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Yoga mats: reduce cost by 60%

Done - 12.03.2018

How we held a tender among Chinese manufacturers, purchased and inspected a batch of sports mats for the Osport.ua online store.

Situation

How we held a tender among Chinese manufacturers, purchased and inspected a batch of sports mats for the Osport.ua online store.

Problem Solving
Step 1

A preliminary search led the M3Cargo purchasing department to 70 Chinese manufacturers and small wholesalers. After studying the proposals, the list of potential bidders was narrowed to 30 manufacturers.

The client clearly understood what parameters those yoga mats should have to be the most popular in Ukraine. The challenge was to find a partner in China to produce a similar product to reduce its cost. The calculation of the factory cost gave an understanding of the average market price for purchasing this product in China. So we realized that we could satisfy the client's desire to reduce costs, even considering logistics and payment for related services.

Ivan Kadolenok , founder of M3Cargo
Step 2

A detailed check was carried out for each manufacturer: whether the company really exists, whether it has a history of deliveries to other countries, how long ago the domain was registered, and what mentions of the company are on the network.

At this stage, it is important not to fall for scammers. The simplest scheme of deception is that a scammer sets a price much lower than the market price and asks for an advance payment, and after receiving the money, he disappears. The second is more sophisticated: the fraudster hacks the mail of the real manufacturer, hacks into your correspondence with him, and issues an invoice. Therefore, when working with China, it is important to be able to visit the production in person or send your trusted representative to the factory on site, who will verify the authenticity of the company.

Maksym Radysh, Head of Purchasing department

The careful analysis helped identify 10 factories with a good reputation. Price negotiations began.

The tender was won by the factory that offered the best price and had about 12 years of experience in the market. Also, an essential fact in favor of this candidate was that the acquaintance with the representatives of this factory took place long before this tender, during a visit by the head of the M3Cargo purchasing department, Maxim Radysh, to the Futian international wholesale market.

Step 3

The ordering process has begun. The client and the factory agreed on final data on the number of products ordered, materials, size of mats, thickness, color palette, and print. After a few days, the factory started manufacturing a batch of yoga mats for our customer.

Step 4

After the batch of yoga mats was ready, M3Cargo representatives in China went to inspect the products: the size, and thickness of the mats, matched the color and print with the order.

M3Cargo in China has its own network of inspectors who check products for any given parameters specified in the order before the start of production. In total, the network has 100 inspectors of various profiles: from generalist inspectors to narrow specialists. These are trusted people with whom we have been cooperating for a long time, and the possibility of a bribe by the factory of our representative is practically reduced to zero.

Maksym Radysh, Head of Purchasing department

A minor technological defect was discovered during the inspection, and a detailed photo report was drawn up. The 5% of the tested yoga mats had scratches, cracks, and dots, which were notified to the client.

For items such as yoga mats, a random (sample) inspection is mainly carried out: 10 percent of the batch is tested for quality. If 10 out of 100 pieces are defective, there is a possibility that this rejection ratio applies to the entire batch.

Maksym Radysh, Head of Purchasing department

Further negotiations led to a compromise: the client received a discount, considering a 5% discrepancy in quality.

Step 5

Loading of the batch into the container has begun.

While the container was moving by sea, the client could track its path on the M3 Cargo website using tracking.

Final result
  • The client reduced the cost of goods by 60% compared to the purchase of similar yoga mats from Ukrainian suppliers;
  • M3Cargo was entirely responsible for the process of searching and communicating with the Chinese partner, signing the contract, and paying;
  • All wishes regarding materials, dimensions, colors, and prints were taken into account;
  • A sample inspection of finished products detected 5% of the defects before loading into the container. This led to a new agreement on the price, which took into account the expected percentage of defects, which could apply to the entire batch of goods in the same proportion.
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