The Source Code

Made in U.S.A.: China’s Premium Brand?

  

  

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Thought “Made in U.S.A.” may be perceived in China similarly to how “Made in China” is in North America? Guess again. Over the past few years Chinese consumer interest in American made brands has skyrocketed. While the majority of sales come via luxury clothing and garment manufactures like Ralph Lauren, a trend of purchasing U.S.A. made goods is developing in other areas of the Chinese economy as well.

These developments present an appealing export opportunity for industrial brands with solid reputations and great product quality track records. Especially when recent facts suggest Chinese consumers are more than willing to pay a premium for American products.

A ground swell is clearly forming and as we know from Malcolm Gladwell’s book The Tipping Point, it only takes a few mavens to incite a positive brand reaction.  Particularly, for product providers who can offer consumers a safer, more prestigious or enhanced quality item.       

• China is comprised mainly of new families and with the 1 child policy in effect, parents are obsessed with providing a safe environment for themselves and their child. Meaning products that will make the workplace or home a safer place are likely to catch the eye of more than a few people.
• As we know from the garment industry, premium brands sell and sell well. However you don’t necessarily have to be a premium brand company to thrive. In some cases it may be enough to show consumers you are one of the few products in your marketplace not being made in China.
• It’s proven in North Americans will pay for quality when they know the value is present. China’s no different. If your organization can demonstrate the quality, the Chinese will happily pay the premium.  

Of course just having the Made in U.S.A. tag doesn’t guarantee you success. Long-term sustainability will likely hinge on your organizations ability to clearly communicate your products value proposition and why it’s worth paying the extra money for enhanced safety, prestige or quality.    

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

Reshoring: The US Side

  

  

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Last week I discussed the likely reasons why (China’s infrastructure, technical ability, consumer market, existing supply chains and economies of scale) jobs would not reshore back to the US. It’s no secret all the reasons listed above present significant challenges for organizations wanting to bring their manufacturing inshore. But there is hope.

For starters, there’s Harry Moser. His career in manufacturing spans four decades but more importantly he founded and is now the president of the Reshoring Initiative where their main goal is bringing manufacturing back to the US.  Most recently he was invited to the White House to participate in a daylong Inshoring Forum hosted by President Obama.  While there, they discussed tactics, policies and what incentives could be implemented to strengthen the US job market. This forum garnered major attention for the inshoring movement and Mr. Moser’s hope is more US companies will reevaluate their options in the coming months and years. And seeing how his initiative is backed by the highest levels of the US government it has serious potential to help many organizations make the transition back home.

Secondly, beyond the characteristics attracting US organizations overseas, Chinese suppliers were given tremendous incentives by their government to supply exporting companies. Now times have begun to change. The Chinese government is facing outside pressures in regards to their labor wages, currency evaluation and rate of inflation. All factors combined create an uncertain economic, social, and political picture. Although not at a boiling point, Chinese officials might be tempted to make changes (removing export incentives, tax rebates, etc) to improve diplomatic relations.   

Lastly, industrial products are produced and derived from the input of raw materials. Many of which are commodities priced on a world scale. Making the only production differentials labor, process and energy costs. If all factors become equal or close to par with the US, outsourcing overseas no longer makes economic sense. At this point organizations would forced to rethink their production strategy and if there was no reason to stay overseas (market position, consumer consumption ability, technical capability, etc) the transportation costs alone would be too great to ignore.

So while the future of manufacturing may appear to favor staying in its current capacity. One aspect is clear. The US can directly affect the number of jobs it brings back to its shores by the level of support and commitment their willing to show US organizations. 

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

Reshoring

  

  

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Last May The Boston Consulting Group released a report indicating jobs would begin to come back to the US as currency inflation and labor costs continue to rise in China. And while some have, the outlook from eastern and southern China is a little different. We know the low skilled labor jobs have begun to move but not back to the US. The majority of it has either headed west to inland China or to other low cost countries like Vietnam, India and Indonesia. 

So what does this mean for the US worker? Not much. The average US worker likely cares less about low skilled labor jobs. What they're interested in, is the return of the higher skilled and better paid factory jobs. So what are the chances of those returning? Well… I’m not going to say they won’t but here are some reasons to be cynical.

1. China’s Infrastructure: Their whole transportation system has been built round their ability to move goods from manufacturers to their ports and from there to the Western World. As a result, their ability to ship goods is one of the best in the World.  
2. Technical Ability: The majority of Chinese people have been employed in the manufacturing sector their entire working life. This means there’s a legion of people who have 20 plus years in the industry, making it nearly impossible to find that type of manufacturing expertise anywhere else in the World. 
3. Future Consumers: The Chinese appetite for goods is unparalleled. Coupled with the country’s ability to move goods. The Chinese market creates enormous potential for organizations. So why would a company after spending 10, 20 years establishing their manufacturing in China move it right before the market is set to explode?
4. Supply Chains: Expensive and can take considerable time to create. Often relying on multiple countries for parts/input components, organizations will be reluctant to change what’s working. Not to mention replacing and recreating an entire supply chain without involving China at some point in the process seems doubtful.  
5. Economies of Scale: “The increase in efficiency of production as the number of goods being produced increases”. China is the World’s manufacturer and virtual one stop shop. In no other country can you purchase the volume and variety of goods for the cost savings you’re able to obtain from China.

That’s it for today. Stay tuned for the next weeks post where I'll look at the other side of the story and point out reasons why some sectors of industrial manufacturing will see job creation over the coming years.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

What to Expect After Chinese New Year

  

  

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Now that Chinese New Year (CNY) is officially over, it’s time to get your products flowing out the factory doors again, right? Not so fast. The affects of CNY are long reaching and it’s not as simple as you may think. The fall out will likely to continue to affect productivity levels for at least the next 4 weeks and in some cases longer. 

Unlike the start of CNY where the migrant workers traveling home create a virtual human gridlock at every turn. Travel at the end of the holiday is a little saner. Yes there will still be around 200 million Chinese workers in transit over the next few weeks.  However, since the spring festival is their only opportunity to be home with their families, many of them will stretch the vacation out as long as possible. This creates a tremendous negative effect on manufacturing because some factories will wait weeks to have a full work force back in action while others may never be able to fully staff their production lines. As an example, last year one of our main approved suppliers wasn’t able to produce at full capacity until the end of March.

In addition to the people stretching out their vacation time, there is another faction of people who take CNY as an opportunity to reevaluate their working situation and seek a career change. Meaning the workers who got your sheet rubber order correct for the past year, have now decided they’d rather make dress shirts and naturally the people who use to make dress shirts are now trying their hand at producing your belting order and so on and so on. This worker realignment means your quality control team needs to be on high alert and working in high gear for the foreseeable future. I suggest you keep a close eye on production until you’re satisfied your supplier can reliably produce the consistent quality you require. Don’t make the mistake and think because the holiday has passed your products will ship immediately and as impeccably as they did before.    

Of course employee turnover is not always dictated by the workers themselves. Manufactures actively trim their workforce and recruit during the holiday period as well. In an effort to attract more talented staff members, factory managers will actually visit local bus and train stations to recruit potential works as they arrive. In special cases where a worker is really sought after, the factory will actually send a driver to collect the individual. In any case of how the new employees end up at their destination, bringing in more talented people usually results in the manufacturer running a better operation.  This can manifest itself by increased quality control measures, a more consistent product, better lead times, enhanced production techniques etc. Nevertheless be mindful of what you hear from your supplier and until you see evidence the new workers have contributed in a positive manner be sure your quality control team/process is watching every step.

All in all there’s no doubt CNY is a stressful time for anyone who has product originating from China. The main aspects are to be patient through this 2-3 month window, perform the extra steps necessary to protect your products and after the holidays pasted, collect your breath then get ready to do it all again in one years time!   

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

Quality Control: Sheet Rubber

  

  

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Souring and importing sheet rubber goods can be a risky proposition. There’s no two ways around that. And no matter how long you’ve been purchasing offshore and how many times you think you’ve seen it all. I promise you a problem will arise that your wildest imagination couldn’t create.  

However the good news is we’re not talking about unforeseen problems we’re talking about the most common quality mistakes made by offshore rubber suppliers. We have imported thousands of pounds of sheet rubber material over the years and here’s our list of top problems to watch your supplier on.

1. Hardness Marching – Typically a result of temperature and the product being over or under cured. The hardness of the rubber will change if the correct formulations are not used.
2. Migration – Where too much oil is used in the rubber compounding process. The oil will then creep to the finished surface creating an oily look and sometimes affects the performance of the rubber. 
3. Surface Contamination – Usually dirty substances (grease, mud, dirt, etc) found on the material attributed to messy working environments and careless workers.
4. Blistering/Bubbling material – If the vulcanization process is not done properly excess moisture can mix with the rubber causing the material to blister or bubble while curing. 
5. Smell – Because process aid oils are used during the rubber compounding process, some will create a very potent smelling rubber product.
6. Thickness Tolerance – If proper tension is not maintained throughout the manufacturing process a wavy product maybe the end result.
7. Packing – Often overlooked but critically important. Make sure your supplier straps the rolls of rubber together, rolls are placed on pallets for easy unloading, cores properly constructed and correctly sized for your warehouse.
8. Color of Rubber – For example, your rubber may show up the wrong shade of red. I know this doesn’t sound significant but when you try and sell the material to people who’ve been buying a certain shade for multiple years, trust me they’ll notice.

So how do you avoid these common errors? First align with a supplier that is best fit for you and your product needs. Whatever you do don’t pick a supplier based solely on price, that’s a sure fire why to not solve any of the issues listed above. Next, work with your supplier to create a list of Vital Factors that are important to you and your product. It’s important to describe each element in detail, don’t leave anything up to choice or assumption. Lastly have your supplier make a sample, production sample, trial order then finally once you’ve confirmed they can consistently manufacture your product, place a full container order. Also if you’re the control type you can never be too careful by sending an employee or hiring a quality control firm to perform in production quality checks.    

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

What to Expect During Chinese New Year

  

  

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Since I’ve already started receiving replies like this from our approved suppliers

“Goods cannot be made or shipped before the holidays, because many transport companies are on holiday. After the holidays (2012-01-30) we will deal with the matter as soon as possible.” 

I thought this would be an opportune time to layout some expectations of what you can anticipate from your suppliers and logistics providers over their New Year holiday. Unlike North America, where over major holidays most companies will employ a skeleton staff to maintain some level of operations, China will basically be closed for business.

Meaning no return emails, no order production updates, no logistics updates or quality control reports. Factories and major production zones will literally become ghost towns. A safe bet is to plan for this interruption to last about 2 weeks, even though the official holiday is scheduled to last 5 days.

This year the Spring Festival falls on a Monday (Jan. 23) setting up a likely situation where factories will start shutting down as early as Jan. 18^th to accommodate for workers travel. Being the largest human migration in the world it will take some workers upwards of 3 days to make it back to their rural home towns.        

Conversely, if you’ve made an appointment to meet with your supplier over the next couple of weeks I hope you’ve confirmed, reconfirmed and then reconfirmed again. It’s not uncommon for suppliers to welcome their customers throughout the year, so many will say yes to your visit without giving it a second thought. Especially if it’s made months in advance your supplier might not initially realize there’s a conflict.  Factor in the holiday actually changes year-to-year because it aligns in accordance with the lunar calendar not Gregorian. The likelihood of a mix up ensuing is far greater during this period than any other time of year, so unless you absolutely HAVE to meet, I’d just suggest you avoid it altogether.    

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

Consequences leading up to Chinese New Year

  

  

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As we are now 12 days away from the official start date to the year of the dragon you’ve probably already begun to notice your suppliers exhibiting some irregular activities. Maybe communication has become a little more sporadic, your technical questions are going unanswered and those orders you wanted rush delivery for, are now delayed 3 weeks shipping after the holiday. Or then again maybe nothing’s changed, as some would say all these traits are par for the course in good times from Chinese suppliers. Kidding of course.

All jokes aside this is the time of year when all the regular complications from doing business in China become magnified. This is to be expected as all suppliers tend to be a little pre-occupied with their upcoming holiday. Even though a manufacturer may not be scheduled to shutdown until a couple of days before the actual holiday, you can bet most of the workers have checked out, figuratively speaking. And no matter your order importance or technical problem, I can guarantee it’s not as significant to them as their upcoming time off with family, whom they haven’t seen since last Chinese New Year (CNY).

So if you want to stay out of trouble leading up to CNY there are few import aspects to watch from your supplier and logistic providers.

1. Communication may become more sporadic or incomplete. Try to no leave any pressing issues (that require immediate solving) within a one week to window of a manufacturer’s shutdown period.
2. Factories will be rushing to get orders complete before the holiday, make sure your quality inspection team or process is on high alert.
3. If your order was placed at the beginning of Dec. (with regular production 40/50 days) expect that it will ship after the holiday break.
4. If your product is not made-to-order and you buy from inventory. Be weary of receiving unacceptable quality products as factories are reluctant to hold product back or reproduce items because they want to clear inventory and warehouse space.
5. Check your rates with your logistics company. Some will charge a premium during this time period due to increased demand.
6. Ensure any important shipments are booked well in advance with your logistics company. No sense in pushing the factory to complete an order before the holiday if you can’t clear it from their warehouse.

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

Essentials of Chinese New Years

  

  

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Like the western world, China follows the Gregorian calendar which recognizes January 1^st as the official start to each year. However their holiday traditions, largely follow the lunar calendar which is based on the time it takes the moon to circle the Earth. Meaning there’s no fixed date for Chinese New Year (CNY) also called The Spring Festival and therefore can fall anywhere within a 2 week window between January and February.

One of the most central traits to CNY are the years. They actually rotate in a 12 year cycle, with each year corresponding to a different animal. This holds significant importance because the Chinese people believe strongly that the ruling animal during your birth year tremendously influences your behavior and personal character.

Being the largest holiday event in China (and many parts of Asia) CNY has a missive impact on business worldwide. Almost all the factories in the country will be closed for part or all of the 15 day celebration, with extra days being provided for travel because it is largest human migration in the world. More than 200 million people will be traveling. Most will be workers moving from the country’s eastern provinces, where the majority of the factories are located, to the central and western provinces where their families live.

Adorned in old age traditions from hanging red decorations (the color is believed to be the luckiest) to large fireworks displays believed to keep evil spirits away, this annual celebration provides a constant reminder to the vividness that is Chinese culture and heritage.

For your pleasure and planning purposes here are the dates for latest 12 year cycle complete with zodiac animal.

Year          Date             Animal

2008       February 7          Rat

2009       January   26        Ox

2010       February 14        Tiger

2011       February 3          Rabbit

2012       January   23        Dragon

2013       February 10        Snake

2014       January   31        Horse

2015       February 19        Sheep

2016       February 8          Monkey

2017       January   28        Rooster

2018       February 16        Dog

2019       February 5          Pig

So in the words of The Spring Festival celebration “Kung Hei Fat Choy” (Have Great Fortune) too all this year!

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

GCP’s Top 10of 2011

  

  

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While many North American and global companies are continuing to struggle with the impacts of market volatility, economic instability and the threat of a double dip recession. I’m pleased to report having just finished our year end meetings, the majority of our customer’s experienced significant growth in 2011. Further, our customer base remains cautiously optimistic that 2012 will be more fruitful with many of them poised to capture revenue growing opportunities.

As many of these opportunities are emerging via new product offerings, I thought today would be a great time to have some fun and countdown GCP’s top 10 most purchased items of 2011 (in terms of quantity sold).

Even though the news you read or watch from your favorite media outlet might not reflect the confidence we feel (in fact I’m almost positive it won’t). My hope is you read our list below and opens your thinking to see what others are doing in the industry and it motivates you to re-visit what business you might be leaving on the table.

So without further a due:

10. Premlene™ Silicone Solid Sheet

9.   Premlene™ Gum Rubber

8.   Premlene™ Red Rubber

7.   Enlast™ Ceramic Tile

6.   Premlene™ EPDM

5.   Premlene™ Nitrile

4.   Enlast™ Engineered Structures

3.   Premlene™ CRS Sheet Rubber (SBR)

2.   Premlene™ Neoprene

1.   Fitrite™ Clamps and Couplings

Be mindful, if you rely on product supply for revenue and want to experience profitable growth, new product offerings maybe the key to unlocking a lucrative 2012.

That’s it for the year! Have very happy holiday season and I look forward to continue posting in 2012.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

Qualifying a GCP Approved Supplier™: What we Audit

  

  

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As most of you know GCP is always searching for new products to supply as well as new suppliers to partner with. We rarely shy away from an opportunity or a challenge which is why we enjoy working on new sourcing projects and take supplier qualification very seriously. After all, we can only sell what we source and if we source poor quality products then we won’t have much of a business. Case in point, of the over 500 factories we have visited so far we have only qualified and approved 34 of them.

This is because we aim to build long-term mutually beneficial relationships with all our suppliers (and customers) and the pursuit of this severely limits the number of factories we deem suitable. For example we just finished auditing, what we initially thought was a fantastic supplier. They had lots of capital in the bank, rooms full of beautiful equipment and plenty of production capacity. They seemed perfect. And in many ways they were, just not for us.

In the end it came down to trust. We felt they weren’t being honest with their business intentions so consequently we weren’t prepared to invest our time and money to help them develop. In short, they failed point one on our audit list, assessment of intention.

The lesson here is, as important as it is to evaluate the supplier’s hard elements: equipment, R&D capability, production capacity, quality management systems etc. It’s equally essential to evaluate supplier’s soft elements such as: management team, communication ability, reliability, ownership commitment etc.

Below are some of the audit components our factories are subjected to and ultimately must pass before we call them a GCP Approved Supplier™.     

Audit – Components

1. Assessment of intention
2. A strong commitment from the owner and GM - They are willing to sign an MOU
3. Do they have effective communication and able to communicate regularly in English
4. Do they have competitive pricing - They are within GCP’s target price and within the range of other manufacturer’s quote
5. Do they deliver on time - Average delivery days against GCP’s expectation
6. Do they have production systemized for timely delivery - They have an expert team/department to deal with RFQs, production, and logistics
7. Do they provide certificate of compliance for orders
8. Do they have R&D capability - An R&D team, a good facility, testing equipment
9. Do they have the production capacity needed to regularly fulfill our requested volumes
10. Reliability - Is there industry information that can be gathered about their past/current performance
11. Do they have in-house product expertise
12. Do they have in-house production expertise that can oversee and adhere to schedule for every order
13. Do they have the ability to test quality during and after production and keep records
14. Are they willing to bear the cost, time and resources to achieve agreed quality standards and follow instructions. What have they done, are they proactive, or are they evasive.
15. Do they possess the adaptability to change

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)