When dealing with a supplier, remember that your goal isn’t to get the cheapest product. Your target is to have a well-priced offering that does not compromise on quality. By learning the art of negotiation, you get three benefits: You cut down on the cost of goods. Money saved is money earned. As a result of lower expenditure, your profit margins rise. It helps you control your cash flow.

1. Noel N. Villarosa
A presentation showcasing the process of selecting suppliers to find quality
sources of goods and services.
SUPPLIER SOURCING

2. What is Strategic Sourcing?
Strategic Sourcing is a purchasing power to create an ideal and
systematic cycle in deriving the trusted products and suppliers
with the best ideal price for targeted products and services.
The primary goal is to create profit and build strong
relationships with the suppliers.
Strategic sourcing focuses on the shared insights in a
collaborative relationship. Partners consult the team to look for
new innovative ways for your products and services. In turn,
they sourced out for manufacturers or traders for their
commitment to the long-term strategic partnership.
In this presentation, I will share my experience of the practices
I used in strategic sourcing practice.

3. The first step is to identify your product,
including the volumes (quantity, types,
and sizes) spend time to keyword
research in Amazon and another e-
commerce platform. Create a keyword
bank for future use. Select your product
with the highest search volumes, sales,
and ranking, consider also the prices
and suppliers, and specification details.
Also, don’t forget to analyze your target
market– who they are, where they are
located – and departments involved in
the supply chain.
Step 1: Profile The Category
My Product Name: Bamboo Steamer
Main Keyword: Bamboo Steamer
Product Weight: 2.81 Ibs

4. The first step is to identify your product,
including the volumes (quantity, types,
and sizes) spend time to keyword
research in Amazon and another e-
commerce platform. Create a keyword
bank for future use. Select your product
with the highest search volumes, sales,
and ranking, consider also the prices
and suppliers, and specification details.
Also, don’t forget to analyze your target
market– who they are, where they are
located – and departments involved in
the supply chain.
Step 1: Profile The Category
My Product Name: Bamboo Steamer
Product Dimension: 6.89 x 10.28 x 10.31 inches

5. The first step is to identify your product,
including the volumes (quantity, types,
and sizes) spend time to keyword
research in Amazon and another e-
commerce platform. Create a keyword
bank for future use. Select your product
with the highest search volumes, sales,
and ranking, consider also the prices
and suppliers, and specification details.
Also, don’t forget to analyze your target
market– who they are, where they are
located – and departments involved in
the supply chain.
Step 1: Profile The Category
My Product Name: Bamboo Steamer
Type of Packaging: Shrinkage Package,
customized box
Package Weigh/Dimension: Weight : 2.33
pounds / 10.12 x 10.04 x 6.8 inches
Product Image:

6. Step 2: Supply Market Analysis
Understand your target market’s buying power and classification in order
to position your sourcing strategy by doing an in-depth market analysis.
Then, you will arrive at your strategy approach that better fits with the type
of service you’re appropriating.
Once you identify the segmentation of your product and service, you’ll
have a clear plan of how your researched product and service impact the
overall operation of your business, then be more assertive about your plan
of action and partner relationship you should build.
Segmentation means dividing the marketplace into parts, or segments,
which are definable, accessible, actionable, and profitable and have growth
potential. In other words, a company would find it impossible to target the
entire market, because of time, cost, effort, and geographic restrictions.

7. It is a difficult task in deciding where and
how to buy while maximizing your
resources. Resourcing your search for the
best suppliers, you should consider both
old and new suppliers. Establish your
business’ guidelines and criteria for the
minimum requirements for suppliers,
then list the selection criteria that are
most fitted to your requirements,
necessities, and budget.
Step 3: Develop The Sourcing Strategy

8. Common terms when negotiating with
suppliers:
MOQ – Minimum Order Quantity
- Refers to the least amount of products or units
a supplier is willing to produce at one time. MOQs
are set by suppliers to cover their cost of
production and ensure that they make a profit off
of each production run.
EXW – Ex-Work
- The Buyer (Amazon Seller) is responsible for
arranging pick up of goods from the supplier’s
and delivering them to the destination (and all of the
other costs in between).
FOB – Free on Board
- Supplier pays to have the goods delivered to the Port
in China including the local transport costs in China as
well as the cost to clear the goods for export.

9. Step 4: Select The Sourcing Process
Time to look for your suppliers. The most
common method that many businesses are
using is Request for Quotation (RFQ).
If you’re not familiar with the term, RFQ is a
solicitation for goods or services in which a
company invites vendors to submit price
quotes. The document outlines the details of
product or service specifications, requirements,
pricing breakdown, Incoterms, and evaluation
criteria.

10. How to contact Alibaba Suppliers:
1. Go to Alibaba and log in to your account
2. Type the keyword of your chosen product and click
search
3. Filter suppliers by clicking Verified Suppliers
4. Start contacting suppliers via Alibaba
5. Create RFQ Letter for quotations and inquiries for
your suppliers. Give them your detailed product and
packaging specification.
6. Ask the suppliers as to their capabilities in shipping
fulfillment for EXW, FOB, and DDP for 500 units and
1000 units and to quote their cost per unit.
7. Rate the suppliers as to their Responsiveness, English
Proficiency, and Request accommodation.
8. Ask for the sample price, sample price shipping fee,
and sample remarks.
9. You should know the contact person, address, year
established, transaction count, transaction amount,
and On-time delivery rate.
10. Highlight your recommended supplier for your
product.

11. Now you may have many suppliers that
respond to your RFQ. Your next task is to
shortlist the most potential suppliers, then
message/chat with them for clarification
or asking more details if needed. The
more information you have from each
supplier, the better decision you will
make. The goal of the supplier sourcing
task is for you to develop the skills of
recommendation, not only for encoding,
but you should also know how to
recommend why is this supplier is best
while the rest is not.
Step 5: Negotiate and Select Suppliers

12. After negotiation, you may have the
decision of what supplier you want to
partner with. Make sure you notify the
successful supplier that are going to be
involved in the implementation stage
and thank also those suppliers who were
not selected.
Step 6: Implementation and Integration

13. ESTIMATED TOTAL COST PER UNIT (WITH ALL EXPENSES)

14. ESTIMATED TOTAL COST PER UNIT (WITH ALL EXPENSES)

15. ESTIMATED TOTAL COST PER UNIT (WITH ALL EXPENSES)

16. RECOMMENDATION/ REASON
WHY I CHOOSE THE SUPPLIER AS
THE PRIMARY SUPPLIER
The primary supplier which is supplier
B achieved the Net Profit Margin for
EXW, FOB, and DDP within the range of
30%-40% which is a requirement to be
selected.
A Verified Supplier and has Trade
Assurance
Primary product is made of bamboo.
Sales representative is conversational
and respond in a timely manner to
inquiries and submission of RFQ.

17. PROFIT MARGIN RECOMPUTATION
Product Research
Profit Margin
43.64%
Product Research
Profit Margin
43.64%
After Supplier Sourcing Profit Margin After Supplier Sourcing Profit Margin
Product Cost
(Section Number 5) $7.25
Product Cost
(Section Number 5) $6.95
Shipping Cost $2.55 Shipping Cost $2.55
Referal Fee $4.93 Referal Fee $4.93
FBA Fee $7.03 FBA Fee $7.03
Storage Fee $0.33 Storage Fee $0.33
Net Profit $10.79 Net Profit $11.09
Profit Margin 32.82% Profit Margin 33.73%
EXW (500) EXW (1000)
SUPPLIER B EXW PRODUCT COSTS

18. PROFIT MARGIN RECOMPUTATION
SUPPLIER B FOB PRODUCT COSTS
Product Research
Profit Margin
43.64%
Product Research
Profit Margin
43.64%
After Supplier Sourcing Profit Margin After Supplier Sourcing Profit Margin
Product Cost
(Section Number 5) $7.08
Product Cost (Section
Number 5) $6.64
Shipping Cost $2.55 Shipping Cost $2.55
Referal Fee $4.93 Referal Fee $4.93
FBA Fee $7.03 FBA Fee $7.03
Storage Fee $0.33 Storage Fee $0.33
Net Profit $10.96 Net Profit $11.40
Profit Margin 33.33% Profit Margin 34.67%
FOB (500) FOB (1000)

19. PROFIT MARGIN RECOMPUTATION
SUPPLIER B DDP PRODUCT COSTS
Product Research
Profit Margin
43.64%
Product Research
Profit Margin
43.64%
After Supplier Sourcing Profit Margin After Supplier Sourcing Profit Margin
Product Cost (Section
Number 5) $3.12
Product Cost (Section
Number 5) $3.06
Shipping Cost $2.55 Shipping Cost $2.55
Referal Fee $4.93 Referal Fee $4.93
FBA Fee $7.03 FBA Fee $7.03
Storage Fee $0.33 Storage Fee $0.33
Net Profit $14.92 Net Profit $14.98
Profit Margin 45.38% Profit Margin 45.56%
DDP (500) DDP (1000)