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FREQUENTLY ASKED QUESTIONS |
Q. How would you describe the
role that CMD fulfils?
A. The closest answer based on existing roles in the industry
would have to be an “agent”, although the CMD business model
incorporates many activities which are not generally associated
with an agent. The CMD business model was created based on
significant experience in the retail industry and reflects what
we consider to be the “Future Role of the Agent” in China
Q. What does the name CMD stand for?
A. China Manufacturers Direct.
Q. How does CMD work with manufacturers they represent?
A. CMD acts as an agent to more than 30 quality manufacturing
companies located primarily in China, Thailand, Taiwan,
Indonesia, Hong Kong, Vietnam, Italy and France. CMD recruits
and selects manufacturers who are interested in having CMD
represent them based on a comprehensive selection criterion.
Once a manufacturer meets all of the conditions contained in the
CMD selection criteria and the factory passes the CMD
inspection, they are invited to sign a CMD agency agreement.
Q. What type of organisation is likely to work with CMD?
A. Our clients are generally very large retailers who operate
across one or more markets and manage their own food and
non-food private label program. Some of our customers include
very large wholesales and importers who also manage a private
label or OEM brand.
Q. What is the motivation for a company to use CMD?
A. Generally, our new clients are looking to develop their
global sourcing capabilities in Asia or specifically China
quickly.
In many instances, our new clients choose to work with CMD for
any of the following reasons:
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a) minimise their risk of procuring from China
b) achieve instant financial benefits by reaching a carefully
selected group of manufacturers from day one with no upfront
cost
c) have access to a group of skilled professionals based in Hong
Kong and China to support their activities
d) have access to quality control capabilities close to the
manufacturers
e) do not have sufficient time or expertise to fulfil this
function properly internally |
Q. What quick wins can CMD achieve for my organisation?
A. CMD can provide you quick financial wins without the
challenges and difficulties associated in sourcing in a new
unknown market. Sourcing out of China has a number of
complexities associated with it. The selection of manufacturers
is vast and many web based utilities and trade fairs will
introduce your buyers to manufacturers. Finding the right
manufacturer for your products for your company can take
considerable time and cost. CMD eliminates this effort therefore
cost benefits associated with your global procurement strategy
are immediate. You have no upfront investment associated with
recruitment, office, travel, training and learning. You have
very little risk associated with new producers as all the
manufacturers we represent are proven.
Q. Does CMD get involved in supplying their clients branded
goods?
A. No. CMD is completely focused on sourcing and supplying
private label or control brands to their clients
Q. Presently all products in my private label brand are produced
by local manufacturers who also warehouse and distribute
products to me based on short lead times and low inventories. If
I import directly from China or Asia, will I have hidden costs
that reduce the benefit?
A. This very much depends on four key factors:
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a) Volume - CMD recommends that our clients only consider
product categories where your volumes are significant enough to
make the saving worth the overall exercise.
b) Nature of the Product – Some products are not efficient for
shipping because of their bulk or weight which result in high
freight cost on a per unit basis.
c) Existing Market of Operation – How cost efficient is your
existing manufacturing base?
d) Existing systems and processes for managing indent - Your
present and future systems, processes, expertise and procedures
used to manage your sea freight, inventory and forecasting
contribute to the overall cost of indent. |
CMD places a lot of importance on minimising hidden costs of
consolidation, inventory, days of stock and lead times for our
clients. We achieve this by:
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a) representing manufacturers that produce in cost efficient
locations within China
b) representing manufacturers that produce full category
solutions as opposed to one off products. By giving your
procurement people more products to order from the one factory,
they are able to increase their order frequency, reduce overall
inventories in the supply chain pipeline and eliminate the need
to use third party consolidation
c) providing you lower production and shipment lead times than
traditionally available from China and Asia which further
reduces overall inventory levels in the supply chain pipeline |
Q. How does CMD make it easier for their clients to import
direct from the manufacturer?
A. CMD manufacturers produce a large range of products within
their respective category. CMD refers to this approach as
“Production of Category Solutions”. By using this approach, our
clients are able to produce more than individual products with
one manufacturer which results in being able to fulfil container
loads without the need of consolidation or the need to purchase
excessive days of inventory just to fill a container.
Some practical examples below offer a better understanding of
how this approach provides efficiency to the import process:
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- CMD is able to manufacturer a full solution for light bulbs
including; incandescent light bulbs, energy saving bulbs,
diachronic bulbs and fluorescent tubes traditionally used in
offices and retail stores. Our clients can fulfil their complete
light bulb category solution for private label and also internal
usage from one producer.
- CMD is able to manufacture a full solution for plastic
storage and sandwich bags for multi tear brands. For clients
that have a two tier private label strategy, our factory can
produce both an entry price brand and a second National brand
equivalent. This function provides automatic efficiencies to
your procurement people as all products are ordered from one
producer.
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Q. How does CMD ensure their clients low cost of products?
A We define the cost of product as the cost of manufacturing the
product plus the supply chain costs associated with getting the
product to the consumer. The 4 points below provide a high level
explanation of our approach to providing our clients low cost of
product:
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1. CMD evaluates a manufacturers production cost as part of the
pre-selection criteria to ensure that the manufacturer has
sufficient procurement scale and manufacturing efficiency to be
competitive in the global market
2. CMD consolidates the purchasing volumes of more than one
client with each manufacturer they represent
3. Most CMD clients award contracts of 1 to 3 years. Such
durations permit CMD to assist manufacturers on strategies
associated with the procurement of their raw materials. Where
possible and practical, CMD facilitates with multiple
manufacturers to consolidate their procurement of raw materials
and achieve a lower cost
4. CMD selection of manufacturers ensures that cost associated
with consolidation, indenting and inventory are minimised across
the supply chain. CMD achieves this by ensuring the
manufacturers we represent:
- are located in areas that are easy to reach and have access to
shipping ports that offer competitive rates and high shipping
frequency
- produce enough products within one category that makes
consolidation of orders and frequency of orders effective in
supporting an indent program with relatively low stock holding.
We understand that our clients may have many distribution points
of import and that some of these may support less volumes than
others.
- offer low production lead times, making it easier for our
clients to manage an indent program without creating large stock
holdings to compensate high production and delivery lead times
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Q. My private label brand has a high quality position comparable
with the National brand equivalent. Can CMD manufacturers
produce products that would suit a high quality brand position?
A. Yes. CMD manufacturers have the capability to produce
products at various quality levels or in accordance with your
company’s detailed specification or formulation.
Q. How does CMD assist me in preventing quality problems?
A. CMD only represents manufacturers that have achieved and
practice a recognisable quality assurance program like ISO9001,
HACCP and GMP. Where necessary and applicable, CMD provides
manufacturer quality inspections on behalf of the client.
Q. Does CMD take ownership of the products from the
manufacturer?
A. No. All products are shipped from the manufacturer direct to
the client.
Q. Is CMD involved in the financial transaction between the
manufacturer and the client?
A. No. The manufacturer invoices CMD clients direct and our
clients make payments to the manufacturers direct
Q. How does CMD get paid?
A. CMD applies a margin to the cost of goods. This margin is
referred to as the commission. Manufacturers pay CMD a
commission once CMD clients have paid for the goods purchased.
Q. Does CMD still get paid if a client does not place any orders
with a CMD manufacturer?
A. No, CMD only gets paid once a client places an order and pays
the manufacturer
Q. Does CMD receive any other payment or rebate from their
manufacturer?
A. No, CMD only operates on a commission.
Q. Does CMD have warehouses and hold inventory on behalf of
clients?
A. No. CMD does not touch the physical goods as part of the
transaction. CMD represents product categories where generally
the client’s volumes are large enough to make direct import
viable.
Q. Should I still contact CMD if the products I’m looking to
source are not part of the list of products supplied by CMD on
your website?
A. Yes. Depending on your specific needs and volumes, CMD
provides a sourcing service that finds a suitable manufacturer
that meets our selection criterion.
Q. Does CMD undertake product development initiatives?
A. CMD takes a pro-active approach to business; as a
consequence, we will exploit product development opportunities
with our factories that provide elements of differentiation or
exclusivity to our clients.
Q. As a manufacturer can I work with CMD without signing an
agency agreement?
A. No. All manufacturers that are represented by CMD must agree
to the terms and conditions of doing business with CMD and their
clients.
Q. If I become a CMD manufacturer how long will it take before I
have the opportunity to get additional business?
A. That depends on the categories you manufacture. As a general
rule, our manufacturers participate in tendering for business in
the first 3 to 6 months after signing the CMD agreement.
Q. Why is CMD different to other agents, distributors and
importers available to manufacturers?
A. The CMD business model is completely focused on supplying
only large scale companies with private label brands and takes
into consideration specific needs of multi-national global
companies. All of our customers are multi billion dollar
companies who have very high standards of expectation from their
agents and manufacturers.
Q. Does CMD represent any manufacturers of textiles or General
Merchandise?
A. No. CMD is focused on food and non-food products. Our
involvement in General Merchandise is restrained to batteries
and light bulbs, although we undertake specific one off sourcing
activities where requested by our clients.
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