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THE SOURCE CODE BLOG
Experiencing setbacks while working with Chinese factories are part of the reality of working in an environment where there are very few processes and even fewer systems to deal with problems. Thus when a problem arises, they are usually compounded long before being recognized. Ultimately the issue will be resolved but not before the entire supply chain feels the ill effects.
No matter how qualified and practiced you are as a global sourcing specialist, international purchaser or supply chain expert, you will face stumbling blocks. This should not be viewed as the exception but rather the rule.
Therefore before deciding to commit to Chinese or any overseas supply line, you need to evaluate the production model and what it means for your business. Manufacturing overseas then shipping to North America then converting/selling to your customers can be a long cash cycle. If your business survives on short cash turn around and can’t weather production delays or your customers wanting “made in the US” goods, then offshoring is probably not your best choice.
When factoring in product quality and lead times as major keys to having a successful overseas supply source. The minute those start falter and you have to buy filler stock or cannot fulfill a customer’s order. Is the moment to evaluate the competitiveness of your strategy and determine if paying a higher price domestically is money better spent?
However prior to arriving at a point where you’re operating in full damage control mode, take a few minutes upfront and identify you’re most important needs and goals from your desired supply chain. From this you’ll be able to make an informed decision and select the best option for your requirements and not simply because you’ve heard or decided a certain country or region can provide you the best value.
Basic aspects you should consider ahead of moving supply overseas:
- Lead times
- Cash flow constraints
- Product quality consistency
- Your marketplace and how they perceive overseas product
- Can you fulfill minimum order quantities and how regularly
- Cost of switching your supply chain
- Benefits of switching your supply chain
- Do you plan to source yourself, use an agent/trading company or partner with a sourcing expert
The truth is not everyone should be looking at China, India, Asia etc as a supply source. Personally speaking we turn down perspective business all the time because we would rather our customer’s benefit from our services and not pay us for products they will not be happy with.
That’s it for today. Stay tuned for the next weeks post.