The Six Landmines of Sourcing from India


 

My first visit to India in 1999 felt like a venture to the moon for me.  Before I even got off of the plane, I began to detect an entirely new scent.  Over the next twenty days, all of my senses were assaulted as I encountered new experiences at every turn.  Most of these new things I enjoyed, and I quickly began to cherish the beautifully unique culture and incredibly hospitable people.  I became a student of everything India, and have spent the last twenty years wrapping my mind around the ways it is both similar as well as dissimilar to my own origin story in America.   

 

It was 2008 when I began to translate these discoveries into business investment and activity.  I took the risky leap of actually moving to India so that I could gain a deeper, more practical understanding of the product possibilities and factory capabilities. I had a few advisors who could give counsel related to business decisions. But, by and large, their experiences were exclusively from China, and not from anywhere south of the Himalayas.  Much of this advice was applicable, but I soon discovered that India was unique, and required specific perspective and skills.  Like many, I emerged from my first few product sourcing attempts with some scars and lessons learned from the school of hard knocks.

 

I assume you are reading this because manufacturing in India has either become an interest or possibility in your business plan.  Whether you are just getting started or have some bruises of your own, these are six warnings I wish someone would have shared with me before sourcing from India.  Over time, and in collaboration with the relatively small number of expat procurement professionals focused on the Indian subcontinent, the following issues and subsequent solutions have become more apparent.  India is an obvious answer to mass production in many material categories.  Therefore, avoiding the following six landmines will position you and your company for success in the marketplace and enduring friendships on the other side of the world.  

 

1. Underestimating Cultural Differences 

 

How many friends do you have who have never tasted a significant corner of the food pyramid based on the religious convictions of their family?  Any that have chosen to allow their parents to pick a spouse for them?  What about seeking the advice of a community leader to find the auspicious day for planning a significant life event?  The cultural roots of India run very deep. The world has become so connected that it is hard to imagine that everyone everywhere has not conformed to the societal norms sold in shared media.  It is important to remember, however, that factories are located outside of the more affluent city centers that are highly influenced by the west.  Even if the owners and operators of a company have adopted a more western approach to life, it is vital to remember that the laborers are normally from surrounding villages and therefore, are less exposed to (and less concerned with) different approaches to life.  

 

As a foreigner, learning about and respecting cultural events will have an incredibly positive impact on interpersonal interaction in business.  For instance, I once lost favor with a potential business partner because my American associate pointed to the bottom of his shoe in the man’s general direction.  Or, you might be surprised to find out that your project is now on hold due to the fact that a member of the management team is getting married, and the activities surrounding the wedding demand nearly all of the focus of the factory for weeks in advance. You might feel like conditions in the factory are not exemplary because the workers sit on the floor.  However, after insisting on chairs and tables, you might return to see that the furniture is stacked in a corner because the employees prefer to sit cross legged on the ground.  I had a good laugh at the expense of the friend who endured that critical miscalculation of what was considered comfortable.  

 

It is also important to keep in mind that India is a true mosaic of beliefs and traditions.  Each factory will have a unique story, and there will be holidays that impact that vendor greatly that might not show up on an international calendar or even affect another manufacturer in the same region.  It takes a significant amount of time and energy to make oneself aware of these differences, and it would be impossible to understand all of the nuances. However, any and every step taken towards greater cultural understanding will pay huge dividends and mitigate unforeseen risks.

 

2. Untested Vendor Selection 

 

When partnering with another business, one also partners with that company’s strengths and weaknesses.  I have been surprised with how quickly myself and others have been willing to trust a vendor we have never met with large amounts of cash to create the products at the core of our desired success.  I have never personally received a container intentionally packed with scrap pieces in lieu of the product I ordered, but I have heard that story more than once.  

 

Early in my personal journey, while working with a large brand name retailer, I did inspect a container at the back door that could barely be identified as what had been ordered.  A kindergarten class could have just as easily done the work.  When asked about the selection of that vendor, I discovered that this decision had been made at the same time that this purchase order had been issued during one meeting at an expo.  After visiting that factory to recover those funds, I found that it would have been easy to forecast this failure.  

 

If you take your product seriously, there has to be a vetting process that you go through with any potential vendor before you commit to an order with them.  Failures can come in many forms, but I find that most failures are easy to predict through a short tour of the factory.  It may seem blindingly apparent, but it needs to be said: Someone needs to go to the factory to ask the obvious questions about processes and procedures. Someone needs to dive into worker satisfaction and safety.  Someone needs to view the orders that are in process to insure the legitimacy of the business, and look into the eyes of a factory’s leadership team to confirm dependability. These seemingly simple activities can protect your investment and save you more headaches than you could ever imagine.  

 

The travel time to India from the United States would require at least a full day of flying, inclusive of a complete flip of your internal clock and reversal of that process to regather your balance once home again.  If you add to that the cost of airfare, it would be an incredibly time consuming and expensive venture to lay eyes on the factory for yourself.  Another option would be to utilize a third party who has a current process of verifying vendors.  But, it would still be important to do your own verification of that partner to insure that you see eye to eye.  Many times, the agents connected to factories simply represent family connections or incentives for sales, and not necessarily the aforementioned concerns.  Bottom line, wherever your manufacturing arm is located, you cannot afford to lean on big promises and flowery language with no proof of the appropriate structure or expectations to support your demands. (Love this sentence!!!!)

 

3. Unclear Quality Expectations

 

Anytime an item is taken to mass production, there is an inherent risk that the recreation will not match the original in some way.  A factory must come up with specific strategies to utilize its facilities and labor force to most efficiently and cost effectively complete the order.  With any given product, there are a variety of angles in which quality can be defined, and there is tremendous risk when buyers and suppliers define quality differently. In many cases, the buying team is unaware of all of the nuance involved in the item’s recreation because they have been working so closely with the finished product.  It is difficult, but necessary to adequately bring the supplier to the same level of clarity regarding quality expectations.  There will always be expectations from the buying team, but many of them are not communicated clearly because they are assumed to be obvious.  For instance, it would be easy to assume that a factory would match the product’s color exactly.  However, if this was not specifically stated and a less expensive, similar shade is readily available at the factory, the potential for a color variation is at play.  If color is at all important to the value of the end product, it must be specifically stated to the vendor with details of what will or will not be considered acceptable.

 

India is world renowned for the incredible handicrafts that result from its artistic and skilled labor force.  Before spending time in these factories, I had no idea how many diligent hands were crafting many of my everyday home purchases.  This handcrafted technique is beautiful, and often the only way to achieve the perceived value required in many categories.  However, there is one significant downside to so many hands touching the product throughout production: It can easily become like the “telephone” game we played as kids, where each person whispers a sentence to the next friend until the original message changes drastically by the time it is passed to the end of the line.  If quality is left to the interpretation of each employee of the factory, you can be sure that it will not match the original intent in some way.

 

Creating and working from a reference sample can be a great way to identify potential problems, and describe where the quality lines need to be drawn.  Keep in mind that the sample is likely produced in a designated space for this purpose, and that an actual production run will involve more people.  Laborers will focus on one process or another without seeing a product to completion.  Having the approved sample on the shop floor and using it as a tangible example for comparison is crucial.  It is also imperative that both the buyer and the supplier speak up early and often about potential quality fears.  A document must be created detailing all of these discussions, and painting a clear portrait of what will or will not be acceptable.  Quality checks by a third party upon completion of the first run and also throughout production are essential.  The presence of a buyer representative who is fully equipped with an approved sample and quality checklist can make all the difference in what arrives at the backdoor.  The more this mediator can understand the mind and values of the end consumer as well as the supplier’s production limitations, the more likely it is that failures will be identified and return numbers will be positively impacted.


 

4. Unspoken Time Requirements

 

We all know that a company can only sell what it has in stock, therefore, missing a sales season can break the back of even a well established company.  In a world where just about anything can be at our door in less than a week, it is easy to take for granted the complicated game of ‘Twister™’ logistics that are required.  When ordering custom products from factory communities on the other side of the world, no assumptions can be made.  The buying team needs accountability in place for every expectation they have. Issues must be expected, and supply chain professionals cannot be surprised when confronted with various assaults on a projected timeline.

 

To avoid missing critical delivery dates, it is vital to communicate to the manufacturer what is needed when and why, so that the supplier can also think proactively about their commitments and realities.  A wise vendor will appreciate understanding the situation, and will often shoulder the buyer’s time concern.  They will know that the factory only succeeds if the buyer moves products and issues reorders.  This highlights the importance of choosing a vendor who is looking for a long-term investment toward reorders.

 

To understand this complexity at a deeper level, it is good to acknowledge a few common obstacles that could wreck a timeline in India. In many instances, factories give an estimated time projection, hopefully with margin for all the potential unforeseen hindrances.  This initial accounting may not always take into consideration how many other orders are in play, and the actual capacity of the factory.  Additionally, India is known for its large variety of holidays and festivals that have the potential to add weeks to a delivery date if factory employees are participating.  Suppliers are rarely intentionally over-promising, but there is a cultural bent toward optimism that can require fact checking in order to mitigate potential obstacles.  All of this is before we even begin to tackle the trucks, trains, boats and planes it will require to move the shipment eight thousand miles.  


 

5. Underestimating Communication Barriers

 

Clarity around decisions made throughout the supply chain process is crucial.  It would be easy to assume when two people speak the same language, communication is happening.  However, oftentimes, spoken words become foggy as the influence of one’s mother tongue and his or her varied definition of terms take effect.  In India, many are educated in English speaking schools, and most of the leadership easily operates in the language.  However, there is a distinct way that English is spoken in India that doesn’t always guarantee effective communication.  You may have experienced this when trying to solve a computer issue with tech support while talking with a representative from Mumbai.  While both people are speaking the same words, it can be difficult to understand unfamiliar terminology through the accent barrier without significantly decreasing the speed of the conversation.  This difficulty may be fine when placing an order of your favorite dish from a restaurant, but when you are working through the details of a highly technical and costly purchase of manufactured goods, it can be crippling.

 

Something else to consider when it comes to clarity is the power of non-verbal communication.  In India, the motions of the hands (and in particular, the head), can ‘say’ as much as spoken words.  To a newcomer, these cues may sometimes even appear to conflict with what is spoken.  I remember my first encounters in-country, and how many times I assumed someone’s head shaking was a negative response. Where I grew up, someone moving their chin from left to right meant ‘no.’ I took this interpretation and walked away defeated only to be chased down and corrected.  The head nod in India is only one of many non-verbals that nearly create an entire language unto themselves.  

 

This communication landmine is one that many have failed to see, and the consequences can be devastating.  It has the potential to sneak up on you because it is not obvious how far the gap in understanding might be until it’s too late.  In many places across the world, a mediator who has command of both languages and cultures is an obvious requirement as English is not as common in these instances. With the history of British influence in India and the near constant changes of language from region to region within the country itself, India has a real advantage in communicating with the Western world.  However, any prospective buyer should keep in mind that there remains a distance that must be navigated if clear understanding is to be achieved.

 

6. Undervalued Relationships

 

In my opinion, without contention, the biggest landmine is when a foreign buyer misunderstands the value of family and friends in the Indian context.  My childhood years were spent in a smaller farming community where ‘everybody knew everybody.’  I later moved to a larger city and into a neighborhood with privacy fences and garage doors.  Though the houses were ten feet apart and several families lived on our block, very rarely did anyone interact.  If they did, it was only to reveal the version of their life and story that benefited them most.  Each family existed on an ‘island of their own making’ that was left to fend for itself and face obstacles alone. Eventually, of course, the success of their children would primarily be defined by this individualistic survival.

 

Of all the shockingly beautiful things about India, none are as powerful as the interconnectedness of families and communities. Families are very close, with most married children living under the same roof as either their own or their spouse’s parents. In many cases, the grandparents live in this same house, and the extended family is very involved in most of the activities of life. Children are definitely raised in the context of a ‘village’ mentality in terms of the interdependency of family members.  Much of this cultural difference has been identified as consistent with people who live below the equator as opposed to those who live in colder regions.  With consistently warmer weather, people have historically interacted on a more constant basis, and have learned a more communal way of life.  Along the same lines, factories are most often family owned and multigenerational.  Even when hungry for business, they are not necessarily willing to take every order that comes along, and they are reluctant to begin partnerships with people with whom they don’t enjoy a good relationship.

 

This different valuation of the bottom line can astound westerners as they try to negotiate product procurement from India.  We all know that human nature causes us to gravitate toward doing business with people we like.  It is rare, however, in most western circumstances, for these relationships to win out over profit margin.  In the push and shove of Indian decision making, I have routinely experienced an honor for relationships winning out over the bottom line.  I believe this is driven both by the cultural emphasis on connectedness as well as the long-term mentality.  When a business is thinking more about what will be left to the great grandchildren than what advances will be made month by month, it focuses attention on trustworthy and loyal partners.  Knowing this relationship will involve give-and-take allows both parties to link arms for the roller coaster ride of risk together.  If a potential buyer assumes that money primarily motivates a supplier in India, they may find themselves confused and alone because of a failure to align with the values of the factory. 

                                                                                                           - Mark Palfreeman

While everyone wants a quality product at an incredible price point, no one wants to achieve that feat by taking advantage of others.  BHI is highly aware of this issue when sourcing products overseas.  Creating a fair and safe environment for factory workers is one of the most compelling reasons as to why BHI exists.  The on-boarding process for any potential BHI endorsed factory includes a baseline evaluation of the most common social compliance failures.  For a factory to be in partnership with BHI, they must comply with these standards.  

Our team is involved both in accountability and in helping develop strategies to improve a factory environment that is struggling to meet buyer expectations.  Focus is given to the safety of the work area provided, and specifically, to the mitigation of fire risks.  Laborer age requirements, appropriate pay, and limitation of work hours are also included in this evaluation.  It is critically important that any subcontractors are known as well, in order to accurately understand the operation from beginning to end.  By taking the welfare of

each person seriously, BHI believes that a better product is possible, and that supply chain activities can become a vehicle for good in our world.