How To Source Quality Raw Materials For Physical Products

by Yaro Starak, creator of Entrepreneurs-Journey.com

Sourcing is finding and evaluating the components and parts needed for goods and services. With a product based company such as my handbag company, sourcing materials would consume a lot of time, energy and funds. Raw materials would account for almost 50-70% of our costs. We spent a lot of time searching for our materials, especially leather. Because of the complexity of our designs, at times it was like looking for a needle under a haystack.

Why Bother Sourcing & How To Source?

If you have a business with physical items it might not be necessary for you to source yourself. You could potentially contract with a full-service company that could source for you.  Additionally, these full-service companies negotiate with the supplier the minimums, terms of payment and make sure that the product received is exactly what was ordered.

QUICK TIP: When ordering for production, I would always ask for a TOP (top of production sample) before they started production. With a TOP sample, I wanted to make sure that the sample that I ordered for production was the same quality and consistency of the sample that I fell in love with and wanted for our line. It is a good idea to specify in your purchase order that a TOP sample must be approved by you before production starts. This may add a week or two to your schedule, but it is better to be safe than sorry.

Recently, I was consulting with a handbag company who would just purchase the leather from her factory. A production factory is not a tannery, so besides the factory charging an additional fee for sourcing leather for her, it boggled my mind because I couldn’t imagine a factory manager being the decision maker for the leather on a handbag.

She asked me how my company would source our materials and I told her that we would travel to the shows in Italy or in Asia to see the newest fabrics or leathers ourselves. It was critical for us to be on the cutting-edge of the latest trends and also we would meet with the leather vendors ourselves to establish a relationship. This was very important because in our business we could not have another competitor have the same leather we were using. So by meeting with the vendors, we were able to negotiate certain terms with them, and one of the terms we always negotiated was that if we committed to buying a large amount, we wanted that leather article to not be sold to any other handbag companies.

When raw materials are sourced, it is imperative that you look at the:

• Selection
• Content
• Construction
• Colors as well as prints and other options
• Performance characteristics

Negotiate The Minimum

When purchasing directly from vendors you will need to negotiate with them the minimum that they expect you to buy (often just called minimums), lead times (production time), cost, delivery options and their return policies.

If there are a lot of suppliers which provide what you need, you may want to consider if you want to purchase domestically or foreign. If you are purchasing domestically, you will pay more because the product is already in your country and you will not have to worry about transportation costs or duties. With foreign sourcing, you will need to worry about those things as well as language barriers and cultural and different business practices. However, I always preferred to source overseas as I found much more selection that way.

Of course, your choice of materials will be different based on aesthetic and functional characteristics of your product, price point, expected sales volume and your business model.

Trade Shows

Instead of having to travel internationally to visit vendors if you live close to a metropolitan area, there are often trade shows at your local convention centers. There are trade shows for a variety of different industries such as textiles, apparel, home furnishing, electronics, children’s items, beauty, health and nutrition, and outdoor sports.

When shopping a trade show, the vendors expect for customers to be well-versed in the wholesale environment. I have worked trade shows and worked with customers who seemed to be newbies or didn’t seem to know the lingo of our industry. Sadly, those were customers I did not spend much time with as they would often cancel their orders next door or would just waste too much of my time on the trade show floor.

Online & Local Sourcing

If it is not convenient for you to attend a trade show, start doing your research online. There are many companies which are online now and many have uploaded their catalogs online. Of course, this does not replace seeing the actual parts in front of you, but it is a close second. If you find the pieces that you need, then you can order a sample to review. When the sample arrives and if it is not what you wanted, try again with another company. In the past when I have been unable to find what I need, I would call the vendors up and ask them if they knew where I could find a part like I needed.

Another option to source is in your hometown. Depending on the product you are making, you can often purchase from a local supplier and be able to pay a lower price or maybe even their cost price provided you purchase in volume.

In closing, I think of sourcing as cooking the perfect Italian meal. First, I have to go to the market and pick up the freshest ingredients – fresh pasta, beautiful vegetables and herbs, fresh bread and a wonderful bottle of wine. I would not send someone else to do it. I personally want to make sure the quality is amazing and that I have chosen the very best the market has to offer.

With my handbag line, I felt that we found the most unique materials consistently season after season. We sourced everywhere to bring our customers the best. If you have a product-driven company, you can either shop yourself or send someone to do it for you. It all depends on what you are having for dinner.

Christine Syquia

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