As an online gift company, we are constantly looking for the latest products to offer our customers. Keeping ahead of shopping trends is a challenge in itself, but once we’ve decided to add a new product to our range there are a number of obstacles to overcome in order to get that product to us ready for sale.
When importing goods, our timescale is dictated to us by the terms of our finance with the bank. We’re allocated 60 days from payment of a deposit to release of the goods ready for shipment to the UK. As a gift company, most of our sales are seasonal, with 80 per cent of turnover coming from the October to December period. Therefore, it’s imperative that our Christmas stock arrives on time and without problems.
During the 60-day period we set deadlines for each stage of the import process to be completed. Before I discuss more about what happens at each stage, I thought it worth mentioning we use Microsoft Project to help us monitor our progress. This cloud-based software means all the members of our team can work together on the same document. This is especially useful when importing or exporting goods as you may have employees oversees, or work with an agent who liaises with factories and suppliers on your behalf.
The software itself is responsive to the deadlines we set. So if there is a delay in completing a task, we’ll receive an alert to follow this up and any amendments to our schedule will automatically be made. Bring able to track impacts to our work calendar allows us to manage issues before they turn into problems.
An Excel document can do something similar but advanced knowledge is required to construct a tracking document. Using an established off the shelf package is economical for a company our size and for what we import/export.
So what are the specific challenges a small business might face in tracking and monitoring their imports?
Rather than import goods already made by a supplier, we sometimes want a new product made to our own specifications. We’ll detail the size, colour, quality and packaging of our potential new product before being given a quote for an order. We’ll also need an initial sample to check our requirements are being met.
However, choosing a supplier on the other side of the world is tricky. Credentials such as references and business licenses need to be checked. To help us evaluate suppliers we employ an agent based in China who can visit factories as needed to monitor their progress.
We mainly import from China, where negotiating a deal follows different customs to the UK. Again, using an agent means we use a third party who is best placed to navigate the culture and business practices. To start production (either of a brand new product or existing product) most suppliers ask for a deposit of around 30 per cent or a flat fee from the overall order. At this point our 60-day timescale begins and monitoring lead times becomes even more important.
Our agent can work from the dates set up in Microsoft Project. If a deadline is looming we have the great benefit of having someone on the ground to follow this up with the supplier. This helps us to minimise the impact a seven hour time difference may have on us – our agent works to the same time zones as our supplier and can update our work flow in real time.
Often suppliers will only deal with production, so once this is complete we need to arrange shipping. This puts the responsibility for declaring duties and taxes on us but also gives us the freedom to ship with a freight forwarder we trust and already have a working relationship with.
Shipments may be delayed for a number of reasons, from inspections at ports to check goods have been correctly declared, to the freighter itself breaking down. Again we closely monitor progress of delivery in Microsoft Project. On one occasion we were approaching the delivery date on a purchase order but received notification that the ship had returned to the dock for repairs. Having software in place allows us to evaluate the impact of the delay and judge the time and cost of waiting versus arranging delivery by other means. We’ve also encountered ships caught in storms and a fire on board so it pays to be prepared.
For us, working with an agent in China, and developing our relationship solely with them has helped us to deal with any challenges as they arise. Our agent is better placed than us to deal with language barriers, cultural differences and monitor progress at factories. Maintaining a good relationship with our agent encourages more communication which helps reassure us the process is on track. We receive photos of the products in development stage, forewarning about delivery dates and potential delays which all result in less surprises when we eventually receive the goods.
Of course, the downside is this is that we pay a commission to the agent. However as a small business you should consider what value you’d place on developing those contacts and expertise yourself.