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China sourcing: Help creating a Purchase Order (PO) template

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The importance of having a good Purchase Order (PO) in place when sourcing in China can’t be stressed enough.

The document sets the foundation for your relationship with your supplier. A buyer without a good PO/Contract gives too much leverage to the seller and allows them to manipulate the relationship to their advantage.

As part of PassageMaker’s Import/Export Management service, our account managers take our in-house PO/Contract templates then work with the local lawyers and project managers to create a robust document specific to the needs of our clients.

However, if you are not yet in a position to retain the services of a professional buying agent like PassageMaker, here is a behind-the-scenes look at how any buyer (large or small) can create an effective and affordable Purchase Order template that offers real protection in China.

Let’s start with the free stuff:

Here are some blog posts I wrote related to PO’s/Contracts:

7 ITEMS YOU PROBABLY FORGOT TO PUT IN YOUR CONTRACT WITH THE FACTORY

PURCHASE ORDER

Now let’s look at some very affordable options for getting professional help writing your PO.

On Amazon you can find guidebooks (do an Amazon search for China+ Sourcing) that offer templates and samples of key documents, including the all-important PO/contract.

For example, My guidebook is available for 58 USD and includes various templates and check lists. The PO template is also available as a standalone document in excel format. I recommend buying the book and templates together as a package because the book explains how to negotiate the terms and set up the PO in a way that protects the buyer’s interests.

While a template is a good start, much better would be having a custom document in bi-lingual format that is specific to your situation. An English speaking Chinese lawyer in China can provide this for a few 100 USD. Here is more information: AsiaBridge Law

Consider engaging an advisor to look after your PO’s/Contract as part of supply chain management. Here are 4 options for your consideration ranging from freelancers to large consultants:

OPTIONS FOR SUPPORT WITH SOURCING AND SUPPLY CHAIN MANAGEMENT

you can also visit www.SourcingServiceCenter.com for my list of endorsed service providers.

In summary, now that you know how to get help building an effective document, even on a tight budget, there is no excuse for not using a well-crafted PO when buying from China.

The best way to avoid defects in China? Clarify specifications

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In a recent blog post entitled “QC: OK to be picky. But be professional” I explain that as professional buyers we need to be picky with our China suppliers. But more importantly, we need to be professional in our ability to create a written standard for our expected quality.The best way to avoid defects in China is for the factory to have a crystal clear understanding in terms of what is your standard and how to inspect for that standard (including what tools and techniques are required).

The team at Asia Quality Focus wrote a similar blog post but included a check list. With their permission, I am sharing it with our readers:

The wordings “it”, “which” or “be picky” should be banned. It is better to clearly specify what is being referred to in the text.

The word “shall” is the best to use to define a requirement. The requirements expressed as “shall” must be fully and properly met.

Sentences should be short and direct.

Obvious spaces should be used only between paragraphs, to differentiate sections.

Each industry has a jargon and abbreviations. They all should be clearly defined one by one (the buyer could add a definition section at the beginning of the specification for example).

For all dimensions or weight requirements, it is important to mention the tolerance levels (+/-) and the measurement method applied.

For color specifications, the best option is to use a standard such as the Pantone code.

The conditions under which the item must meet the product specification should be specified. If the product performance is reduced at extreme temperatures and humidity is acceptable (this detail is still part of the product specifications).

When some specific tests are required, they should be specified and include the standards that should be used or the precise measurements to be done (Material, Conditions…)

The approval sample should be complementary to the product specification; it is an additional support only. In any case it can replace clear product specifications.

The best way to avoid defects in China Clarify specifications

Perhaps the best advice is this:

As a general rule, the buyer should write the product specifications pretending that the supplier is new to the industry.

Really “spell it out”. Here is another advantage of being detail oriented with your product specs:

As a matter of fact, the buyer should keep in mind that some suppliers will try to cut corners to decrease internal costs and bolster their profits. So ensure that the specifications describe all qualities of the product in such detail that corner-cutting is impossible.

Need QC support?

I’m on the board of advisors at Asia Quality Focus and recommend them with confidence for audits and inspections. Contact me here if you would like an introduction.