I once owned a family shoe manufacturing business with factories in the US and Puerto Rico. We employed over 1,000 people in two locations. When you manufacture shoes, the most labor-intensive part of making a shoe is stitching the tops, which are referred to as “uppers.” We did not have enough stitching labor in our factories to increase the production.
It’s was time to outsource. But, where?
I opened two additional stitching factories. Even with this additional capacity, we still could not meet our customer’s demand. We also started importing uppers from China, but found that the quality did not meet our standards and the lead times from China were too long. We needed solutions closer to home.
I researched alternatives. I called friends, suppliers, and competitors to try to find solutions. After extensive research, I decided to explore the Caribbean Basin.
I found there were upper suppliers in Haiti.
Principle number 1: Do extensive research. I contacted several suppliers to find out answers to my questions and to request references. After reviewing their references, I narrowed the list to a supplier that I thought could produce a product in the time, price, quantity, and quality that were required. I sent them materials, patterns, and a sample upper for them to make samples and price the product.
Now, it was time to visit the supplier in Haiti.
Principle number 2: Visit suppliers to kick the tires. It is always important to visit your suppliers. Usually, you will know right away when you walk into a factory whether this is a company you want to do business with.
When I arrived in Haiti, I was not prepared for the military presence and poverty. When the plane landed, guards with machine guns surrounded us. We were met at customs by our host and hustled into a car for the drive to the hotel. During our drive, there were torrential storms. Women were bathing in the storm sewers on the sides of the road. It’s an image I will never forget.
The next morning, I was picked up and driven to the factory. When I was taken for a tour, I was surprised at how friendly the Haitian people were and the cleanliness of the factory. The pace of production was slow, but the quality was excellent.
Overall, I had a very good impression of Haiti, the factory management, and the employees. The samples look good and the price was right.
Principle number 3: Never order production without a trial run. I gave them a trial order for 360 pair. The trial order arrived a month later. We checked the quality and everything was made to our specifications.
Now, the question was: where do we go from here?
The only question I had was whether Haiti would be a long-term solution for us.
Principle number 4: Decide whether to take a leap of faith if everything is right. I decided to do a pilot program of 1800 pair per week for 12 weeks. Everything went well with the pilot program and we ended up doing business with the supplier for four years.
The program was successful because of the next principle.
Principle number 5: Visit your supplier on a regular basis and build a trusting relationship. You need to visit your foreign suppliers on a regular basis to make sure the quality is correct, the production is on schedule and the factory is adhering to human rights standards.
Today, the process is easier in some ways, but the same 5 principles are still the same. You need to remember there is no substitute for human interaction. You need to build a trusting relationship with your suppliers.
What principles do you follow when you outsource? I’d love for you to share your comments below.
P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor, or Interim CEO? Someone who can help you see your business and your goals through “Fresh Eyes.” Contact me and I will work with you to look at where you want to go and help you find the best way to get there. Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.
Image Credit: Shutterstock