Henrik Pontoppidan, Director of S2U Design, asks the question: What is YOUR sourcing philosophy in Vietnam – And how is it going?
In my series of letters from Vietnam, each exploring key sourcing disciplines for success, this month’s focus is on ‘the sourcing philosophy.’ For example:
- “We cut out the middleman and do all tasks ourselves.”
- “We outsource all sourcing tasks to agents or sourcing companies and focus solely on selling furniture.”
Whatever your strategy, it needs to address design, product development, factory vetting, negotiation, compliance documentation, and QC/QA. If you’re importing from Vietnam, chances are you’ve been burned more than once due to inadequate handling of one or more of these disciplines.
Myth Buster
Cutting out the middleman saves costs. No – not if the goal is purely to save money. Only cut out the middleman if you can manage tasks better yourself.
Outsourcing means no worries. Wrong. Blindly outsourcing leads to poor results and costly mistakes. It is super important to understand what’s being done and to be able to evaluate and verify/challenge its quality.
My Hands-On Approach
My approach is hands-on, transparent, and rooted in local oversight. I coach, provide expert advice, and manage the process on the ground to deliver superior outcomes. If you have an existing Vietnamese team, I can even coach and train them to enhance results.
The Cost of Inadequate Planning
Here is a fundamental lesson from 15 years of working with Vietnamese factories on the ground: Avoiding direct investment in proper handling leads to higher costs later – for both you and your supplier. Minimizing upfront spending results in delays, errors, miscommunications, and frustrated – and therefore poorly motivated suppliers. This can even stall a project entirely. Tasks must be done well and require skill – whether you or a middleman perform them. Middlemen have functions, much like organs in the body. Only remove them if you can replicate their function better and more effectively.
Defining YOUR Sourcing Strategy
To be clear on YOUR sourcing strategy at the outset is paramount. It focuses your resources and prevents trial-and-error pitfalls. Strategies range from handling everything internally to outsourcing completely. Most fall somewhere in between. For importers, importing from Vietnam, common strategies include:
- Off-the-shelf purchases: Quick, but risky with potential quality issues. This approach is also likely to cause unintended problems relating to design rights.
- Network introductions: More reliable but unlikely to provide the best factory match for YOUR project.
- DIY: Full control, but time-consuming and challenging to manage remotely.
- Buying agents: Convenient but often lack transparency. Difficult to identify if the agent’s motivation is to look after your best interests – or support family and friends by giving them the business.
- Dedicated stationed staff: Effective but administratively burdensome and expensive.
- Sourcing companies: Comprehensive but expensive and may obscure communication.
- Representative office: High control but costly, burdensome and complex.
- Own company: Maximum control but also maximum resource-intensive.
Hidden Costs of Sourcing
Every sourcing function incurs costs. If you’re not paying directly, they’re embedded in pricing. Common activities and their costs include:
| Activity | Description | Who Does It? | Who Pays? | Amount |
| Design | Sketching, 3D modeling | Buyer/Designer/Supplier | Buyer/Supplier | $0 – $10,000 |
| Development | Sampling, molds, testing | Buyer/Supplier | Buyer/Supplier | $0 – $10,000 |
| Manufacturer search | Vetting, visits | Own staff/Agent | Buyer | $0 – $3,000 |
| Supervision | Production oversight | Own staff/Agent | Buyer | 2% – 15% of order |
| QC/QA | Sample checks, reporting | Own staff/Agent | Buyer | 2% – 15% of order |
| Compliance | Docs (COO, FSC) | Own staff/Agent | Buyer | 1% – 10% of order |
| Marketing assets | Photos, videos | Own staff/Agent | Buyer | Variable |
Common methods of Finding the Factory
Happy-Go-Lucky Approach Finding the product you are looking for online. But brace yourself! Ordering without vetting often leads to quality issues and delays.
Relying on Introductions Asking around. Valuable but not foolproof for your specific needs.
DIY Method Taking a week out and travelling to Vietnam yourself. May save on costs but it is most likely less than optimal without on-ground expertise, and due to misrepresented factories during preliminary research.
Funnelling The best approach, but requires a lot of time on the ground vetting 5-10 factories, with personal visits conversations with the owners/CEOs, and analysis to find the best one for YOUR project.
Why You Need Skilled Support
In summary, the biggest and most common mistake is to underestimate the need for qualified local support. Tasks require cultural knowledge, technical skill, and continuous oversight.
How I Can Help
Whatever your sourcing strategy, I can fill gaps and address its weaknesses with hands-on support. Unlike traditional agents, I offer personalized, “western style” expert service in all areas mentioned. My goal is to demystify processes so you can make informed decisions – and then implement your decisions on the ground with full reporting and oversight. Whether it’s design, factory vetting, production oversight, or compliance, I ensure efficient operations and prevent costly issues. In many cases, I outperform entire teams, delivering better results at lower costs.
Sourcing from Vietnam isn’t just about finding a manufacturer—it’s about managing the entire ecosystem. With the right support, Vietnam’s challenges become opportunities for growth. If I do my job, I put you ahead of your competition.
Investing in qualified support isn’t an expense; it’s an investment in your future success.
If you’d like to discuss further, please reach out:
+84 82 7600 171
henrik@s2udesign.com
