Rosson Long of Innovasia: How to source from China & learning Chinese!

Transcript:

JARED WARD: Hey guys, Jared here, CEO and founder of Luminous. This is the Ops Unfiltered podcast. I started Ops Unfiltered because I know what it feels like to be in operations and e-commerce. You're handling every single part of the business. It's easy to feel siloed in. It's easy to feel like you have to find a solution for everything. I hope that by bringing raw conversations from other operators in e-commerce, that you can extract some value and not feel alone. Many of the operations leaders in e-commerce are running into the same problems that you're running into. So I hope that maybe their solutions can be your solutions. Maybe you can feel not so alone in the warehouse, in purchasing, in your supply chain. So, that's my hope. I hope this can be valuable for all of you. Let's dive in to have some raw conversations. 

 

ROSSON LONG: So, multiple factories helps you make sure that you're really not getting screwed, obviously. Because if you show up as an American, sometimes they will assume they can charge you a lot more. Two people can go quote at the same time. So you can go get the same quote from the same factory and they'll go get the same quote. Then you know you're not getting screwed around with. But in the end, we don't usually try to negotiate lower than what a factory is. If you want to cut costs, where are you willing to cut your quality? If it's in, like, Boeing industry, you can't cut quality.

 

JARED WARD: Yeah, exactly. 

 

ROSSON LONG: Admittedly, I haven't run into many problems with factories underperforming or having poor quality. 

 

JARED WARD: What advice would you give to a client on how to approach it to get the best results so you find out there's a defect? What would you recommend on the clients in and then what would Innovasia go and do to investigate and find that?

 

ROSSON LONG: Defects are probably the most anxiety inducing thing you can do as a supply chain manager because 

 

JARED WARD: Can you just introduce yourself and yeah sort of? Qualify the angle we're gonna go out in this podcast is gonna be sourcing and dealing with Chinese factories, well, not Chinese factor any factory, right?  Qualify yourself on like, on why you know what you're talking about there. 

 

ROSSON LONG: Yeah, back in 2015, I had just got home from Taiwan. I served a mission in Taiwan, and I was speaking Mandarin Chinese, and my dad was working in China at the time. He had been working there for a long time. He also had served a Chinese speaking mission. So I started going on business trips with him over to China. And it was my first real introduction to it beyond just being at home and hearing my dad on the phone, talking in Chinese with people and factories and figuring things out. My first trip over there, I just remember falling asleep on train rides. Because my, my dad had this pacing where he was just going every day. So we would hit the ground, he had his sleep schedule locked in, and he just hit the ground running. And we're there for seven days. 

 

JARED WARD: And your dad's Darren, right?

 

ROSSON LONG: Yeah, my dad's Darren, yeah. 

 

JARED WARD: Because I know a lot of people in my network know your dad. 

 

ROSSON LONG: Yeah, so we would hit the ground, he would hit the ground running. And I just remember trying to keep up, really. 

 

JARED WARD: How did he get started in import export business? 

 

ROSSON LONG: So, that goes back a long ways. He started just sourcing things and helping people find them and, sometime in the early 90s or even late 80s, the supply, the infrastructure boom of China started happening where they started making all these machines and farmers would buy up these big machines to put them in warehouses, and then they would hide them from the government because it was not legal for them to be doing anything but what the farm was designed for, but then they would find customers off-source and then start manufacturing things for them plastics, clothing, whatever it was and my dad went over really early and started sourcing from the very beginning kind of 

 

JARED WARD: Wow 

 

ROSSON LONG: And some of these clients would send them over because it was the new thing to do Not necessarily because they knew what they were doing.

 

JARED WARD: Then when you say clients, you're talking about U. S. based companies that manufacture products. 

 

ROSSON LONG: Correct. 

 

JARED WARD: That's like, go figure this out. 

 

ROSSON LONG: Yeah. My dad is helping them find things. So he just headed out to China and, went to a few trade shows, started digging his heels in and then started sourcing directly to the factories too. Cause a lot of times at the, at the trade shows, it is just trading companies. The factories don't always make it all the way out there cause they don't always have the revenue to do it or the means, especially in early China.  The transportation wasn't what it is now. 

 

JARED WARD: So that's an interesting point. And we'll dive into that more later too. Yeah. Like Alibaba. 

 

ROSSON LONG: Yeah.  So that's the background he came from. And then I dove into it in around 2015 with him and all the way through 2020. I was pretty much doing supply chain with him, and, in 2015, I went over with him in 2014, I think, in 2015 is when I really started doing it.

 

JARED WARD: You got to just learn on the job, with your dad, post Chinese mission, Taiwan mission,  where you learn Mandarin. You just got to sit with him and see how he negotiated deals. How he checked for quality. Wow. What what an opportunity 

 

ROSSON LONG: It was crazy. It was crazy I think the main thing I have to say about it is after doing it with him through 2019 or 2018 even I quickly realized that his wealth of experience is what led to his success and my lack of experience caused me to have certain oversights. And so starting around 2017 I set out on a mission to document everything.  Because I realized you can't just shoot from the hip. Even though I've seen my dad doing it for two years, I don't necessarily actually have the same skill set as him. And so if I want to be 

 

JARED WARD: The same experience. 

 

ROSSON LONG: Right. Yeah. He has a skill set from all this wealth of experience that I lack. So that's what I did. 2017, I started like really asking him tons of questions and then writing it all down and then kind of creating a system around it. That's how I ended up getting into the software side of things is just kind of proactively trying to build something. And at the time I found low code platforms that kind of let me dip my feet in the water. And that's how I started. So yeah, that's my, my backstory, but that's China though.  All the different kinds of products that you end up making and how you find those products for the different clients that you run into, it's challenging and time consuming too,  you can spend all day traveling to different factories and not find what you're looking for.

 

JARED WARD: Yeah, so  specifically on the opposite side of things, like this is  so many people in e-commerce companies, especially in operations, they have a baseline understanding of how their goods get made. So if you're, if you are a direct to consumer company, or forget it, you just sell consumer goods. You just sell something, whether that's distribution or like direct to consumer. A lot of times, the purchasers there, or like the director of supply chain, or the COO, they're doing the purchasing. Something that I found fascinating was they didn't fully understand that that guy they were talking to in China or the factory that they thought was the factory. Many times it's, they're just an agent or a trading company. They don't even realize it. 

 

ROSSON LONG: No, nobody usually does. 

 

JARED WARD: Can you explain,  let's dive in a little bit to what you did between 2015, like what your dad's company and your company did, helping people source products and managing the supply chain. Why, why not just use an Alibaba? Why not just use the guy or girl that you've been dealing with for 15 years?

 

ROSSON LONG: Yeah, to kind of summarize it, a lot of it is actually just trust.  And we actually started the internship program because of that. We would send the interns out to the factories, and a lot of times we'd send them with a Chinese person, with them. And the interns we sent over 

 

JARED WARD: Explain this internship thing. Because I know you guys got a lot of Chinese speaking BYU students, which was a killer strategy. 

 

ROSSON LONG: Pretty much all the interns we sent over, they could all speak Chinese. Not necessarily fluent, they were somewhere between fluency, like,  incredibly fluent, and some of them still learning. But they had enough Chinese under their belt that when we would send them into the factories with a person who speaks Chinese, we would tell them, speak English when you first arrive. Because you're going to start to tell a lot about who this kind of person is if the  person you're with, who actually is a Chinese native, speaking with them, if they speak about you in any kind of derogatory terminology. 

 

JARED WARD: Okay, so, so, alright.  You have an internship program where you get Chinese speaking Americans, and this was at the time from BYU.

 

ROSSON LONG: Yes. 

 

JARED WARD:And their mission is: Go and vet the factory or the place that these companies are sourcing from, see what's actually going on. And your first bit of advice is just don't even let them know you speak English or you speak Chinese. Just see, watch and see what they say. That's really interesting. 

 

ROSSON LONG: A lot of times we would frame it as the client is coming to visit your factory. Because, I mean, they can represent the client on our behalf to go see the factory, right? And so it's assumed that they wouldn't speak Chinese, that they're there to see the factory's operations. And so how they got treated often would determine whether or not we would partner with them or even source from them because it instantly showed a certain level of trust or commitment or diligence towards the decision to work with them and source from them. 

 

JARED WARD: Have you ever personally had any experiences or your interns have experiences where they did speak in a really derogatory way and you're just like, nah, this ain't working? 

 

ROSSON LONG: Yes, we've had, I think there's been at least two times that I'm aware of where the employee was openly mocked  while they were walking through. I'm going to have troubles recalling the exact terms that they used in Chinese because it's been so long, but essentially they were just kind of making fun of them having to come all this way and not being able to speak Chinese and really just belittling them in a way, and then when they find out that you can speak Chinese, they just feel like complete idiots and just complete jerks. And it's actually super satisfying to reveal that you speak Chinese at the end when they have been that way. I only got it maybe  once, but it wasn't extreme. A couple of our interns had it really bad,  at least on two cases that I can remember that it was just clear.  The whole experience felt negative. We just immediately high tailed out of there. Went with a different factory to source from. 

 

JARED WARD: It's like, ah, what is this American dude doing? 

 

ROSSON LONG:  Yeah, it's like, Yeah, it's like, they send his, this guy sends his,  this little peon all the way out here to take a look at the factory. And he's not even going to understand anything that we do here.

 

JARED WARD: Right? But, by the way, I hear you have wicked Chinese. I hear that from Alex. 

 

ROSSON LONG: You know what, I would say that from a communication standpoint, dialogue, I'm above average, far above average. But in terms of reading and writing, writing, I'm terrible. But I have a friend in Guatemala that is unbelievable. He's trilingual, and he writes all of his notes in Chinese.  So I come up to his desk when I'm working with him down there and I see him at his desk and everything is in Chinese. And I'm like, this, what's your, what? Like you, you keep all of your notes in Chinese. Chinese isn't even your main language. He's like, yeah, and my phone is in Chinese and my emails are in Chinese. 

 

JARED WARD: That's such a good way to keep it up though. 

 

ROSSON LONG: Yeah. It's incredible. It's quite, it's something else. But yeah,  I, I love speaking Chinese though. Everyone has a little bit of a different personality in the languages that you learn.

 I don't know how to describe it, really. 

 

JARED WARD: Oh, totally. 

 

ROSSON LONG:  It's also partially culture, too, I think, as well. 

 

JARED WARD: It's also how you learn it. So I learned Cantonese first, and then I learned Mandarin. I think my Mandarin  is a lot more like standardized, I would say and then my Cantonese is way more colloquial. It's cause like Cantonese, like as a mission in Hong Kong, I spoke on the street all day, every day. And like in Mandarin, my, the Mandarin that I learned was mainly business. Like I worked at a Chinese company, so. 

 

ROSSON LONG: Right.  

 

JARED WARD: Yeah, totally hear what you're saying. Okay, so,you would send these interns, they would,  they would find out if, what type of factory they're dealing with, what type of person.

 

ROSSON LONG: Vet the factory. 

 

JARED WARD: Vet them out,  then, what other services would you guys do? Beyond that, 

 

ROSSON LONG: We let the interns handle a lot of the communication between factory as a supply after they found it and vetted it, depending on the client and the level of purchasing that was going on. Usually, we would just let the interns handle everything. We would create like  safety nets for them because if you know lead times on things and you always are ordering ahead. If something isn't happening quite right, then you just reach out and you're like, hey, I noticed this hasn't started yet. The lead time is 30 days. 

 

JARED WARD: Let's back up a little bit. 

 

ROSSON LONG: So we'd let them manage that though. We'd let them manage the ordering and purchasing. 

 

JARED WARD: You have this infrastructure of interns that speak Chinese that you've sourced from BYU or wherever, like, but they're these Americans that speak Chinese. They're super excited for the opportunity. They're planted in areas in China. They actually live there. They're boots on the ground. So let's say for example, like. a Thread or like a insert direct consumer brand a or distribution company in America. They'd be like, hey we really want to use your company  and what you're managing is the probably probably the sourcing of the factory, that could be their existing factory or helping them find a new one and then the production process from start to finish and you would you would really so you would train and have a program and you would trust your interns to fit in your processes to make sure the goods came out as promised. Intended. Yeah. 

 

ROSSON LONG: Okay. A lot of times the goods we would have them manage were not highly technical. I would say most of the time they weren't highly technical. 

 

JARED WARD: Got it. 

 

ROSSON LONG: I think that, that was relatively important that we would always be finding clients that would have something that wasn't so technical.  Our interns actually had opportunities to get their hands dirty because we we wanted them to actually figure it out. We would provide a certain amount of training and we would answer phone calls if they had questions But we would simply tell them, you know,  this is your opportunity to go shake hands with chinese factories and figure out how to put together a deal and, and place a purchase order with them and see how that goes. See what the lead times are like, you know, communicate all that out, document it, send it to us. Let us know how it's going.  Help us know how it's going, you know? Send us emails, reports, things like that. 

 

JARED WARD: So, I really like that because when you've actually been to China, and when you've been exposed to supply chain and purchasing to a certain degree, obviously yours is even much deeper than mine. But. You start understanding, like, people have a rudimentary,  they just have a naive understanding of sourcing from China. What happens so many times is, like I said, the guy that you've been dealing with, that you've been purchasing from, he's not actually the factory, or she's not actually the factory. And that's why a service like yours is so valuable, it's like Have you ever sent somebody to go and really check out is the, or is this just, is this an agent that's working through a trading company that's  like the fact you could be three layers behind the factory and you don't even know it. 

 

ROSSON LONG: Well, and sometimes it's a different factory every time. So you'll get different levels of quality because the trading company is just looking for the best deal. They're not looking to standardize a certain level of quality. They're looking to opt to capitalize on the biggest level of profit they can. 

 

JARED WARD: Okay, explain this. Because so the way that comes out in consumer goods businesses is like, what the hell? Like that you receive a product.  You wrote a PO to the same guy or girl that you've been purchasing from for so long. And it's like. Totally different and you've been purchasing this for like say a couple years and it comes out totally different. You're like what like did they even use the same wood? So that's most likely what a trading company that's sourced another factory  

 

ROSSON LONG: Yeah, they I think they do that pretty frequently to help capitalize on their income. Because also when you're worth a factory for a long time, it's not out of the norm for them to want to up rates on you just a little bit gradually, you know, over time, because they know there's a certain level of trust and there's a certain level of we're worth more because we're getting better at it even right as they manufacture for you over a long period of time, as frustrating as that can be. They also recognize there are limits. So usually it's not like, you know, you can't, you can use a factory for pretty much ever if you have a good relationship with them and they won't screw you over. But yes, with trading companies, they know it's a trading company too. And so factories that are partnered with trading companies are usually even harder on them than they are on somebody like us where they know they have this connection directly with the American client. And so. The potential for you as a trading company in China to get your rates busted on you or, or jacked up on you is, is relatively high. I personally, I think that sometimes a lot of trading companies will say, well, we have the inside scoop  that I think that in a lot of ways, you going to China directly, uh, gives you a huge advantage over having a trading company.

 

JARED WARD: So this brings a really good point because I think so many ops people, purchasers at these companies, they're very motivated by cost and typically the route that I see and that I've even gone in the past before I had any sourcing experience is like, okay, I want to cut costs on this good right here. So I'm going to go to Alibaba or main China or Global Sources, and I'm just going to shop everybody against each other. Which typically doesn't like that has its results and we kind of talked about that where a lot of times you're dealing with agents or trading companies, what would be, in your opinion, if if you're trying to cut costs or like actually establish a long term relationship with a, with a factory, get more visibility into the actual cost of, of goods in, in your product.  What, what would your advice be? Like, instead of going that Alibaba, made in China route, like, how do you actually cut costs and maintain a good relationship with a factory?

 

ROSSON LONG: Yeah,  you know, I would say for this specific question, typically we would actually go and source multiple factories and then, the factories, we don't necessarily negotiate with them. It's very rare that we would actually negotiate with a factory because we know if we decide to cut their costs, they're going to cut corners. Usually our experience has been if a factory says this is how much it costs, that's how much it costs for them. And if we try to help them bring the price down or we ask for a cheaper price, that means that they're going to have to give up on something. What that is isn't always clear. Sometimes it's less quality. Maybe they decrease the number of quality assurance workers that are reviewing the products as they're going out. Maybe they take your PO and they mess up your lead times because another product, another client's more important. 

 

JARED WARD: What's the balance though? What's the balance between not negotiating at it? I guess. That's probably why you go to multiple factories, right? So you, you get an idea. Okay. Like this one's way too high. We can negotiate on this or like, no, like they're actually quoting pretty standard here. Like if we go lower. 

 

ROSSON LONG: Yeah. So multiple factories helps you make sure that you're really not getting screwed, obviously. And also having partners in China that are Chinese can also help with that too, because if you show up as an American, sometimes they will assume they can charge you a lot more, but that helps having at least two or three people in China that you have an office with there to just two people can go quote at the same time. So you can go get the same quote from the same factory and they'll go get the same quote. Then, you know, you're not getting screwed around with that's initial vetting right there, right? Because if they're telling me a different price and they're telling them, That's not fun. They're giving me two different messages. But, either way, that's just, these are kind of different strategies that you can use. It's a mixed bag of strategies that you can kind of use to try to find the best prices with factories. But in the end, we don't usually try to negotiate lower than what a factory is asked for, we will give them a price point sometimes where we'll say, look, this is our cutoff and if you can't make it happen at this price, then it's not a good business strategy for us either. So, our customer needs it at this cost, otherwise they are not going to make what they need, right, because the consumers are only going to buy it at certain prices and the people selling the product usually know what the price they need, the price point is. So you go to multiple factories, you do your best and factories can oftentimes actually have relatively different costs because of how they're optimized or their quality of work. So sometimes you just need to find a factory that's a less, a little bit less quality, right? If you want to cut costs, where are you willing to cut your quality?  If it's in the Boeing industry, you can't cut quality anyway.  But if you're making like a little key chain. You can find a different factory that has much less quality assurance. You know, it's finding the right factory. If you find the Oakley factory to make sunglasses for Oakley, they might not be the right factory for you to make your 20 pair of sunglasses that you're going to sell to people. Cause the Oakley factory has perfected an expensive procurement and manufacturing process that results in high quality products. So asking them to go lower on a different product because you perceive it as being worth less doesn't fit into their manufacturing plans. 

 

JARED WARD: Interesting. 

 

ROSSON LONG: They have to piece it together, well, if we want to hit this cost, we can't bring in our normal laborers, they can't come in that day, they can't come in this day, it's a hassle for them. So factories, in my view, each factory has a price point that they've determined from their internal operations. And finding the right factory to fit your needs is usually where you try to go with it. 

 

JARED WARD: That's good. Let's say that one more time. Finding the right factory to fit your needs, cause normally ops people that, including myself, you're too tunnel vision on price and that's it. Like, this needs to cost 5 a round. It's like, well, what if you're just working with the wrong factory to get you to 5? Or you might be just working with a trading company, you know? 

 

ROSSON LONG: Yeah.  Interesting. Either or, right? The trading company thing is too, because there's another middleman in between now. So you don't get to work with them directly. But yeah, big picture, we would find people who spoke Mandarin, we'd let them gain all this experience in America, in China, finding the factories, and because they would do the hard work finding the factories, it would help us find the right factory. And they got the experience of going out and sourcing and doing that. 

 

JARED WARD: This is what I find really interesting.  How, so an RFQ or like a request for quote comes in like hey, man we sell 20 million dollars a year of this wallet right here  Can you guys help us find it? What how do you source factories in China or Vietnam or like what? What is that process like do you actually do you send people physically? Is there a directory that they look up? How does that work?

 

ROSSON LONG: I'd say there's a myriad of different ways that you can approach this. Um, but the most common is usually, Alibaba has a Chinese version of their website called 168.  So if you go to 168, you're going to get the China version of everything, which is perfect for anybody who you work with directly in China. They know how to navigate it like the back of their hand. They just grow up in this environment and they're accustomed to it and they can help you find stuff really fast. The other is depending on the product. 

 

JARED WARD: So, so you probably have in house just a 168 expert or more like all of the people who source, they, they just know how to navigate.

 

ROSSON LONG:  They know 168 really well. The other option is China is very, uh, sectioned. I don't really know how to say this correctly, but, you had said once in one of your shorts, Yiwu is like the hotbed of trading companies  and lots of different knickknack things. Well, Taizhou is the center for sunglasses. You want to find sunglasses? Go to Taizhou. You want to find molds so that you can make a mold to do a blow mold? Go to Ninghai or Ningbo. You're gonna find molding companies everywhere.  And these different parts of China, similar to how like a language dialect continues to exist because the people teach each other the dialect,  there are industries that are locationalized, that are localized in China throughout the country. And so if you know of a product that you want to make or buy, if you find the right place in China, you're going to find all the factories, a hotbed of them, just right in one spot. And so a lot of it, if you are looking to make, 

 

JARED WARD: So many people don't know that. 

 

ROSSON LONG: Yeah. If you've got a big deal that you're trying to sort through and it's worth a lot of money, you always go to where all the factories are and you bring someone from that native. If you can find a native in that area that you trust  or that you can,  you know, you can trust or something like that to bring you out there and they'll just. give you tours of these places half the time. Some of the factories are locked down. Some of them don't like you seeing inside their processes, but most of them know you don't care about how they manufacture it or their trade secrets. You care about  trust, whether or not I can work with you. And are you the right factory for my needs? You know, are you this humongous factory and I need someone who's like a mom and pop shop that's a lot smaller. Because my orders are  low MOQs, you know,  just hunting them down.  

 

JARED WARD: That's really cool. That's super helpful. Alright, so that's, that's sourcing a factory. Then, run me through sort of the  pre production sampling, QC during production, what, how, how did you help clients out with that? 

 

ROSSON LONG: So, this was actually one that I struggled on the most, I would say, while I was working with InnovAsia. A lot of it is because the quality 

 

JARED WARD: Yeah, the company is called InnovAsia, by the way. I don't know why we haven't said that. 

 

ROSSON LONG: Yeah, InnovAsia. So, the, the clients determine the quality.  They want a certain level of quality. That's usually how it works. And if you ship them junk, they don't want it. You know, if you, if a shipment shows up and it's not the quality that they want. They don't want the product.  And so it, it can be a struggle sometimes because they'll, sometimes clients will identify something that they perceive as high quality and then they haven't necessarily put it through it's paces. So yeah, most of the time the client is looking for a specific quality level.

The biggest struggle that I've had is, they'll bring you a previous version of their product, or somebody else's product, that's a competitor in their same space and then they'll show you what they're trying to get. You can work with a factory and send them these objects and you can get them verified. I would say durability, testing for durability was my personal biggest weakness of helping clients assess quality and make sure the quality was good. Putting together supply chains and having multiple factories manufacture all the different pieces and then ship them to a centralized location to assemble everything. I loved that part. That part was so much fun. 

 

JARED WARD: Why do you think the quality was so hard to figure out? 

 

ROSSON LONG: I think quality is hard because if you haven't, especially for products that have a lifespan, the people that the client has said there's a, we'll guarantee this for a year. Right? Like we'll, we'll make sure that it lasts a whole year or we'll make sure it lasts two years. If it doesn't, we'll replace it. You know, how do you test a whole year? 

 

JARED WARD: But they also want it in three months. 

 

ROSSON LONG: Yeah. They want it in three months. And then the client assumes that it's going to last a year because that's what they're guaranteeing to people. And then they're replacing the product. I don't know, but there were just so many times where that would be.  It felt sometimes with clients who would feel gimmicky and that was something that I never really cracked while I was in Innovasia. I ended up moving into just working more on the software stuff that I kind of uncovered. But I feel like one of the things that I wish I had done is assess with the client that each time they decide to make a change, if the product is designed to last a year, any modifications or changes or improvements that you perceive as improvements, they may not necessarily be improvements if you already have something that you know works. That's important because if you decide to change something, but they want it in three months, sure, you can switch to a new factory and order that different piece for them on that product to switch it out, but you don't know how long it's going to last. And then other times, uh, they identify the competitor, and they're like, well, they're using this kind of material, and it's clearly working for them. And in reality, you store it in your basement for a year, and you find out that theirs was having the same defects that they claimed theirs was having after I switched to their materials. It's a bunch of he said, she said, like they. It can be hard. It can be really hard. 

 

JARED WARD: So it's really interesting because  I feel like it's it's from my experience. It's like a mindset issue. Almost like people view their factories as no more than just costs. Like it's 5. This shit didn't work like send it back. It's like they really are your partners. And the people that I've seen run supply chains the best  are the ones who actually see their factories as humans and as partners, like, like, Hey, we're both looking at the same problem and we're trying to solve it here. It's like, it's not your fault. There was something not communicated, I think it's a mindset issue that a lot of people have. 

 

ROSSON LONG: Yeah, admittedly, I haven't run into many problems with factories underperforming or having poor quality. What I've run into more frequently is that the factory executes based on what we've communicated and the client either under communicated, or, didn't test all the way. And I think that's the biggest problem is you send the clients a sample.  They give you a green light and as a supplier,  it's not assumed that you are going to do all of the testing on their behalf from a functionality standpoint, right? You're not a daily user necessarily. You're helping them source it. So a lot of it's contractual. I think that maybe contracts need to be updated that if we decide to switch to this, that we're not at fault for, hey, I'm going to have you sign this. You want to switch it and you want it in three months, but you're guaranteeing your clients a year. We are no longer liable if this doesn't pan out the way that you want it to because we know this does work. 

 

JARED WARD: Yeah, we're not signing off on this and that's not because we're bad at our jobs. Me and Jason we're talking about this and it's just supply chain and in Emerson as well  supply chain and  Logistics and like everything is so unpredictable. That's the only predictable thing is it's unpredictable. And like, no matter how rigorous the testing, like I can't guarantee that this product is going to work for two years. And that doesn't mean that Innovasia is horrible or like the factory sucks. It's just like, I don't know. 

 

ROSSON LONG: It's like we chose, I mean as, it's, it's almost like it's your fault, right? You chose the products and what you decided to put into the product. We executed on that. The factory executed on it perfectly, and you got the product that you wanted. I think that's sometimes the biggest thing. 

 

JARED WARD: And this also, in my opinion, it comes from, so Jason from Klugonyx, he's like a gun slinging engineer product developer guy, like, you almost need a, a Jason on your team  on the client side where like an engineer who like will dissect it and see how it works and test every little way, but the thing is, most, most people, they either don't outsource an engineer to do those things. It's just like the supply chain guy. He's just kind of like, Oh, like dropping it and ripping it and pulling it like, Oh, it looks good. 

 

ROSSON LONG: Yeah.  I've recalled one experience where the factory's quality was low. And every time we would plan visits, we'd go see the factory and we would bring the products with defects. And then we would actually walk the factory floor at them sometimes. And we would talk about what stage of the manufacturing process is resulting. And is possibly resulting in the defect. It might only be like a 5% possibility that it happens, but somehow that 5% is sneaking through, where is it happening? And then, you know, so scheduling a meeting with them and being respectful about it. Not trying to call them out and say that they're terrible at what they're doing, but just bringing the proof into the room knowing that it is possible for it to not come out the way that they anticipated it would, and that's all right. The question is now, how do we help the client get a better experience afterwards? 

 

JARED WARD: And this is interesting right here. So say, say you receive a product, there's a defect.  Again, going back to like my experience in ops and purchasers who might be watching this, instead of What the fuck?  Like, you know, being so pissed. Like, are you kidding me? Which, some cases, some cases, like, yeah, you have a right to be pissed, but like, more often than not, it's more like, okay, like, let's calm down. Assess the defect rate. Was it just one pissed off client that received it? What's the actual percentage of defects? What advice would you give to a client on how to approach it to get the best results? So you find out there's a defect. Then what happens on the client, what, what would you recommend on the clients in, and then what would Innovasia go and do to investigate and find that? 

 

ROSSON LONG: Yeah, I think these are the, defects are probably the most anxiety inducing thing you can do as a supply chain manager because you're trying to keep your customer happy, and you're also trying to manage the relationship with the factory at the same time, because if you just go in and burn them,  it's going to ruin your relationship with them. And they don't want to manufacture for someone who's always mad at them. So, you almost have to approach it as the nice guy from both sides. And you have to internalize all that anxiety and just decide to let it go. And then you go to the factories, you schedule these times with them. And I said, I said a second ago, you have to be like, look, everything is all right. You know, when you show them the defects, you're going to be like, look, we're not mad at you. Everything's fine. But we do need to make changes because if we don't make changes, then the client will keep being frustrated. Otherwise we need to change what's in the contract with you, because with you, you said you're going to have a 98 percent no defect rate, and right now, they have enough to show that it's 96, right?

So they're having 4 percent are defects.  How can we improve this, right? What can we change? Do we need to change the contract? That's okay too, if that's what we need to do, because if the contract is changed, then the client can decide whether or not they want to keep working with you. 

 

JARED WARD: Yep.  

 

ROSSON LONG: That's okay. If you guys lose this one customer, I'm sure that you have other clients that you can keep working for that aren't as frustrated as this person. We'll go find a new factory.  That's like the worst case scenario in my opinion, because it means a whole lot of extra work on your side to go source a brand new factory. Then you might have to remake new molds. There's tons of stuff to be doing, but ultimately helping that factory stay calm and not freak out and not get mad at you, you not getting mad at them, just working through that process and being logical about it. Just like, here's where the defect is every single time,  what machine is that, or what person is doing that, or what role is QA ing it, and breaking that down.

 

JARED WARD: Let's say there's a, so there's a plush toy, and there's a 4 percent defect rate. Yeah. Right? Client gets pissed, they come to you, you're just like, okay,  chill out, we're gonna go find out what happened, come to the factory, hey, looks like there's a 4 to 6 percent defect right here, you said there was gonna be 2, all good, so then you're going on the line and you're checking out everything, you're looking how they receive the raw materials, where they stuff it, um, the packet, like, you're just checking at every point, hmm, where could this tear have happened, or where was the label possibly put upside down, right?

 

ROSSON LONG: That's exactly right. And then a lot of times I would say it's adding one more quality assurance person. The factory workers oftentimes are going to make mistakes because they're trying to go for speed. They need output. And that's how they make money. And that's why in factories you always have a counterparty. That they don't get paid for how much comes off the line. They get paid based on them making sure that the quality assurance stays at 99 percent or whatever percent they've signed at. If you need to hire another person to be another quality assurance person on the line, your prices might go up a little bit. But if that means that you get the 4 percent back. 

 

JARED WARD:When you say hire another quality assurance person, are you talking about just like somebody not even affiliated with a factory, just a third party person that you hire yourself, or third party inspection service? 

 

ROSSON LONG: It can go lots of different ways. How you and the factory decide to handle that is oftentimes between you and the factory. Because you're editing their standard process and changing it to better suit the client that you're serving, right? And the factory is okay with that, usually. They're happy to make ends meet. And then we'll do surprise visits sometimes to make sure that they're actually following through on the commitments that we decided on and depending on the distance of the factory surprise visits, oftentimes you can't do them as frequently as you'd want to.  If you're just sitting around and you don't have a lot to do all day, it's nice to do surprise visits to factories out there especially Mondays when America is still asleep, you don't have a lot going on. Easy day. Sunday in the states and you can go out and you can just go surprise visit factories on their money and see if they're doing their supply chains correctly  But quality is by far the most stressful part of being a supply chain manager, I think  just because  it's not always in your power to change. It's something that you can help the factory make a decision about and help the factory assess what's happening and make better decisions. And you can get educated on that industry and then figure out how the manufacturing works to a tee. But a lot of times they have all the experience. And so when you walk in with a defect, sometimes it even blows their mind that it even occurred. They're like, I have no clue how this would have even happened. And I'm like, well, it did.  We both know it did. So let's work backwards.  What could we do? And what would the cost change be if we need to If we need to mitigate this, if it's this important to the client to mitigate it, what's the cost chain, cost change for us, I'll present that to the client and then they can decide if they are comfortable with the 4 percent defect rate or if they want to move back to 99 and they're comfortable paying a tiny bit more and they're getting a better consistency out of their product, stuff like that. Those are a handful of times that I really had to do it.  

 

JARED WARD: So closing this out a little bit, what, if you could sum up your advice to gunslinging operators, kind of like wearing multiple hats who I have a lot of empathy for in the United States, we've had a bunch of them on the podcast. If you had to sum up.  Your advice on doing business with factories,  what, what would you tell them if they're not going to go the innovation route, like the boots on the ground? So my helping, um, what advice would you give them on dealing with your factories?  

 

ROSSON LONG: Quality assurance specific or just general?

 

JARED WARD:Just general general. Like what are some takeaways from like that combo that we just had? 

 

ROSSON LONG:  I would say that  there's not a lot of risk in just putting in the time to reach out to lots of factories. I mean, your biggest risk is just loss of time. That's really it. And sometimes that's what it takes to actually get what you need. Sourcing is a mixed bag. You're going to dive into all sorts of different places, and you're going to find different levels of success with each place that you dive into. And for some industries, it's going to be very straightforward to hop onto something like Alibaba and find what you're looking for. But if you're looking at a package deal where you actually need to get like three or four different things to bring them together, then you may want to seek a partner or a trading company that you could partner with and bite the cost of the extra value of the extra cost. As long as you know that if you know you're partnering with a trading company, then you can start to expect things from a trading company, expect what the trading company should be capable of doing, checking on the factories. Going and making sure that the assembly is coming together appropriately at whatever factories assembling things, stuff of that nature. So, yeah, I would say take a look at what product you're trying to make and then  talk to somebody experienced enough with all this to say, you could just do that on Alibaba  or you're gonna want to travel to China because this is way too complicated. Then the last thing I would say is. A lot of these Chinese factories, like the sunglasses factories, they like to mess around and make new designs.  Nobody's bought them. They'll spend time making a new design that nobody has bought. They have the extra time and they want to  make their skills better.

And if you actually travel out there or you find a trading company who's willing to go out there in person and take a look at the random things that they're making, sometimes you can find a product that the factory is willing to manufacture for you that nobody else has sold. And they're just waiting for someone to decide to buy it. So it's kind of a gold mine in some of these places where if you're trying to do fast e-commerce and find the next hot thing  I remember going to China finding this really cool pair of sunglasses that I love. It's actually it's in my car right now I didn't bring them in but I came back to the states and I browsed through a bunch of websites Didn't find anybody that was selling them. And then three months later they started showing up in my Facebook ads and it was one of those companies that they started the company. They've listed this one type of sunglasses for sale. And then after eight months the company disappeared. They did one big sales run of a specific kind of sunglasses, got people hyped up for it. You know, I don't know if you've seen those kinds of brands where they, they, they're purpose built brand just for one thing. And then they dissipate, they fall off the face of the map as soon as they get the sale that they're looking for. So almost like a Kickstarter, but different approach. Anyways, I digress, but  point is there's lots of ways to get into e-commerce and there are lots of ways to approach sourcing. I think just talking to somebody about how you need to approach it is going to be the fastest way. If you don't want to use Innovasia at all, just go get your toes dirty. Get your toes wet, you know? Get, go talk to people, cold call, hop on Alibaba. 

 

JARED WARD: Go to 168 if you speak Chinese. Yeah. Get somebody to help you navigate it.

 

ROSSON LONG: And you know what? Maybe with website translation tools, maybe nowadays 168 might actually be pretty useful. I haven't been on since. You can just click translate website and all of it pops into English. Yeah. 

 

JARED WARD: I, if I, if I had to summarize,as somebody who has run purchasing before, it's  look at your relationships with factories as partnerships and  you know, they're not just a cost. So if something's defective, if something is like always dive deep. Understanding that there is an actual human on the other side. They're not just 5 per unit. A lot of times kind of everything that you are saying with quality control. It has to do with lack of clarity on the client's end. What type of results do you want? Are you clear on that? Are you clear on those expectations? Doesn't seem like you're very clear. Like always be as clear as you can get with your expectations on the product, put it in writing, put it in pictures, put it as much details as you possibly can, and the factory will most likely be able to get that out.

 

ROSSON LONG: Yeah, they'll be able to do it right.  I love your, I love your takeaway actually. So I think what I missed from just everything I talked about is that if someone's trying to not use a third party, then they need to leverage everything we just talked about to actually perform the job function. 

 

JARED WARD: Yeah, and most people will go that route. Okay, so switching gears a little bit. We've talked a little bit about this off camera, but what, what trends do you see in China and in manufacturing? Because for those of you that don't know, you're about to spend a lot of time in Latin America with factories.  We've talked a little bit about Vietnam. Labor costs rising in China. These are all things that you read on headlines, but what have you actually seen when it comes to sourcing, diversifying your supply chain? It's like the buzzword, so many companies advertise on it, but like, what have you actually seen? Products switching their manufacturing to Vietnam. Why? And then also switching your supply chain to Latin American countries. Why? 

 

ROSSON LONG:  Yeah.  So there's a myriad of reasons. I would say the biggest one is a lot uncertainty.  Diversifying from China, I think right now the biggest is uncertainty. And that's mostly just because  back in 2021, there were widespread power outages in China. During COVID. 

 

JARED WARD: Yeah, we experienced that. 

 

ROSSON LONG: Yeah, we had a factory that was down for a whole week. 

 

JARED WARD: We thought it was excuses. We honestly thought it was excuses. 

 

ROSSON LONG:  But yeah, the government controlled the power. It's hard to identify exactly where in China's supply chain, what happened that caused them to have such widespread power outages. I boil it down to a little bit of  everything in China is owned by China  and government. And so you don't necessarily no factory owner actually owns their factory.  I know that some Chinese people, if they're watching this and they hear me say that they're going to be kind of like, ah, like mad about that a little bit when I say that. And I think culturally they don't like to think about it that way, but I see it that way. I see that everything that's there is actually owned by China. And so China has no empathy for the factories. They see it as it's a teeny portion of potential commerce that brings in a little bit of taxes. And if they have to shut down for a while because other things are more important, so be it.  And all, everybody else can go take a hike, kick rocks, you know? And so I think that when they did that, when China did that and they caused so much uncertainty in the market. 

 

JARED WARD: Well, also to add to that, Trump's tariffs, that was massive.

 

ROSSON LONG:  Yep. That was huge. Trump's tariffs were big. I was extremely.  appreciative of the balancing effect that Trump's tariffs had in the long run. In the short term, it was difficult to manage because the prices were changing so quickly. And oftentimes a shipment that shipped a new tariff would be, would happen while the shipments on the water. And then you had to figure out whether or not you were under, if you had shot yourself in the foot and sold at the wrong price, but  ultimately it's just uncertainty that it kind of boils into. And what stinks is that all the infrastructure is in China.  Pretty much all of it. In fact, in Guatemala, the factory that we just opened, we bought all of our sewing machines from China. They're all from China.  

 

JARED WARD: So, and when you say infrastructure, you're talking about manufacturing infrastructure. 

 

ROSSON LONG: Yeah. The machines, and the experience, and the people, the workers.  Yeah. The other places it's from is Korea. Korea is another big part of textile industry. But these countries like Vietnam, who's currently trying to bite off a huge portion of the textile market right now and apparel market, they're buying up machines that aren't from their country. They're not the originators of these machines, from my knowledge that I have personally. And so, you end up with this very segmented supply chain in the world now, because people don't want to buy from China as much, they want to diversify, they want to have like an 80-20, where maybe 80 percent is still China and then the other 20 percent is somewhere else,  some other place. And maybe they're paying more for that 20%, but it keeps the factory moving and chugging on it, so that they know that if something hits hits the fan, they can go back to Guatemala and they can raise their 20 in Guatemala up to 60 or 70. With a factory that has experience with them, that's important.

Right now, because no country has the infrastructure that China has, we're all just kind of suffering from it because Biden didn't change the tariffs like everyone thought he was going to, because America's actually making money from that.  Nobody thinks about it that way. We have these huge debts to pay and yet we charge no one for shipping things into our own country. 

I ship a backpack from here to China as a sample for the factory to take a look at. $300. I ship the same backpack from China to the States. $40. Wow.  So China, who, who gets that money? Not the shipping company. That's the tariff. I'm paying that money to the government of China to ship into their country. And so China doesn't want anybody to ship things into their country. They said no, because they're not producers, they're consumers at that point. And that's not the position that they've wanted to have in the market. They've wanted to force their people to go make everything on their own, so they become proficient at it, and then they become mass exporters. It's a brilliant strategy. If you look at the two countries, and this is a totally different topic, but if you look at the two countries economically, I really think America's on a dangerous long term path. Extremely dangerous long term path and not changing the tariffs was a very, in my opinion, a very decisive, astute move,  you know, knowing by an administration. I don't know that it was decisive, but I believe it was a wise decision, 

 

JARED WARD: Whether it was accidental or deliberate-wise,

 

ROSSON LONG:  The fact that they didn't switch it back and they're letting that. play out in a more long term effect, I think is very smart.  While Trump was in office, the oil industry in America boomed because we decided it was important getting oil from our own soil. And everyone freaks out about this, but  we charge the electric cars from fuel that's burnt at a factory. I feel like everybody says this, but for some reason, people don't comprehend it yet is that we can't just suddenly switch all over to these renewables. It's going to take time while it's taking that time. Why are we chopping ourselves off at the knee trying to cut all of our oil manufacturing? Why not just manufacture as much as we can so it's cheaper to make the solar panels, it's cheaper to make the wind farms, it's cheaper to make the hydroelectric plants. Oil being cheap means it's cheaper to do all of the things that we need to make to make the renewables. So you may as well make that as cheap as you possibly can. So that you can actually execute on your big vision. And then once that's executed, then the need for that goes down. But at least it was a cheap resource while you were doing it. Don't make the cost high. It makes it hard to get these other things done. So that's just big picture world perspectives.  But, looping back to just diversification, right,  none of the world is currently ready to consume the original infrastructure productions that China had at scale.  Vietnam maybe can eat off 20 percent of the apparel industry, Guatemala maybe 5,  like, from what I've seen and the numbers that I've seen. Occasionally, and I mean, you can go out to Walmart and Target and these big companies. If you get in underneath the surface, you'll see that  they're manufacturing everywhere all over the world, these biggest companies. And it's for a reason. It's because if they have this much throughput, they actually need to leverage an entire infrastructure of the whole world.

And maybe they've sped things up and they actually entered these countries within the last three years. But after visiting Guatemala and visiting other countries, Indonesia, I feel like the relationship they've had with these companies goes far beyond before COVID. So the infrastructure is starting and the skill sets are there, but it's going to take a lot of time.

 

What you're bringing up is really interesting. And most people don't understand it. Like manufacturing is going out of China, like it's like this buzz term diversification of supply chain, but  that infrastructure that's been built up over decades and decades, which is machinery, it's skilled labor, it's the supply chains within China, 

 

ROSSON LONG: Skilled operations 

 

JARED WARD: Yeah 

 

ROSSON LONG: These factories are efficient. China's efficient.

 

JARED WARD: It's that.  I mean, there's so much that goes into a manufacturing country. And yes, while Vietnam has been doing that, but like, it's not like, oh, I'm just gonna take all of the molding manufacturing and let's do it in Vietnam. Like what? Like, yeah, that might not happen. Or even in Latin America, like you might have one or two factories that do wood really well, but  do they have the same skilled labor that China does for cutting boards or something? Like, yeah. It's yeah, it's totally different. It's more complex than people think.

 

ROSSON LONG: It is really complex and it's hard to gauge It's almost like you need to go visit the country in person from someone who's done it in the past  from my perspective I do feel like you actually need to go out and just see if the proof is in the pudding. You got to just go and do the footwork to see if it's there or not. And if you've been to China before you know what you're looking for, you know, yeah If, you know, these guys, you know, their stuff or if they're, if they don't know their stuff at all,  it's pretty clear, pretty fast.

 

JARED WARD: So let's transition into Guatemala and sort of what you're up to nowadays. So like all of this experience and discussion around manufacturing and your past decade of experience with that, what, what has that led you to do now? I know you've started a software company and you're going to Guatemala.  To basically sell it.  Let's hear it, man. 

 

ROSSON LONG:  This whole journey with China, while I was there, I realized I really didn't have my dad's skill set. And most of that was experience, but there was no way that I could overcome that in an exceptionally short period of time. You know, my dad just doesn't forget things cause he has so much experience with them. For me, I struggled to remember all the fine details all the time. It's like having a hundred things in your head at once with supply chains. There's so many things to keep track of, your invoicing, your logistics,  the different invoices at different stages of the logistics that you need to provide to customs, the detailed packing lists, all this stuff. So it occurred to me that I needed to systematize what was happening if I wanted to be as effective as my dad was at it. And I like to say it's like carrying a backpack around. If you have a good backpack, you can carry everything that you need every day. If you have a terrible backpack, you're going to end up with a lot of stuff in your arms, you're going to feel clumsy and you're not going to get and do what you need to do throughout the day. So having the right backpack allows you to perform the right job. And that's what software has really done for us. The same way that a backpack lets us carry a bunch of new stuff. Software has allowed the world to operate so much more efficiently than it ever could have, and with much less knowledge. And much less skill. Software also allows people that are less skilled to achieve much higher efficiencies.  So that's what I set out to do. I set out to systemize the process the individual was doing. And the journey that it led me down in Guatemala now is we started in China when China shut down in 2020 because we couldn't get anything out of China. We moved to Guatemala. So I built the software in China and then I built the software in Guatemala. 

 

JARED WARD: So you built in China with your partner factories, like ones that was it ones that you owned or just like trading companies, long term partners that you. 

 

ROSSON LONG: We owned the trading company there, but the factories were all very close partners, like 10 year, 10 plus year partners that we integrated it with. And really, we just figured out good ways to integrate with the factories. We found out ways that didn't mess with their processes, and it was all through the trading company.  The trading company gave us the boots on the ground that were necessary to do the level of implementation that we were capable of.

 

JARED WARD: So is this software, is it more for trading companies? Like, or like sourcing agents?

 

ROSSON LONG:  Initially it was designed for supply chain companies, so trading companies. That was the first integration. And what it created was essentially a huge amount of transparency between the factory's information and the client. We went from 48 hours of late data. So, typically we would gather all these Excel sheets together. It was two people around the clock. They would start Monday and they'd send out a report on On a Wednesday and then they would start Wednesday and they'd send out a report on Friday and then they'd start Friday and they'd send out a report on Monday. And so every time the client was getting information, it was 48 hours behind what was actually happening because they would get all the Excel docs and then they'd merge all of them together and then put them all into one word that was legible because they were all different formats. I talked to the client and they said, look, we could have saved $6, 000 if we knew that this was that far behind 48 hours ago. We could have told them to stop what they're doing 48 hours ago and let this SKU go. It doesn't need to happen because in the garments industry, it's seasonal. So if something's too far behind and you're not going to make the season, just stop making what you're making, cut your losses there, pay the two grand that you spent to have the fabric manufactured, and then let the fabric get consumed somewhere else, don't go dye it, right?  So these timelines were imperative. If they could know 48 hours, if they didn't have that 48 hour delay, they could have been saving six grand every week. Maybe even sometimes upwards of hundreds of thousands, easily six grand a week for sure. I know just looking back at it, I personally recall on during integration, seeing them decide to cancel things while we were integrating it. And so then it got to the point where the data from the factories wasn't always perfectly accurate. We had unskilled labor putting in the data and because it was so instantaneous, it was causing the client to make poor decisions at that point. So it flipped the needle on the other completely to the other side where they were saving tons of money and then suddenly we were actually just giving them bad data for a while. The data would get cleaned up after 24 hours or sometimes within two or three hours even, depending on when people are going to sleep, right, and the timings of the time zones. But essentially,  we completely streamlined all the transparency and the client was able to peer through every single factory all the way down to the cotton mills that were making all the cotton and the polyester to bring those items all the way up to the surface so they could tell from a forecasting perspective whether or not things were going to be late way ahead of time and then make decisions really early.

 

JARED WARD: It provides visibility into the actual manufacturing flow from start to finish. Yeah. Where are we at on production? Well, like here we are, like the repurchase raw materials or like it's everything's it, the production has started. It's in this line right here. It's, oh, it's in the packaging phase. Okay, got it. How many units are in the packaging phase? How many units? Is it that detailed?

 

ROSSON LONG:  It's daily. It's a daily update usually that factories will report into. If you have the scanning system set up within the factory on the factory floor, then it could be almost instantaneous about like you seeing literal objects being worked on by employees, but from the client's perspective, they don't necessarily care about what is Jose working on right now, right?

They just care about how many units are finishing at the end of each day and seeing those averages so they can make sure that the production is happening in the way that it's supposed to, so that they're going to meet their deadlines for the season, at least in apparel industries. It also helps with knowing when your purchase is going to arrive in the first place.

 

JARED WARD: Oh, yeah. Big stuff. There's just so much that goes into that, like planning for marketing if you're doing like a, if you have a drop based business, yeah, that's interesting. So.  How do you,  this is what I'm curious for, like, how do you get factories to adopt that? That seems like it's gotta be super challenging.

 

ROSSON LONG: So this was the trick, this was the trick for us, this was really hard. With the trading company, we had them do all the footwork. So the trading companies would go out, they would do surprise visits, and they would meet with the factories, and they'd gather the data, and they'd have it all in one format. And then they bring all that data together and it would instantly go into the database at the end of every day. Sometimes they'd have to be offline because they're too remote and they don't have cell service at the factory and then they put that in Excel sheet and upload that into the system within about two hours of collecting that information. But the factories themselves, the ones that we partnered with the closest that did decide to use the software to update the dates, what it resulted in is there was a lot more building of trust because you had to trust each other that you were going to do this and then we would do surprise visits less frequently to just check that what they were inputting was correct  and if it was wrong, then we would decrease the vendor score on them or we would come down hard and be like, look, I don't know if we can trust you, you know, like you just. You can say little things like that and it'll put them on edge of it and make them realize you're taking the data they're entering seriously. That's the main thing. You have to let them know that what they're entering, you're taking it seriously. If I cancel a PO,  and you're like, why did they cancel that? And it's like, well, You inputted this data and  they cancel it. It's like, well, that was, that was wrong or whatever. It's like, was it wrong or right? Like there was a certain amount of trust that went back and forth. But as soon as the rubber hit the road, so to speak, and you found traction, suddenly it just became amazing. Or the factories realized that they could provide the client with the right information that would help them make their best decisions. And the client could see the information.  And the client would take the quality control on their side and they would feed quality control reports back into the software, which would then result on the factory's tray. So it created a loop where the factory would send things out and then the client would receive them and do quality assurance on their own side. And then, the quality assurance would get consumed by the software and get sent all the way back to the factory. And it created this really pretty closed loop where the factories were able to see that the client was being responsible and the factory was able to see that they were, vice and vice versa. But what it came down to in the long run is that the upper  C suites need to buy off.  If the C suite doesn't buy off,  your chances of integrating successfully with the factory is zero, because the people on the factory floor, they already have some process in mind that they're accustomed to, and they don't want to go learn something new. They hate it.  They really do. I hate to say that, but they don't like learning something new, because they are so accustomed to something else that they've already done for so long. So integrating with factories is extremely challenging. What we're trying to do with Sightline, the product that we're trying to sell down there, working on selling down there. And I think we'll, we'll probably end up calling it Sightline Studio, just for trademarking purposes, because I think Sightline, it appears, has already been gobbled up by lots of different people. So we'll probably end up calling it Sightline Studio. But  ultimately,  if the C suite buys off, and you can actually provide them with a system of record  is friendly enough that people can learn it that often times have no experience with software.  Clients like to use their factories.  Clients like it when they have transparency.  If the client has transparency, your factory becomes much more popular.

 

JARED WARD: And this is what I talked to you about offline, which is just like factories have a system of record, like I feel like the winning strategy here is integrating with the customers in the United States, their system of record, and that's the challenge is like in their PO writing process or forecasting.

 

ROSSON LONG:  And that's where I came to talk to you and why I was going to have lunch with you because as much as I want to build the client portal, I also recognize there are already a lot of client portals that are incredibly good in the United States. While I've been out here trying to tackle the system of record for factories and try to make that process really good so that the factory can advertise to the world that, hey, partner with Luminous, partner with so and so, we're working with them, you know, and we have a portal you can log into. It's not as pretty, it's not as user friendly for you because it's just for visibility, but if you're working with somebody like you and in the future, we can get this off the ground. The idea is, is that quotes show up right in your software when the company makes the quote. Cause they're not doing it in an Excel sheet anymore. They're doing it in a cloud based system. And if it's in a cloud, a couple API calls and suddenly it's all in everybody else's systems. 

 

JARED WARD: But most important, in my opinion, like the value add for ops people is actual lead times on purchase orders like so many and you experience this just at Innovasia. I'm sure it's like, Hey, when are we going to get this? Hey, what's up daily time? Like if you had something cloud based, you could actually trust that like, Oh, this factor is actually updating me then. Uh, yeah, that's, that's really cool. If I can just go to my PO, and there's like a Pizza Hut tracker, it's like I see exactly where it is, and the new estimated arrival date, or if it's gonna send in split shipments, like, it's just really easy to see, like, that'd be cool.

 

ROSSON LONG:  Yeah, I think the other thing that we're gonna work on in the long term is and this is actually funny, Innovasia started taking the software and what they started doing with it is they created 15 day reports  And the 15 day reports they would send to the clients were based on Innovasia's perspective of the data that they saw from the factories and  this is basically taking a lot of high detail, highly detailed information and turning it into something that the client can act on actionable data for the clients. And right now with Sightline, that's what we're the next big thing that we're going to try to fully comprehend for each industry. What's the actionable information that each client needs to work in their industry correctly and it's something that at Luminous, I think you're probably already having to deal with and tackle every day. What is the missing dashboard that they wish they had they're complaining about every day do this, right? 

 

JARED WARD: So daily conversation. 

 

ROSSON LONG: Yeah, so Figuring out that, that actionable information is absolutely game changing for clients. And the funny thing is, is I think for every client, it's a little different because they have different strategies, apparel industry. It's seasonal. So it's very different than an industry that's not seasonal, 

 

JARED WARD: Even from my perspective, like  it's industry specific, but it's also attribute specific, like a company that has a 3PL or multiple 3PLs or company that sells on Amazon, a company that sells wholesale, a company that does in house fulfillment. those  attributes create totally different dashboards that they want to see, that they value in the business. And I'm sure it's the exact same thing on the factory end. 

 

ROSSON LONG:  Yeah, on the factory end, I think the reporting and the actionable information is very different. But it is still, the kind of information that they wish they could know is still important. Where this could become valuable is if we can democratize factory software.

I don't know if that's the right word to use, but essentially make it so that it's cheap enough that all these third party countries can consume it. That's been the biggest problem that I've seen so far. These factories, they're really working on pennies out there. They're not the most wealthy people in the world. They make a living doing hard labor, right? And that's how they do. 

 

JARED WARD: And every cost cuts to their bottom line. So it's exactly so like that's what, when, when we had that lunch, I, I was just like, oh, like I'm glad somebody's trying to solve that end because, I went down that route a little bit and I realized like, you gotta be able to monetize on the factory. I went down the Luminous route. So I'm glad somebody's trying to tackle that, but that, that is, it's a. Gargantuan problem. So good luck with that. Like it's appreciate it. It's a hard problem to tackle. So respect for you trying to build that. And like literally Rosson's he's going to Guatemala soon. Obviously he's been boots on the ground trying to lived in Yiwu, speaks Chinese. He's been all over the, so like,  yeah, respect to you as a builder.  

 

ROSSON LONG: Yeah, that, that's the longterm goal of, of LZ tech building sightline is, we wanted to make it so that factories that are in any country would be able to afford software that lets them optimize their internal processes and give visibility to the clients. Yes, that's the gold nugget because you can have a system of record for a factory, but does a client ever have access to it? Maybe  I don't even know of a software that does that specifically right? So that's a breakthrough point if we can really get there. And I think it's more about partnerships with companies like yourself that will make that happen in the long run. But in the short term, it really is about making it so that these factories have reliable software platforms that are cheap enough that they can use to make it so that their clients are more excited to work with them. Because they do have a system of record, and they do keep track of everything, and it's not messy Excel sheets that  people throw together in a couple of hours and then send it over hoping that it answers the questions that they want to get answered. So, yeah, that's the big picture. 

 

JARED WARD: Yeah, we're running low on time right now, but  that was, that was a fun podcast. I appreciate you stopping by. I think there was a lot of value in that. Yeah,  I hope a lot of people listen to this one. If you're wanting, like, sourcing tips, if you're wanting to understand what happens behind the scenes, like, that was, that was pretty sweet. 

 

ROSSON LONG: Yeah. Well, I appreciate you giving me the opportunity to actually be on a podcast. Now that our company is in the place where we're at right now with Sightline, it's time to just start talking to people because we're getting that part where now we're really excited. We're actually getting to sell it to people. People are getting to use it. They're excited to use it because it's simplifying their internal factories and their day to day so much. So yeah, super grateful that you're able to bring me on and that I was able to even start talking about this.