As more and more companies look for alternates to their China sources, we receive many queries about what is the best way to approach a supplier search initiative for India. I thought that it would be useful to summarize some of the highlights of that advice and share it here. (A prior article published on LinkedIn, delved into the “15 Essential Steps for Effective Sourcing from India“.)
The query that this post addresses came to us as follows:
“I am interested in shifting my sourcing focus to India as I keep hearing a lot about the developments and how they compare better in terms of quality of the products and similar aspects. It is easy to get information on the Chinese suppliers. I simply use any of their websites (starting with Alibaba and globalsources.com). Are there similar sites specifically for the Indian industries? Can you share any other resources on the best practices to follow while sourcing from India.”
There are numerous Alibaba-like sites for Indian companies. The closest you get to Alibaba like resources is on http://www.tradeindia.com/ and http://www.indiamart.com/. Regardless of which site you use, please follow the Deming rule (See below) when reviewing the information about the suppliers on these sites.
India Mart has the Trust Seal showing that the companies have been verified for the information provided. Trade India has the Trust Stamp which actually goes a bit further in terms of getting some of the financials of the supplier. (Make sure that you check the date of the information as some of it can be several years old) The Trust Seal and Trust Stamp are similar to the TrustPass verification of Alibaba. Neither Trade India or India Mart have the Alibaba vetting levels such as Trade Assurance, Gold Supplier, Assessed Supplier which provides a higher level of security for the buyer.
Regarding best practices in terms of sourcing from India, I would say that you should follow the same caution that you have used with China. Timeliness of responses will be a frustrating factor that you should be prepared to deal with when sourcing from India. However, with the right dosage of patience and caution, you should be able to find reliable suppliers in India.
Price will be a factor. Indian companies still find it difficult to match the “China” price. Be prepared for that. If your volumes are very high, then China will still be the preferred country for price competitiveness.
There are many large, well-established and reputable Indian companies that have been successfully exporting for decades. However, if you are a smaller company you will not garner much interest, nor get attractive pricing, from these companies as they are more accustomed to deal directly with large multinational brands. (Check out their websites for their customer base to see what level of attention you may attract.)
You will tend to have more luck being the proverbial “bigger fish in the pond” with smaller, mid-sized companies in India. By default – believe nothing unless it is backed by concrete evidence. I like to fall back on the Deming advice – “In God we trust, all other must have data.” If you follow that rule, then you should have a better chance of success.
Indian companies will want to deal with Letter of Credit (LC) for the payment. Electronic transfers are acceptable if payment is made in advance of shipment leaving. Please be cautious on agreeing on payment in advance to companies that you have never met. As your relationship with a particular supplier matures over time and a level of trust is built on both sides, then you will see more generous credit terms opening up.
The quality of products has to be closely assessed BEFORE they ship out. You should use your own inspectors or third-party inspection agencies for that purpose. I would not rely on a suppliers self-inspection of a shipment unless you have had a history of at least 4 to 6 shipments without issues from the supplier.
Timeliness of deliveries is also another area where you have to be prepared for disappointments. Add at least two weeks or 20% (whichever is more) to the promised delivery date and then keep on following up weekly to find out what the status is. Here again, use the Deming rule and ask for proof – photos, reports etc. to indicate the current status of the shipment.
In summary, the universally applicable, caveat emptor (buyer beware) rule holds equally true and probably more so, in India.
About the author:
Rahul Sarkar is a Professional Engineer and entreprenuer working with manufacturing companies (with a focus on the small, mid-sized companies) in increasing top-line sales and bottom line savings.
His company, Chiketa, LLC | Phoenix Manufacturing Systems (Chiketa–Phoneix), works on lowering manufacturing costs (materials and labor), managing Low-Cost Country (LCC) sourcing, developing Lean Manufacturing strategies, identifying energy savings opportunities, advising on automation systems, providing reverse engineering and CAD services, providing quality management system and metallurgical engineering consulting, developing purchasing management systems and more….
To learn more, e-mail: firstname.lastname@example.org