How to Procure from China #9 - Transaction Monitoring
The Beijing Axis Procurement Process Flow encapsulates the full extent of project engagement, from the point of first enquiry to the range of services in the solution process and benefits provided for the customer. In this edition we focus more closely on step 9 of the Beijing Axis Procurement Process Flow: Transaction Monitoring.
Beijing Axis Procurement Guidelines for Transaction Monitoring
Beijing Axis Procurement monitors the transaction execution by either assisting the client or by acting on their behalf. Potential risks during the transaction will be an incomplete understanding of the technical aspects of the contract, as well as the schedules, quality, potential cost increases and crises which might occur at any time.
Understanding technical contract: The fact that a Chinese supplier has signed the technical contract does not mean that they fully understand it and will comply with it. This could be caused by many reasons, such as a language barrier for the technical terms, different industry conventions (the default in the client's country might not be the same as in China), poor internal coordination in the supplier's organisation, etc. Beijing Axis Procurement provides assistance with technical clarification and with coordinating the supplier's various departments to ensure full comprehension. Whenever necessary, Beijing Axis Procurement will summarise all the potentially risky technical issues and discuss these with suppliers. With proper outsourced technical support for some large projects, Beijing Axis Procurement can provide technical solutions to bridge the client's requirements and suppliers' capabilities in a more economic and practical way so that the transaction can proceed.
Potential cost increases: Even though low product costs appear to promise large savings when the contract is first signed, global procurement managers often find that the contract execution cost for purchasing from China can severely complicate the transaction. Such potential costs include costs for hiring inspectors, flights and accommodation for sourcing and technical teams, cost for amendment of the contract based on the revision of technical requirements, etc. Beijing Axis Procurement helps clients to manage these costs at the beginning of the transaction, by for example:
- Negotiating whenever necessary with suppliers and third parties;
- Planning trips in an economic and efficient way;
- Operating locally in China or even in suppliers' workshop on behalf of clients
Crises: Due to many uncontrollable elements, there will always be sudden crises in any transaction. Beijing Axis Procurement will assist clients to decide whether the transaction should proceed. If the crisis is not serious enough to break the deal, Beijing Axis Procurement will produce solutions to enable the two sides to reach an agreement and maintain the relationship, which sometimes is more important than dealing with the crisis itself. If the crisis is serious and the risk is too high, Beijing Axis Procurement will help clients to negotiate with suppliers to minimise the loss and find alternative solutions for clients to maintain supply.
By Beijing Axis Procurement