Supplier Vetting Framework: A 10-Step Due Diligence Process

Sourcing overseas can unlock tremendous advantages — lower cost of goods, faster speed to market, access to specialized manufacturers in China, Vietnam, India, Mexico and beyond. But along with opportunity comes risk. A wrong choice of supplier can lead to quality issues, delayed shipments, IP theft, hidden costs and brand damage.

At Sourcify, we’ve vetted 2,000+ factories across 19+ years and helped dozens of brands scale confidently. Today we’re sharing our 10-step Supplier Vetting Framework — the process we follow for every sourcing project. Use it as a checklist for your next partner-selection, or better yet, partner with us to put it into action.

Step 1: Define Your Requirements & Build the Brief

The foundational stage: be very specific about what you need.

1. Define product specification (materials, tolerances, finishes, certifications).
2. Determine order quantity, lead-time, packaging, logistics destination.
3. Identify strategic priorities (cost vs quality vs speed vs IP protection).
4. Map your preferred geography (China vs Vietnam vs India vs Mexico) and backup plans.

Step 2: Supplier Short-list & Initial Screening

Once you have your brief, create a short-list of potential suppliers. Criteria may include: capacity, certifications, export licence, customer references.

At Sourcify we often pre-qualify 3–5 potential suppliers and send an initial RFQ to each.

Elements to screen: business registration, export licence, product catalog, previous clients, location & size of facility.

If a supplier cannot provide at least these fundamental items, move on.

Step 3: On-Site Audit or Virtual Factory Tour

A supplier may look good on paper, but you need to verify physically or virtually.

Key areas to audit:

1. Factory ownership (vs trading company)
2. Production capacity & lead times
3. Quality control systems
4. Equipment, workforce skill level, yield/waste rates
5. Compliance (safety, environmental, labor)
6. Clean audit history (unexpected stoppages, valid certifications)

At Sourcify we document audit results in a standard template and score suppliers against our internal threshold. Those who don’t clear the audit do not progress.

Step 4: Sample Production & First Article Approval

Before full production you must send samples.

1. Agree on specification with supplier and QC firm (or internal oversight).
2. Produce sample batch (or First Article)
3. Inspect for fit, finish, tolerances, functionality, packaging and labelling.
4. Record any non-conformities, corrective action plan, supplier responsiveness.

At Sourcify we require suppliers to pass three sequential sample milestones before mass production begins.

Step 5: Contract & Payment Terms

A contract defines roles, obligations, IP protection, penalties, etc.

Key clauses to include:

1. Product specification and sample reference
2. Lead time, inspection rights, payment schedule
3. Intellectual property rights and confidentiality/NDA
4. Warranty, defective rate thresholds, return/reshipment responsibilities
5. Force-majeure, termination conditions
6. Currency/FX, shipment terms, payment terms

At Sourcify we require every manufacturing partner to sign our standard NDA and IP & confidentiality addendum.

Step 6: Pre-Mass Production Inspection & Trial Run

Before ramping up, you should perform a trial run with a small batch, inspect it, and handle any issues.

1. Create a trial production order (e.g., 10-30% of full run)
2. Inspect for production consistency (not just the sample)
3. Ensure first ship-lot logistics, packaging, labelling and documentation work smoothly
4. Resolve any glitches, update contract/performance measures

At Sourcify we treat this as a “go/no-go” gate: if a trial fails, production is paused until corrective action is validated.

Step 7: Mass Production Oversight & Continuous Quality Control

Once full production begins:

1. Agree on inspection checkpoints (pre-production, during production, pre-shipment)
2. Use independent third-party QC if appropriate
3. Track production yield, defect rates, rework, scrap
4. Monitor lead time adherence, communication responsiveness
5. Keep a supplier score-card for future references

At Sourcify we include these metrics in our monthly supplier reviews and share summary score-cards with our brand clients.

Step 8: Logistics, Compliance & Traceability

Sourcing is not just making the product — it’s getting it to your door, compliant and traceable.

1. Ensure export/import licences, customs documentation (e.g., U.S., EU)
2. Confirm incoterms, freight forwarding, insurance
3. Track lot numbers, expiry/maintenance if applicable, packaging integrity
4. Ensure labeling, safety regulation, certification (CE, UL, FDA etc) if required
5. Plan for returns, warranty and reverse logistics

At Sourcify we integrate logistics & compliance checklists into supplier onboarding.

Step 9: Post-Shipment Review & Supplier Score-Card

Once shipment lands and you’re shipping product to market:

1. Evaluate performance: did the supplier meet schedule, yield, quality, communication?
2. Was there damage, shortage, rejects, quality returns?
3. Update supplier score-card (quality, cost, delivery, communication, innovation)
4. Decide: keep, re-negotiate, or remove supplier from your pool

At Sourcify we perform quarterly supplier reviews and feed the data back into client dashboards.

Step 10: Risk Mitigation & Diversification

Even with the best supplier, geography or macro conditions can create disruption.

1. Maintain backup suppliers (2nd or 3rd tier)
2. Monitor geopolitical, currency, labour and environmental risks
3. Ensure IP protection, confidentiality and alternative manufacturing options
4. Review cost versus benefit of single-sourcing vs multi-sourcing

At Sourcify we advise clients always to maintain optionality — geography, supplier, logistics. It’s like insurance for your supply chain.

Why This Framework Matters

1. Reduces surprise defects — you know your supplier before they start volume.
2. Improves time-to-market — fewer rework loops, fewer logistic delays.
3. Protects your brand & IP — by vetting, auditing and contractually protecting the process.
4. Generates scalable supplier networks — you can repeat this process as you grow across categories or geographies.

How Sourcify Can Help

If you’re ready to move beyond theory and partner with a team that executes this 10-step framework, here’s how we help:

1. We bring 19+ years of supplier vetting experience and 2,000+ factory evaluations.
2. We operate across China, Vietnam, India, Mexico, Singapore, Turkey and beyond, with relevant local knowledge.
3. We integrate audit, QC, logistics, IP protection, and supplier management into one partner.
4. We tailor the framework to your category (jewelry, electronics, apparel, consumer goods etc) and business size.

Download our “Supplier Vetting Checklist” (PDF) to get started now — and let’s schedule a call to apply this framework to your next project.

Final Thoughts

Supplier vetting is not a one-and-done activity. It’s a continuous process of setting the right standards, monitoring performance, evolving with your business and staying ahead of supply-chain risk. Use this 10-step framework as your foundation. Build the metrics, integrate the review process, and treat your sourcing partners as strategic assets—not just low-cost vendors.

At Sourcify, we believe sourcing done right is a competitive advantage. Let’s build it together.