desirable.
2. They will take action to ensure you get a consistent supply
An electronic component supplier can’t be considered the best for your needs if they’re unable to provide you with a consistent supply.
A good consultant should be taking these steps ‘behind-the-scenes’ to ensure you get a consistent supply from your new supplier:
- Screen the suppliers based on what they answer in the initial questionnaire.
- Give you context so you can choose your No. 1 and No. 2 options for each type of component.
- Interview those best options further and get them to confirm they are willing to sign a legally enforceable manufacturing contract, as extra screening.
- For critical components and those to be purchased in large volume, send an auditor to the factory is quite important, as the last vetting stage to reduce the risk of receiving inconsistent quality.
3. They’ll provide strategies to help you obtain components that are in high demand
A good consultant will also help advise on the way to deal with components that are in very hot demand these days. Certain components may have to be purchased in advance, to secure supply for the rest of the year and/or to reduce the risk of further rises in pricing.
The situation in 2021 has become very difficult for certain projects, where the design was based on components that suddenly became very expensive. If you want to secure your supply at a reasonable cost, you will have to understand those risks & challenges.
How about you? Is this the way you’re sourcing electronic component suppliers in China these days? Do you have any advice to add? If so, please add a comment. Thanks!
You should check out these resources next:
- How To Switch To A Newer, Better Chinese Manufacturer? [eBook]
- How To Find Trustworthy Suppliers In China In 2021
- Developing New Products? Which Suppliers Are The Right Fit For You?
- Do You Really Need A Sourcing Agent in China Or Can You Do It Yourself?
- Vetting Chinese Suppliers [Podcast Series] with 11 episodes!
This FREE eBook starts from the beginning, discussing whether you need to hire a sourcing agent, and follows the sourcing process right through to developing a trusted supplier’s quality and productivity.
There are 15 chapters over 80+ pages to explore, providing exhaustive guidance on the entire sourcing and supplier development process from start to finish, including:
- Identifying suppliers,
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- Developing Chinese suppliers,
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Just hit the button below to request and download your free copy: