A Good Looking Website & A Procurement Disaster

The USA buyer thought he could be the potential supplier.
He contacted using the ‘Contact Us’ page.
The reply was prompt.
The buyer sent the NDA for signature.
NDA was signed in no time.
The buyer issued the RFQ (after the NDA).
The pricing was attractive.

This USA-based Procurement manager then asked APOGEE to perform a Factory Audit.

I contacted the potential supplier. They asked me to come for the audit after 10 days.
Just one day before, the potential supplier informed me, “Our new factory is outside the city. We will go there for the audit“.
Okay, I said.

On the audit day, we arrived at a factory located outside the city.
I observed the Nameplates/sign boards and business cards.
The factory name was different than that of the supplier.

Here is my conversation with the potential supplier.

I: Why have you brought me to this factory? Your business name and the factory’s names are different.
Potential Supplier: They shall manufacture your products.

I: So what is your role?
Potential Supplier: We are the supplier, but they are the manufacturer.

I: You said it’s your factory, right?
Potential Supplier: Yes, you can consider this as our factory only.

I: Consider or yours? The business names are different. Can you show me a document that links you with the factory?
Potential Supplier: The owner is my brother.

I: But your surnames (family names) are different. Are you brothers from the same family?
Potential Supplier: We are like brothers.

I: Okay, understood. Please take me to your physical address (Potential Supplier). I want to start from there.
Potential Supplier: Our physical address has a vacant building on it.

I: Have you notified the USA buyer that you are not the real producer?
Potential Supplier: It doesn’t matter. He only needs OK products. Factory can produce the products for the USA buyer without revealing our address.

Would you work with such suppliers?
More importantly, how would you do such a detailed analysis?

Schedule a TEAMS meeting with us today. We add value for you.

Know the Author: