Pragmatic View on Intermediary Services

Intermediary services are very instrumental to supply chain management and manufacturing businesses. Without these services, there would be no flow in transporting products from manufacturers up to the end users. It would be much more efficient if a third party intervenes in talking to all the suppliers instead of customers communicating with them one by one. They can also be described as “the middleman” but their intermediary services really go beyond than transacting with suppliers and customers.

Different Types of Intermediary Services

1. Intermediary services as agents/brokers

They usually represent the manufacturers in playing this role and they are the ones responsible to look for stores/merchants who are willing to purchase the product. They add a small percentage to the product’s price which serves as their commission or broker’s fee.

2. Intermediary services as wholesalers

With this role, they purchase the products in bulk and then resell it to customers at a price a bit more expensive compared to how much they purchased them from the manufacturer. Unlike agents and brokers, they work around a bigger budget due to the quantity they buy from suppliers.

3. Intermediary services as distributors

Distributors are like wholesalers except they seem to own the product or act as its franchise holder. They are sole distributors for products or manufacturers they are tied up to. For new products, they usually set a launching date as part of their marketing strategy to make the product more desirable to consumers.

4. Intermediary services as retailers

Unlike agents/brokers who look for stores/merchants who are willing to sell the product, retailers sell the product themselves directly to the consumers. Profit is more direct this way, but the work involved could be heavier since they will also be in charge of marketing and other additional tasks agents/brokers no longer do.

Biggest Advantage of Intermediary Services

In our sourcing and intermediary company, we perform different types of qualified intermediary except for being a retailer. Our qualified intermediary may also include but are not limited to doing paper works, checking legalities, handling customs and a lot more. The biggest catch why our clients choose to go with our intermediary services is because they are able to save money through our help. We have better-negotiating power in dealing with suppliers since we are more connected to them compared to the relationship between customer and manufacturers. We can easily coordinate with suppliers/manufacturers and provide immediate payment methods which most clients do not have. To sum it all up, we make transactions flow smoothly and everything becomes more convenient for each party involved.


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Quality Control Plan in the Industry of Manufacturing

A basic overview of how we establish a quality control plan as part of our sourcing operations, which is a necessary process to screen suppliers and make sure we are both on the same page in terms of quality service.

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Do’s and Dont’s of Product Packaging in China

A basic overview of our process and standards when it comes to product packaging, which is a necessary aspect of our service because it easily represents the quality we want in our products.

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Establishing a Product Costing System

As we have previously discussed, our company assists suppliers through production line assessment to ensure quality in manufacturing products and this goes the same way when it comes to setting a product costing system. We make sure products are priced the right way which is why we have established a product costing system in this company.

Components of a Product Costing System

1. Material Expenses

This product costing system component must be the basic when it comes to calculating product costs since material expenses are where most of the capital goes in terms of production. Material costs also include freight expenses, storage fees, import duties and other expenses directly attributable to the material acquisition.

2. Labor Expenses

This component involves overhead labor costs and all the personnel costs required to get the product done. Salaries, payroll costs, and third-party services fall under this product costing system category as well.

3. Factory Overhead

These are expenses that cannot be categorized under direct material costs nor labor costs but are still vital to manufacturing the final product. This component may include manufacturing supplies, utilities, rentals, repairs and other indirect material or labor expenses.

4. Taxes, Duties, and Fees

This used to be a minor factor in our product costing system when we started the sourcing business but has fully come to play when we started doing business in China. Unlike most countries, China has a very complex structure when dealing with their customs. Even though they also apply the 3 main type of taxes (value added tax or VAT, consumption tax, and customs duties) for importing products much like in most countries, the rules for each type of tax are very much different compared to what is traditional in other countries. This is why you need to have a complete understanding of the fees you will be paying for at the customs so you can incorporate them as part of your product costing system.

Calculating Product Costs

Companies follow different formulas for establishing a product costing system. Here in our company, we follow the standard product costing system in the industry which is to divide the total production cost to the number of units produced. The quotient is the production cost per unit and should be the basis for the actual sales price of the product upon considering other factors such as competition, availability and a lot more. Any amount applied beyond the production cost per unit is already considered as your potential profit and values below the production cost per unit are the loss to the company. This process is how our product costing and pricing is established.


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Production Line Measures

We are exposed to different industries such as manufacturing, retail, and even marketing as a sourcing company. We completely understand how competitive these industries are and it is a must for us to adjust to the competition. You cannot simply stick to the basics to be competitive in any business environment. In this blog post, we will further take a closer look at one of the more complex processes we will divulge which is: production line assessment.
This process is much like supplier assessment except this time around we dig deeper into the supplier or manufacturer’s system/processes, operating procedures, and production standards. We would not really intervene to how they do the following, but we only want to make sure these factors are in line with the company standards and our own expectations from them.
Cost estimation is used to make the following products: Garments, Plastics, Electronics, and Branded/Logo Items.

 

What is a Production Line?

A production line is the process flow of manufacturing a product. It starts with the materials and components of the product, the creation process and up to the end of the line when the final product is materialized. The manufacturing production line can easily be described through words but the actual process including the micro-processes involved can really be tedious. However, you really must go through a production line assessment if you want to significantly decrease costs and achieve the best quality.

As a globally competitive sourcing company, we want our manufacturers and suppliers to follow an optimized production process for their production. In the world of manufacturing, this term is known as “Lean Operations” which is one of the components of the Lean Manufacturing operation system. Most production processes are underutilized and could follow rudimentary methods, which is why it is important for us to assess them from time to time. Helping them achieve an optimized production process will not only help our company but will also benefit them to improve their services.

We want to ensure good quality (or at least reach client standards) of our manufactured goods. The best way to achieve this is to assist our suppliers and manufacturers in their production line process and make sure it is optimized for better efficiency and maximum productivity. There is no need to spend resources in this process, you only must set standards for the manufacturers and suppliers to comply. The manufacturing production line is not your work as a sourcing company, but it is your responsibility to assess the system is up to the company’s standards.
For more details specifically about what this service is; click here: Further reading on Cost Estimation

Click here if you want to do a cost estimate on White Label products.
Click here if you want to do a cost estimate on Apparel.
Click here if you want to do a cost estimate on Electronics.



Click here if you want to do a cost estimate on Plastics.


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http://intrepidsourcing.com/production-line-measures/

A Simple Guide on Contract Negotiation Process

As a global sourcing company, we expect to work with companies from different countries rather than exclusively working with a single country or nationality. Geographical locations, culture, and communication play huge roles in our working relationships which is why it is necessary for us to document our agreement in the form of a contract. Our contract negotiation process involves multiple factors along with terms and conditions which are tightly considered before a final contract gets signed. Here are a few factors to our contract negotiation process you need to know of.
Cost estimation is used to make the following products: Garments, Plastics, Electronics, and Branded/Logo Items.

 

Factors to a Contract Negotiation Process

1. Pricing

Pricing makes or breaks a contract negotiation process.
The most common reason why disagreement arises in the contract negotiation process is due to pricing. Most companies we come across right away go for the lowest production cost which is practical but wrongdoing. Always keep in mind quality comes with a price. If you go ultra-cheap then quality is surely sacrificed. The people we end up signing contracts with are usually reputable and the pricing towards their services are justifiable which is congruent to our goals in this company: provide quality service at a reasonable price.

2. Service Quality & Delivery Time

Service quality and delivery time are key factors in the contract negotiation process.
Quality of service and delivery time are very important components and are primary concerns for the terms and conditions during the contract negotiation process. You need to be assured of their service quality and they should promise to deliver on time. If both parties cannot meet on these factors, then a contract drafting is not happening any time soon. Also, you must hold a party liable in case they fall short of the standards set or be tardy in delivery time. This clause should be discussed clearly during the contract negotiation process.

3. Communication & Culture

Why communication and culture vital to the contract negotiation process?
There must be clear communication lines between our company and the suppliers or manufacturers we work with. We understand things could go wrong somewhere in the production and they could be inevitable. They must be honest with us so we can prepare our ad hoc processes to suppress the issue. If these issues are not communicated right away, then problems would reflect badly on our company and to them as well.

Understanding your potential business partner’s culture is important because even if work is constant, our approach and behavior towards it differ depending on our cultures. In our experience working with different nationalities, we modify our terms and conditions compliant with the other party’s culture and yet stick to our company’s standards. We just alter stuff within the contract negotiation process based on their working conditions and other factors revolving around their work culture.

Contract drafting will easily follow if the factors mentioned above are agreed upon by all parties involved and the contract negotiation process goes on smoothly. Your company’s terms and conditions should be set at a standard and applies to any contract negotiation process you offer your potential clients in the future. However, always be open to changes and possibly alter these items after the contract negotiation process not just for the benefit of your company but to your partners as well. This move will also make the contract negotiation process easier later in the future.
For more details specifically about what this service is; click here: Further reading on Contract Negotiations

Click here if you want to do a cost estimate on White Label products.
Click here if you want to do a cost estimate on Apparel.
Click here if you want to do a cost estimate on Electronics.



Click here if you want to do a cost estimate on Plastics.

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http://intrepidsourcing.com/a-simple-guide-on-contract-negotiation-process/

The Art of Prototype Manufacturing in OEM Companies

A basic overview of how we conduct prototyping for clients including the factors we consider before hiring suppliers and manufacturers capable of creating prototypes; it is a necessary process to screen suppliers and make sure we are both on the same page in terms of quality service.

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