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Freight Rates 2.0

Industry Insights / admin / freight rates, Industry, logistics, sourcing

Freight Rates 2.0 ET2C Int.
Freight rates continue their astronomic rise, and with spot rates expected to surpass $20,000 for a 40ft container Ex China to Europe in July, there is little chance of any immediate respite.

Freight rates are all that companies manufacturing overseas – particularly from Asia – are talking about. The disruption that started at the end of 2020 on the back of a shortage of containers and equipment in market, has now intensified on the back of high consumer demand and profiteering by the Carrier Alliances (in our opinion). The implications are wide-ranging but ultimately, alongside commodity price rises, Consumers should anticipate an inflationary tsunami hitting product prices by Q3 and Q4 of this year, and that is if there is available stock in store come the end of the year!

Freight Rates Growth

Fig 1, Freightos Index, China/East Asia to Mediterranean

At the end of last year, there was an expectation that freight rates would begin to ameliorate by Spring/Summer 2021; we even suggested that there were ‘whispers of $10,000 per FEU come CNY for China to Europe for Off contract rates’. There was certainly logic to this view (and perhaps a bit of optimism). Chinese New Year is always a bottle neck with large volumes of goods moving prior to the Chinese holidays. Carriers were already implementing a ‘blanking strategy’ to reallocate assets and minimize disruption. However, now off-contract rates, with premiums, surcharges and any other means of ‘gazumping’ the competition, are heading over the $20,000 mark for a 40 ft container on both Western and Eastern routes out of China to Europe and the States. As per the graphic above, basic rates have increased 5 fold since the start of the year, and a comparison of rates year on year demonstrates a stark difference in price.

What Happened?

A combination of factors has led to this extraordinary price surge. In simple economics, there is excess demand and constraints in supply. This has led to record freight rates at a time when supply chains are already stressed on the back of Pandemic. It appears that global trade and supply chains, as much as take for granted, under normal market conditions are delicately balanced.

There have been additional disruptions that have not helped. The Ever Given was the first such ‘shock’ as it plugged a vital artery of global for six days. Carriers had to reroute their vessels onto different, longer routes to get to their destinations. There has also been the recent outbreak of Covid in Southern China, striking right at the heart of one of the busiest ports in the world, Yantian. The port handled 13.3 million Twenty Foot Equivalents in 2020, which is approximately 36,400 per day. Although the port is back to operational capacity, there is a significant back log that continues to disrupt surrounding ports and waterways.

Freight Rates 2.0 ET2C sourcing

There is no doubt that bringing back capacity does take time. Current market conditions are no doubt challenging for the carriers. However, it is true that the Carriers are now generating excessive profits on the back of the situation and perhaps to the ultimate detriment of their customers; the retailers, wholesalers and importers shipping goods. You have to just look at some of the recent results announced for Q1 2021, and at a time when off-contract rates were only around $13,000 per 40ft container. Maersk, one of the largest carriers, has just announced an increase in EBIT to $3.1Bn from $552 Million over the same quarter last year (Q1 2020 was likely impacted by Covid to an extent). Their website goes on to state, ‘The results reflect high volumes, which are up 5.7%, significant increases in freight rates of 35% and lower bunker fuel prices…’. The same can be seen with other carriers, for example, Cosco has reported net profits in Q1 of $2.39 Billion.

Freight Rates – What Next?

The Carriers are suggesting that demand will support these rates well into Q4 of this year, particularly on Ocean routes. Some retailers are already considering entering the shipping market themselves as a safeguard against further rate rises. Taking on this risk would likely only be possible for the large big box retailers. Home Depot is already willing to take that position and have their own vessel for moving goods to the US.

The market will settle and pricing will likely react to additional supply (containers and ships) coming to the market later this year into next year. The concern, though, remains how long these rates are sustainable. In the meantime, there are some areas of concern:

1. Large retailers will have the advantage over smaller players, who can leverage large contract rates that will help them (for now) to get a significant discount on the freight rates.
2. Certain categories with large CBM (like furniture) may become prohibitive to ship where the consumer is not willing to take on the additional costs.
3. Freight forwarders may not be able to finance the shipments as credit limits per customer will be restrictive to new business. Working capital will be stretched.
4. There will be a significant lack of stock in Western markets for the next 6 months, which will drive inflation at a time when commodity prices are already forcing prices up.

Of course, it is an opportunity to look at re-engineering your products, how you can ship more effectively, different routes (like train to EU), alternate markets and look at removal of costs across the entire supply chain.

Call to Action – #doRightbyRetail

The Pandemic has brought aspects of global supply chains into focus. This market is very challenging and risks tipping a recovering global economy into an inflationary spin. Governments need to understand that the majority of brands and retailers have already struggled enough over the past 18 months and this just adds fuel to the fire. The Consumer, too, is unlikely ready for the price hikes around the corner. That is why we have decided to act to make a difference.

doRightbyRetail-1

Starting with the UK, we are just working on a Petition to put to the UK Government to provide temporary assistance on import duty and VAT and, once it has been approved, we will need the support of all UK residents who want to #doRightbyRetail and seek Government support. We need your help to make that difference.

At ET2C, we understand your needs, and are prepared to do what it takes to make that difference. For more information, please contact us at contact@et2cint.com.

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Supply Chain Trends 2021

Industry Insights / admin / Sourcing Trends, suppliers, Supply Chain, sustainable sourcing

Supply Chain Trends 2021 ET2C International Sourcing Procurement Quality Control

Supply Chain Trends 2021 reaffirm that Sourcing remains an important area of focus, while Sustainability and Supplier Relationships make their entrance into the ranking.

Over the last 18 months, the global pandemic has severely shaken markets and disrupted supply-chains worldwide.

Although there are no doubt still challenges (freight rates, commodity prices and Covid outbreaks), the uncertainty in markets has to an extent abated and supply chain professionals are starting a new phase of planning.

The latest report from the American Productivity and Quality Center (“APQC”), “Supply Chain Management Priorities and Challenges” sets out some interesting data on the impact of Covid-19 on the global supply chain. APQC interviewed over 450 global companies across many industries such as Retail, Automotive, Consumer Goods, Industrial and more. As expected, the pandemic significantly impacted 95 percent of organizations’ supply chains. In addition, over 70 percent of supply chains missed some or all of their business goals for 2020. However, even more interesting are the forecasts for the future and the potential opportunities.

Supply Chain areas of focus 2021

Considering the unprecedented challenges faced by supply chains over the past 18 months, what is next? Where does the focus need to be?

2021 Overall Supply Chain areas of focus – APQC

The participants showed a clear interest in ‘Supply Chain planning’ (81%). ‘Sourcing and Procurement’ resulted as a key focus, scoring second in the ranking of the future areas of focus (79%). But what are the priorities related to sourcing and procurement for 2021 on the back of the Pandemic?

Sourcing and Procurement

The Pandemic has certainly disrupted supply chains (and continues to with freight rates). In addition, it has impacted the businesses’ ability to trade in the majority of cases. For example, retailers have had their stores being forcibly closed through lockdowns. The Sourcing function continues to become increasingly a strategic (rather than operational) function of any company.

The catastrophic impact of the pandemic on companies is certainly a determining factor in the first position of “reducing costs” (35%) – although a common theme for many buyers – as margin growth or profit generation are increasingly important. With the additional costs of freight and commodity costs, there will likely be push back from suppliers back down the supply chain with the Consumer/end-user ultimately having to pay a higher price into the second half of 2021.

This represents a shift from 2020 when the survey had automation and digitization as the top result, which has likely fallen off the list of priorities given there are other more pressing matters to focus on – business survival as a start!

Also, ‘sustainable sourcing’ (34%) has risen to the top of the survey’s results when it was not even mentioned previously. This further suggests that sustainable sourcing is a key trend that will continue to grow in importance and certainly will not be temporary.

It is good to see that ‘improve collaboration and communication with suppliers’ (34%) also features highly. This recognizes the importance of strategic relationships with suppliers that are often only seen as transactional.

Supplier Relationship Management (SRM)

These results support the view that identifying the right suppliers is of strategic importance to organizations. Too often, suppliers are seen as transactional players in any supply chain, when in fact they are strategic partners and, in some cases, transformational. Whether it is product design, innovation, commercial terms, exclusivity or capacity (to name a few examples), suppliers can drive significant value to your business. In a nutshell, the more aligned companies and suppliers will be, the more beneficial it will be for both. Strategic relationships can also provide valuable support during periods of uncertainty, making the business more resilient.

Supply Chain Trends 2021 ET2C Int. Supplier Relation Management Sourcing Procurement

It is therefore key to implement effective supplier relationship management. Although the reduction of supplier costs is a top priority for organizations, looking at a medium-term horizon by empowering your suppliers (and not beating them up on price) will undoubtedly drive more value over a longer period of time.

The constraints of the current business environment make it tempting for organizations to take drastic steps to reduce costs, but they should not sacrifice relationships and collaboration with key suppliers.
The crises of the last year have shown that organizations must work closely with their key suppliers to mitigate risk and quickly address unexpected situations that arise. Through collaboration and stronger relationships, they can identify weaknesses and create solutions that are mutually beneficial.

Top Trends impacting the Supply Chain by 2023

The respondents listed two key trends that will impact the supply chain over the next two years. There were Robotic Process Automation (RPA) and Sustainability.

Supply Chain trends ET2C sourcing Procurement

Robotics Process Automation (RPA)

RPA is broadly the use of metaphorical “software robots” as part of a business process automation or the implementation of artificial intelligence to carry out tasks instead of humans. By automating repetitive tasks and reducing human involvement in transactional work, the potential for errors decreases significantly. In addition, this type of technology improves productivity and efficiency by enabling employees to spend time on more value-added activities.

Sustainability

In the pre-pandemic era, the respondents’ focus was almost exclusively related to technology and driving efficiencies through their supply chain. It appears that post Covid-19 other themes emerged and one of them being the prominence of ‘Sustainable Sourcing’.

An increasing number of companies and organizations worldwide feel the urgency of focusing more and more on environmental, social and corporate governance (ESG) factors, which make up the second trend anticipated to impact supply chains.

This is an aspect not to underestimate, considering that it will impact also the companies’ sourcing strategies. Certainly, sustainability-related subjects and issues will influence how companies identify and evaluate potential new suppliers and monitor existing suppliers.

Interestingly, the prioritization of sustainable sourcing is not perceived as just a reaction to media, consumer, and regulatory pressure. It is more and more evident that sustainable sourcing provides tangible benefits in terms of speed, efficiency, and risk mitigation. For this reason, procurement will need to include ESG in its strategic plans to carefully consider and coordinate all interactions with suppliers and reach their sustainability goals.

Supply Chain Trends – Summary

Of course, the Pandemic has brought some aspects of companies’ supply chains into focus. Supplier relationships are central to driving value through your supply chain. A shift away from transactional to more strategic (collaborative) relationships will support a company’s growth targets.
At ET2C, we look to provide our clients with insights across our manufacturing base. We understand your needs, and are well placed to address your needs. For more information, please contact us at contact@et2cint.com.

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Plastic Injection Moulding: The Insight Series

Industry Insights / admin / Industrial, Platic Injection Moulding, sourcing

Plastic Injection Moulding ET2C Int. Sourcing Procurement Industrial

Plastic Injection Moulding is a manufacturing technique that is widely used for the production of plastic products.

The Insight Series

We work with our suppliers to develop products across an array of different sectors that rely on varying materials and a range of manufacturing techniques. It is always fascinating to see how each of these products are made, whether it is the number of hands that touch the products as it is manufactured or the machines that are utilised as part of the production process.

Plastic Injection Moulding ET2C Int. Sourcing Procurement Industrial Machine
This month, we’re back! We are going to take a look at one of the most widely used plastic forming techniques – plastic injection moulding – and its applications across a wide range of industries. Given the breadth of sectors that this plastic forming technique covers, it should not be a surprise that plastic injection moulding is common within the Asian manufacturing sector. Whether it is solely used for componentry or the product itself, this technique aligns to high quantity, cost-effective products.

Plastic Injection Moulding

So what does this technique involve? If you have ever been to a factory using this technique, you will have noticed the sizeable machinery in the factory. Of course, the machines vary in size depending on the product requirements.
The machine takes the solid plastic (pellets), compresses it and then melts it as prior to it arriving in the injection chamber. The plastic is then injected (as the name would suggest) at high pressure into a customized mould, which is generally made of two parts. The plastic then cools and solidifies and can then be released. Simple!

Moulds & Assembly

As you can imagine, it does get more complicated than this. There are variations in how the moulds interact (two part-moulds, side action moulds and moulds with ‘releasers’) which will depend entirely on the product being made.
In addition, the assembly process ranges from simple to complex. This is based on the budget and the final product being manufactured. Different types of assembly include mechanical, ultrasonic sealed and using adhesives.
Plastic injection moulding is a more automated manufacturing process which relies much less on the ‘human’ touch points. So, what are the benefits of using Asian suppliers given labour is not a significant cost? The largest benefit of leveraging production in Asia is the actual mould tool creation/set-up. This is very labour intensive hence the benefit and as such there are significant reductions in the capital investment required; costs which are often amortized across the product costs, which increases price.

Industry Application

The technique has broad application across a number of sectors. The best way to demonstrate this is to provide some insight on some of the industries where it is commonly used.

1. Medical

The industry demands high quality instruments that are precise and intricate in their design. Plastic injection moulding, with its high-pressure moulding, is capable of producing such instruments in a cost-effective way. The plastic resins used are high quality and can deliver superior mechanical properties such as high tensile strength and resistance to high temperatures.

ET2C Int. Sourcing Procurement Industrial medical

2. Shoe Industry

The technique is also used widely in the shoe industry. Yes, shoes are often made of leather and fabric uppers. But you will note that most shoes use plastic injecting moulding to form the sole. This provides the shape and durability and gives you that little bit of cushioning!

3. Electronics

Plastic is a good protector against dust and dirt and does not trap moisture. So when you are dealing with electronic components and circuit boards on keyboards and computers, plastic injection moulding is the perfect technique to create the casing and the frames. Given the infiltration of electronic items into our everyday lives, you should now be getting a sense of the importance of this manufacturing technique.
There are other industries that can also be added to the list, such as food and beverages, toy and building.

Advantages of Plastic Injection Moulding

We have seen the industries to which it is applied, but what are the benefits from a manufacturing perspective?

As a manufacturing process, plastic injection moulding has lots of advantages:

1. Quality Replication

With the right moulds and resins, it should be possible to reproduce the same product thousands of times to the same quality.

2. Low Cost

Once the moulds have been made and evaluated (and invested in) the cost per unit is relatively low compared with other materials and manufacturing processes. The lack of waste also factors into this as well (unlike CNC which has a much higher wastage).

3. Mass Production

When the machine is operating, the injection cycle should be a matter of minutes (or even seconds!) per unit. It is therefore an incredibly quick and effective manufacturing process for mass, large scale production runs.

Summary

Industrial manufacturing is a fast-growing sector for offshore manufacturing, particularly across Asia where relative share has grown significantly, which includes products that are made using plastic injection moulding techniques.
At ET2C, we look to provide our clients with insights across our manufacturing base. We already manufacture a range of industrial products for our clients across multiple markets. For more information. please contact us at contact@et2cint.com.

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Indoor Garden Trends: Bringing the Outdoors Indoors

Industry Insights / admin / business, finance, Industry

Indoor Garden Trends ET2C Int. Sourcing Procurement Outdoor

Indoor Garden Trends point to much greater demand for indoor plants and vegetation as people have re-imagined and re-engineered their inside space.

Indoor garden trends have reacted to the past 18 months of the Pandemic, as it has made us all rethink our inside space. With the Lockdowns and restrictions on venturing out that many of us have experienced, it is not surprising that there has been a greater appreciation of the internal environment. The emergence of the ‘Plantfluencer’ underlines the growing consumer appetite. Indoor garden, visual statement and interior plant styling are also increasingly common hashtags that can be found on social media.

Indoor Garden: Just a Trend?

Plants and vegetation are central to this trend, and it is not only the aesthetic. There are several studies that point towards the connection between plants and human well-being. Not only do plants improve air quality (they produce oxygen via photosynthesis) but simply make people happier and healthier. In the US, there is a trend of ‘grow your own food’ increasing in number on social media. Ready to grow and edible gardening kits are therefore popular options that can be used inside the home.

Of course, though, the aesthetic remains an important element of indoor garden trends. Hybrid design (a functional place like café or store with greenery and indoor plants added, for example) is becoming more common place. Studies do show that customers are more likely to spend time and drive longer distances to shops and restaurants that capitalize on this design aesthetic.

Indoor Garden – Product Accessories

So how does this translate at a product accessories level? What are these green-fingered consumers buying to support this need? We have pulled together 5 key areas that we are seeing in the market:

1. Natural materials – Basic shapes and neutral colors

To compliment the plants, consumers are buying neutral colours and in natural materials. Sustainability very much aligns with nature and plants, so expect opportunities to also present sustainable themes on material to the consumer. We are seeing a range of materials for indoor plants from cork pots and sea grass baskets to washable kraft paper and hand painted clay pots. Such items have a certain timeless feel and can outlast the often short-lived interior design trends.

Natural materials Pot Garden Sourcing Indoor Outdoor

2. Propagation Stations

With the growing trend of Hydroponic techniques, there have also been an increase in hydroponic planters being sold in the market. Hydroponics involves growing plants (usually crops) without soil, by using mineral nutrient solutions in an aqueous solvent. The planters can act as an interior statement given they can display bulbs and plants without hiding them in the pot. In fact, hydroponics can accelerate the growing process by 30-50% and is being adopted in some ‘sustainable kitchens’ as a result.

Garden pot gardening indoor outdoor sourcing

3. Self-watering pots and sticks

For those people who do not have as much time to care for their plants, there are self-watering pots and sticks now being sold. These are particularly relevant for the younger generation of gardeners who have less experience of gardening. Watering from the roots up will help maintain the correct water level without drowning the plants in the process.

Indoor garden Trends indoor gardening sourcing ET2C Int.

4. Vertical Garden

Placing plants on different levels can help to recreate natural patterns and environments. This helps break up space through the use of vertical planes. Plant holders, hanging baskets and wall planters can help to achieve this effect. Bring the urban jungle into your home!

Indoor garden trends vertical garden sourcing ET2C Int.

5. Modern Look/Minimalist Design

Less is more. The consumer is looking for simple designs (geometric, 3-dimensional with black/white/grey simple matt finish). Also, metal galvanized containers are very popular and the product has to be compact and lightweight.

pots garden plants

Summary

We have already done a lot of work with our clients on these types of product accessories. At ET2C, we have people on the ground in multiple markets that are working with suppliers already producing these categories. Whether it be local skilled craftsman involved in the manufacturing process or innovative tools for some of the materials (like composition cork), we have you covered and can help your category grow! For all your product needs, please contact us at contact@et2cint.com .

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Supplier Contracts: NNN Agreements & Other Tips

Industry Insights / admin / Contracts, NNN Agreements, Supplier Contracts, suppliers

Supplier Contracts sourcing ET2C Int. Procurement

Supplier contracts are vital for maximizing the benefit of sourcing in Asia. Yet many companies do not consider the local laws in place to their detriment.

Supplier contracts underpin any transactions with Asian manufacturers. They define your legal relationship with a foreign manufacturer in a foreign jurisdiction. However many companies still fail to consider the local law and its application when getting contracts agreed. Where disputes do ultimately arise this can be problematic, and a reliance on a contract as a means of recourse or compensation may prove disappointing.

So, as a company that has been operating on the ground in Asia now for over 20 years, we wanted to give you some tips on what you should be looking for when it comes to supplier contracts. Just a word of caution though, we are not writing this as a lawyer. Therefore, for any areas below that you want to enquire into, please be sure to take the appropriate legal advice.

The Landscape

Over the past 20 years, as manufacturing migrated out East on a mass scale with the accension to the WTO by China (and to today with a more fluid sourcing landscape across Asia) many foreign companies moved production out East and contracted with local Asian companies in their respective markets to produce goods. Clearly, different countries have different legal systems and different laws. This may sound like an obvious statement but the assumption that US law will have enforceability necessarily in China, as an example, is perhaps wide of the mark. And that is not to say that Asian legal systems are less developed than other Western markets (in fact that the Chinese legal system is one of the oldest in the World) but they are different and understanding these differences and how to protect your company is the key point here.

Supplier contracts ET2C Int. Sourcing procurement quality control

To take one simple example of how different legal systems can be; the ‘Chop’ in China is equivalent to a signature and can bind a company in an agreement or contract. So, securing the Chop is an important internal control that we do not have in the West.

There have been numerous books written over the years on the perils of manufacturing in Asia (a favourite being ‘Mr China’ by Tim Clisshold) and we have certainly seen issues arise. Inevitably for companies that are contracting directly from overseas in a different language with a foreign manufacturer, there will always be scope for a misunderstanding or possible breach of contract. Having legal recourse via a supplier contract is, therefore, an essential part of doing business in Asia.

Key Tips for Supplier Contracts

We have set out below some key points for you to think about when drawing up supplier contracts (with a leaning to supplier contracts with Chinese suppliers):

1. NNN Agreements

This is a good example of applying legal norms in one’s own market to a foreign market. Traditionally, companies have used Non-Disclosure Agreements (“NDAs”) when it comes to protecting IP or sharing any confidential information with Asian manufacturers. In markets, such as China, this does not offer sufficient protection.
Instead, an NNN Agreement (non-disclosure, non-use, and non-circumvention) provides greater protections. It covers some practices that manufacturers could do to take your product and sell it under their own brand. Actually, in China it is more effective under the law because it provides for liquidated damages instead of injunctive relief which is essentially enforceable by a Chinese Court.

Contract Agreement Supplier ET2C Int. Sourcing Quality Assurance Procurement Vendors

2. Contract Language

Think which language is most appropriate to remove any misunderstandings or mistranslations. Often, this statement would lead to most companies drafting their NDAs in English. However, you should certainly take into consideration the use of a domestic language. Clearly, this means professional translators may need to be involved but this is the best way to remove any confusion.

3. The Governing Law

Commonly companies will use their own law as the Governing law for any contract. This is primarily because they understand the recourse available. However, when it comes to enforceability, this can be more problematic. For example, a contract governed by US law although recognized in China, will still be viewed through Chinese Civil Law procedure. This will make its enforceability even more complex and administratively burdensome, not to mention the costs. It is worth noting that HK law is enforceable in China via a Chinese notary and has the benefits of a known Common Law system.

4. Jurisdiction of Courts

Similarly, you may want to think about the Jurisdiction of the Courts. If an American Court provides a judgement, then getting it enforced in China (as an example) won’t be easy. There is no treaty between China and the US, which renders the judgement worthless. Having a Chinese Court would likely provide greater protections.

Supplier contracts ET2C Int. Sourcing procurement quality control

5. Commercial Levers

This is probably the most important tip and should hopefully keep you away from complex and lengthy legal claims. There is no doubt that any legal claim through Asian courts is likely going to be long. Therefore, the best course of action is to avoid it where you can. The best way to do this is to use commercial levers to get you what you want. This could be negotiating terms of 30 days plus (not always easy) so that you have received the goods before you must pay the manufacturer. Or it could be protecting your IP in markets where you sell your products so that you can prevent others from selling your products.

We are on the Ground

At ET2C, we have people on the ground to make sure that your production does not go wrong, whether that be during product development through to end of line quality control. When issues do arise, the legal implications can be complex and time-consuming to address. Certainly, they could be also very costly so better to avoid them if possible! Some of the tips above should provide some thoughts for supplier contracts when you are engaging directly with manufacturers – remember to take legal advice as required.

For all your queries, please contact us at contact@et2cint.com .

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Quality Control: 5 Important Mistakes to Avoid

Industry Insights / admin / business, finance, Industry

Quality Control ET2C Int. quality assurance factory audit check

Quality control is a valuable part of any supply chain process and will give you visibility of the product quality prior to shipment. There are some common pitfalls to avoid though and navigating these should save both time and money.

Quality Control (QC) is a process that considers all aspects of manufacturing a product. This includes aspects such as vendor capability, management, and, of course, product quality. Preventing mistakes and product defects at the source provides the customer with reassurance that their shipments are to the requisite quality level. The last thing that anyone wants is to be shipping a quality problem. This will inevitably be costly and difficult to correct once the ship leaves the Port!

QC is a useful tool to manage product quality on-site at a factory. Certainly, it is important to make sure it is done correctly. With so many companies leveraging the benefits of Asian supply chains, having this visibility ensures that the risk of quality defects is mitigated. However, there are some common areas where companies make simple mistakes.

Quality Control: 5 mistakes you should really avoid

Below is a short summary of 5 common mistakes that can lead to quality issues:

1. Skipping the Samples Approval

Part of benefiting from upstream quality control is about the ‘set-up’. For example, clearifying what the quality level is and being able to reference this during any QC process is paramount. Before mass production, it is therefore imperative that you check the product you have required. When manufacturing products in Asia, you should always implement a “gold seal sample” process.

This means having identical development or pre-production samples made, and signed by all parties (factory, client and agent) and then retained by each respective party for reference as and when required.
This sample is the result of an approval process and is essentially the “go-ahead” signal for production. This is particularly important for any quality control inspector to be able to check the bulk pieces against. The ‘Gold Seal sample’ represents a perfectly made product that is in full alignment with your product quality standards.

2. Providing inaccurate Product Specifications

Similarly, it is important to set out as much detail with the product specification. Even with a gold seal sample in place, having documented and signed off (by all parties) the product specifications will provide evidence of dimensions, function, any printing and packaging some of which may not be covered by the Gold Seal sample.

When it comes to dealing with your manufacturers, specificity is key. This is particularly important where language and culture need to be bridged. For example, ‘This Way Up’ printed on a box for a fragile item is obvious for English language speakers. However, where English is not widely spoken, don’t be surprised if it isn’t printed the right way around. It is therefore important to reduce the margin of uncertainty and be clear and never assume anything.

Even for repeat orders, a specification sheet can clearly detail the materials used which will prevent cheaper substitutes. It is the base documentation for your product, so the more detail the better. The product specification should also include certain physical or chemical standards required which may require a testing house to do some lab tests.

By defining every detail in an official document, no excuses can be made when a shipment does not meet your standards.

Specifications should cover dimensions, product images, material used, components, function, colours and pantone references, packaging details, print artwork, certifications, standards, labelling and packaging way. Once all aspects of your product are documented and you have a gold seal sample, the subsequent quality control process can be overlaid much more effectively.

3. Not identifying the Quality Risk Areas

Understand your product and the potential quality issues. This may be based on past experience or just recent results with an incumbent supplier. Taking into account the quality risk, it is possible to target specific areas of the manufacturing process to proactively eliminate issues as they occur at earlier stages of the production. Of course, the financial and commercial risk of quality issues arising will need to be taken into account at the same time. For example, you may have just landed a large new client account and the quality needs perfect.

factory warehouse logistics goods

At each step, the workflows and the purpose of quality control are quite different. Here are the main QC services that you can consider:

1. Factory Evaluation
2. Sample Development Consulting
3. Product Standard Consulting
4. During Production Inspection (DUPRO)
5. Pre-shipment Inspection (AQL test) (PSI)
6. Pre-shipment Inspection (piece by piece checking)
7. Loading Inspection (LI)
8. Product Checking List Development.

Certainly, they are all important and, as your company needs might vary, some quality checks are even more important than others. A quality risk assessment will allow you to select which quality control audits are implemented.

For example, the factory evaluation will identify potential issues with the supplier that may in fact stop any further work or product development. Or implementing a pre-shipment inspection will help catch any issues before it is too late, saving you time and money.

4. The QC Inspector as the ‘Policeman’

Quality needs to be about collaboration. There needs to be a move away from the quality inspector as a ‘policeman’ who comes in and performs a tick the box exercise. Certainly, factories might tell you that they have internal QC methods and procedures that result in very low defect rates. Clearly, an independent pair of eyes would still be beneficial and add a level of objectivity. But, the more the factory can understand the quality requirements and the more the inspector can understand the manufacturing process, the better placed all parties are to identify quality issues and correct them.

Quality team expert Asian engineer using a laptop in a factory

This works back up the manufacturing process and should encourage continuous improvement methodologies to address a process/machine/employee that is causing a defect and make the necessary changes or adjustments.

This collaboration is very much distinct from the inspector being too close to the factory managers. To this extent, the objectivity has to be maintained so as not to create any conflicts of interest. Also, often third-party inspectors bring with them experience across different product categories, which provides additional added value when it comes to potential product-specific quality issues.

5. Ignoring the Data

Often the quality control piece is seen as transactional; the goods have passed and the focus shifts to the next production run. Rather companies need to take the time to step back and look at the data. For one supplier, looking across multiple shipments over a period of time may identify one particular quality defect that is an issue. It should then be possible to speak to the factory and through a root cause analysis identify what is driving this particular issue and implement a corrective action plan to address it.

analytics analysis qc qa audit factory supplier

For example, if loose threads are commonly featuring on your pre-shipment QC reports for some cotton upper shoes, then working with the factory to remove this quality issue will save time and cost. Additional checks could be implemented during the sewing stage to reiterate to the workers that the threads should be properly trimmed. Likewise, you could implement internal QC on the production line as the shoes move down the conveyor belt to cut any loose threads still showing.

Looking for third-party quality control services?

Finding a trustworthy third-party quality control service will provide a significant benefit to your business. We at ET2C International understand the necessity for transparency and accountability because they are core to what we do each day.

Third-party Quality Control ET2C Int. quality assurance factory audit check

With our own dedicated quality team across Asia, we look to deliver the visibility you need to sign off shipments. We are already investing in technology to enhance the service we provide our clients in this arena. For more information, please contact us at contact@et2cint.com.

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Sourcing Market Insight

Industry Insights / admin / business, finance, Industry

Sourcing Market Insight

Sourcing Market Insight: Inflationary pressures are feeding into global supply chains but what does this mean for sourcing strategies?

Sourcing Market Insight – Overview

The global trade equilibrium is no longer balanced. The Pandemic initially plunged the world economy into cardiac arrest. Then, as individual markets applied their own Covid recovery plans, trade certainly picked up. But it is the disjointed nature of this recovery that is now driving supply and demand imbalance and leading to challenges in sourcing markets.

Inflationary pressures

Sourcing markets were already in flux, with strategic shifts occurring as companies looked to ‘de-risk’ their global supply chains and enhance supply chain resilience by looking at complimentary sourcing markets for their factories. The recovery in certain markets combined with devastating second, third and fourth Covid waves in others, is pointing to demand outstripping supply across multiple sectors. The result is inflationary pressures feeding into the supply chain; whether it is freight rates, commodities, labour costs or operating costs, prices are likely going in one direction for the foreseeable future, and that’s up!

In this week’s article, we are looking at what this will likely mean for sourcing markets, and whether this will accelerate the current shift away from a ‘China plus one’ sourcing strategy.

Global Commodities

Given any product cost is heavily correlated to a commodity price, it is a good place to start. Whether it is cotton through to copper, raw materials are on the rise as any Asian factory will readily tell you. Broadly, this upward pressure is likely to be for a sustained period. This is due to a combination of factors, both structural and due to short term supply constraints. The recent Producer Price Index (‘PPI’) data pointed to factory gate prices increasing 6.8% in the year to April, according to China’s National Bureau of Statistics. This increase is largely driven by rising commodity prices, with the raw materials component of PPI up 15.2% over the same period.

containers port sourcing procurement ET2C Int. logistics

Although some of this rise is linked to the recovery of the global economy, some is more centred on shifts in demand oversupply. To take copper as an example, the metal has some industry analysts and CEOs pointing to a 50% rise in copper prices to $15,000 per tonne by 2025. Copper is a particularly good conductor and is therefore used in electrical wiring. With economies like China committing to build millions of new homes, there is heightened demand. In addition, many Governments around the world are committing to greener energy alternatives, and this will require more copper for the infrastructure. This at a time when copper prices post 2008 have been low and not allowed mining companies to invest the capex required to bridge the long-term supply gap of 8.2M tonnes by 2030. Demand is outstripping supply. The same is true of other metals, such as aluminium and iron ore (China is reducing output due to the removal of polluting industries). Such commodities may therefore have some time to go before prices begin to subside.

Freight Rates

On sea routes out of Asia, there is a continued expectation that rates will hold at high prices, albeit not quite as high as pre-CNY when there was significant demand for space. This is due to container equipment shortages continuing to be a problem, which is leading to space shortages as companies look to ship transpacific or to Europe. The fallout from the Evergiven Container ship in the Suez Canal will continue into May and June and is only exacerbating the capacity constraints.

freight rates tariffs logistics shipping sourcing procurement

Sustained high freight rates will inevitably impact landed cost, and for larger items – such as furniture – this can become prohibitive after a sustained period. We are already seeing some retailers deciding to hold shipments until rates subside to make the landed cost workable. Looking at the current market, this may be some wait, and it may be a better option to look at alternate ways of shipping the goods (such as overland by train), which take longer but are more palatable from a cost perspective.

Global Sourcing Sentiment

It, therefore, appears that inflationary pressures are here to stay over the medium term at least and these collective higher costs are already filtering through to shelves in the West. So, what does this mean for the Sourcing market?

QIMA, the Quality compliance provider, has recently conducted a survey across 700+ businesses on what global sourcing looks like in 2021 (“After the Storm: A Look at Global Sourcing in 2021”, March 2021), which draws out some valuable insight. These can be summarised as follows:

Pre-pandemic sourcing trends are still in effect.

Global buyers are continuing their move to more regionalized sourcing strategies increasingly across China, India and Vietnam.

Vietnam & India dominate China’s regional competition.

Both markets have gain popularity with Vietnam featuring particularly higher when ranked against China for US respondents (for example 33% of US Furniture is now coming from Vietnam).

Buyers reluctant to significantly cut ties with China.

China still retains its positions as the most important manufacturing partner for many of the businesses surveyed.

EU Brands are stepping up Near Shoring again.

This is a trend particularly relevant for the EU with a focus on Turkey. US businesses seem more reluctant to move away from Far East Sourcing.

Two-thirds of buyers globally are eager to continue sourcing diversification to mitigate risks in 2021.

Broadening the supply base is seen as a way of mitigating market risk and disruption.

Made in China Sourcing Insight delivery shipping procurement manufacturing

Although this survey was conducted in March, we anticipate little change to these trends. In fact, we have been pointing to companies looking to reduce reliance on any one market where possible for the past 8 months and see little reason to change our opinion.

We would, however, anticipate broad price increases to the consumer which will help offset the freight and other commodity price rises. Even though wage inflation has generally been stagnant over the past couple of years, it remains the case that one result of the Pandemic is that savings rates in the UK, US and EU have increased dramatically. For example, the population in the UK is sitting on an estimated £180 Billion of savings since the start of the Pandemic with £3 in every £10 saved. There is, therefore, scope currently for retailers and brands to push prices to the consumer, and as the savings are spent this is likely to the case. There appears little scope for suppliers to absorb further cost increases, as they have done over the past couple of years.

Summary

Although price increases are already feeding into global supply chains, we generally expect these to be passed onto the consumer across categories. We do not, therefore, see any wholesale change to longer-term sourcing strategies. We continue to see companies embedding greater resilience into their supply chains by market diversification.

At ET2C, we look to provide our clients with sourcing market insights across our manufacturing bases. With offices in China, Vietnam, India and Turkey, we are well placed to deliver sourcing solutions to meet your needs. For more information. please contact us at contact@et2cint.com.

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Sourcing chronicles: ET2C – 20 years and counting!

Company News / admin / Buying Office, et2c, procurement, Quality Control, sourcing

Sourcing Chronicles ET2C International procurement quality control

Sourcing has evolved significantly over the past 20 years. We have seen China’s accension to the WTO, outsource manufacturing move mainstream with lower barriers to entry, trade tariffs as part of political posturing, the expectations of the consumer have developed to put greater emphasis on information flow (sustainability, supply chain transparency etc) and, last year, the Pandemic and the PPE ‘grab’.

There is no doubt that some of these events have presented opportunities whilst others have been significantly more challenging. Throughout these ups and downs, a consistent throughout this period has been ET2C, who celebrates 20 years on the 8th May 2021. Our DNA remains the same, and we are still working to deliver the best products and services to our clients. It’s what gets us out of bed in the morning!

“What a fantastic achievement! Never could I have imagined, on that first day when I opened the office on Beijing Dong Lu, that 20 years later we would have over 200 staff across more than 10 countries and over 100 regular clients. Of course there have been tough times, but it has been the staff and our clients that have helped us truly grow and flourish. A great ride, here is to the next twenty!” Richard Archer-Perkins, CEO, 7th May 2021

ET2C’s History

It all started at the Javits Center in January 2001, when Richard (CEO) visited New York at the Pure Exhibition. Having seen the emergence of a mass manufacturing base in China, which was in the early stages of taking the mantle from Taiwan, he walked the show going to every booth asking whether there was anyone interested in working with China. There was a lot of interest, but there was only one company that came to the table; a body jewellery company called Silver Moon Concepts who operated in Florida, USA. He managed to find a supplier (who traditionally worked with watches), who had the machinery and material to make surgical grade stainless steel (316L) and importantly create the necessary shapes. He then went about finding staff to create a mini-production line to put the product together and pack them. The office then opened on the 8th May 2001.

ET2C office

The evolution of the business

As a result of delivering significant cost savings and driving margin growth for our clients, ET2C quickly took on more clients who wanted access to suppliers in China. Even back then, in 2002 and 2003, broad access to China was much more limited as it would usually be today (outside of the Pandemic). As the business grew, we established our own merchant team, a quality team and established operations in different markets to best align with our clients’ needs. Today, we have in excess of 100 regular clients and are constantly looking to give them sourcing solutions that drive their bottom-line growth.

Areas such as sustainability and personalisation have become key parts of any retailers’ supply chains – at the very least they should be analysed and considered in line with the consumer – and we are therefore actively engaging in these fields to continue to provide relevant solutions to our clients.

ET2C video — Watch our Company Video to know more!

Sourcing in Uncertain Times

The Pandemic continues to stunt global trade, with certain markets still reeling from lockdowns whereas others are beginning to relax restrictions. Sourcing markets are similarly impacted; India has plunged into a lockdown whereas China by comparison is largely Covid free. Market diversification is essential to spread risk across regional hubs. We continue to see this trend with South East Asia (Vietnam and India) becoming increasingly popular as sourcing locations. Diversification can also include, particularly for European businesses, near sourcing options such as Turkey where freight rates (and at today’s high pricing) can be mitigated as well as speed to market.

That is not to say that China will lose importance even as its relative market share is gradually eroded. On the contrary, we think that China will still be an essential part of any sourcing matrix given the infrastructure and networks in place.

ET2C’ Services

We realise that every client will have their own unique requirements. We, therefore, look to tailor our solutions to best fit each client’s needs, whether this be resource, expertise, cost structure we have the solution for you.

Sourcing Solutions

Our merchandise teams work across multiple categories, but primarily these can be defined into two divisions, Consumer Goods (Garden, Fashion, Pet, Toys, Furniture, Homewares and Health & Beauty) and Industrial goods. We currently source from India, China, Vietnam and Turkey (opened December 2020). Countries being assessed at present include Mexico, Thailand, Malaysia and Taiwan.

Buying Office

Our Buying Office solution has always been the backbone of the company and helped the business to grow. We still believe that ability to have a dedicated team on the ground, in market, is essential to driving visibility at source. This allows clients to fully control their suppliers across quality, delivery and production management. Our model is the most cost effective, transparent and simplest available and second to none.

Quality Team

We have teams on the ground who spend a considerable amount of their time traveling to suppliers to verify and check the quality of our clients’ products pre-shipment. There is no doubt that having visibility pre-shipment of your products is an essential part of the supply chain function. Our teams also evaluate factories to make sure that you know they are the right partner for you before committing to any funds. We have recently launched our Virtual Factory Tours initiative to help clients who are stuck out of their sourcing markets connect with their suppliers, or even identify potential new partners.

ET2C - Virtual Factory Tours — Watch the video to know more about ET2C Virtual Factory Tours

With 20 years of experience, ET2C is well-positioned to help you with all your sourcing needs, whatever they may be. We look forward to designing new solutions to make your business more successful. Please contact us at contact@et2cint.com.

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Plastic Packaging: Is it REALLY recyclable?

Industry Insights / admin / Packaging, Sustainability, Sustainable Packaging

Plastic Packaging Is it REALLY recyclable ET2C int.

Plastic packaging is convenient and efficient but its tremendous impact on the environment obliges us to adopt new sustainable solutions.

Plastic packaging can be extremely wasteful due to how we use and dispose of it. And this impacts the Earth’s ecosystems on which we depend. Due to poor product design and lack of political infrastructure, the majority of plastic waste is sent to landfills or ends up as rubbish scattered across our lands and seas.
In addition, it has been estimated that at least 8 million tons of plastic are dumped in the ocean every year. Plastic pollution threatens wildlife, alters ecosystems and poses risks to human health.

Sustainable Solutions

Ultimately, it is the end-use of plastic and how we dispose of it that is having such an impact on our environment. This is unlikely to change immediately and it is therefore necessary to find solutions that could reduce the production and the use of plastic packaging in order to decrease the chance of such damage. Some key areas of focus should be:

• Invest in innovative ways to package goods that reduce plastic use and packaging waste

Previously, we already discussed some innovative ideas to replace packaging especially in the food packaging industry. Some of them are certainly bioplastics, dissolving and edible plastics, not to mention ‘no packaging’ solutions.

• Increase recyclable content

While making the packaging 100 percent recyclable is important, reusing material that has already been produced reduces the environmental costs of production and disposal. Therefore, not only it is important to cut down the amount of plastic used in packaging but also switching to higher recycled content and making sure that all the packaging components are recyclable.

• Standardize recycling labels on products

Over the past couple of years, we have seen a wider variety of plastics are also being used to package the everyday items we purchase. This complexity has in many ways altered consumers’ understanding of what they think is recyclable. More and more, non-recyclables are finding their way into single-stream containers. Therefore, contamination rates – or the percentage of trash mixed with recyclables – has steadily climbed over the years. Subsequently, about a quarter of everything consumers place in recycling bins ultimately is not able to be recycled by the programs that collect them.

The Resin Identification Code (RIC)

A product made of plastic is often stamped with a resin code, which is a number between one and seven inside a small triangle made of arrows. However, the presence of a resin code doesn’t necessarily mean that the product can be recycled. It is the number inside the triangle that counts, because each number corresponds to a different type of plastic.
The symbols—then collectively called the Resin Identification Code (RIC)—were developed in 1988 by the organization now known as the Plastics Industry Association.

Plastic types

Plastic Packaging Types

Understanding the plastic types can help consumers like you make more informed decisions related to your health and the environment.

If you look at the number inside the triangle on your plastic packaging, it will range from one to seven. This will tell you both the type of plastic used and which type is recyclable or even reusable.

1. PET or PETE – Polyethylene Terephthalate

This is the most common plastic for single-use bottled beverages. This material also has wide applications in the textile, medical, electrical/electronic and automotive industries. Certainly, it is inexpensive, lightweight and easy to recycle.

Plastic Packaging PET PETE

Recyclable: YES, PET is 100% recyclable. In fact, it is one of the most recycled thermoplastics. It can be picked up through most curbside recycling programs as long as it has been emptied and rinsed of any food.

Reusable: Technically yes, but not suggested. PET is meant for single-use applications; repeated use increases the risk of leaching and bacterial growth.

2. HDPE – High-Density Polyethylene

It is a versatile material with many uses, especially when it comes to packaging. This type of plastic is extremely common and one of the safest to use. Most milk jugs, detergent containers, and oil bottles are made from HDPE. It carries low risk of leaching and is readily recyclable into many types of goods.

Plastic 2 HDPE Sustainability Recycle

Recyclable: YES.

Reusable: technically yes, but generally the bottles made of HDPE are intended for only one-time use.

3. PVC – Polyvinyl Chloride

PVC is one of the most widely produced synthetic plastic polymer (about 40 million tons of PVC are produced each year). It is a flexible plastic and generally cheap so it is used for a huge array of household products and packaging.

The rigid form of PVC is used in construction for pipe and in profile applications such as doors and windows. It is also used in making bottles, non-food packaging, food-covering sheets and cards. It can be made softer and more flexible by the addition of plasticizers. In this form, it is also used in plumbing, electrical cable insulation, imitation leather, flooring, signage, inflatable products and many applications where it replaces rubber.

3 Plastic Plastic PVC Sustainability Recycle

Recyclable: Most consumer recyclers will not take PVC products. A major problem in the recycling of PVC is the high chlorine content in raw PVC and high levels of hazardous additives added to the polymer to achieve the desired material quality. As a result, PVC requires separation from other plastics before recycling.

Reusable: not suggested. They contain toxins which leach throughout its entire life cycle.

4. LDPE – Low-Density Polyethylene

This is a hard- flexible thermoplastic with many applications. In fact, most plastic wrapping is made of this material. It is also used to make grocery bags and the bags that hold newspapers, sliced bread loaves and fresh produce, among other things. While this may not be the most popular type of plastic for household supplies and food containers, LDPE is present in the home in the form of plastic bags that we use for frozen foods and such like.

4 Plastic LDPE Sustainability Recycle

Recyclable: LDPE can be recycled, however, the way this is done, and the complexities faced depends on the nature of the plastic. For example, flexible products are more difficult to recycle, especially as they tend to be contaminated by the item they are packaging. The more rigid form of LDPE is easier to recycle and it can often be collected and recycled by curbside recycling programs. You do need to check with your Local Authority to make sure that it can be recycled within your area.

Reusable: YES.

5. PP – Polypropylene

This type of plastic has a high melting point, so it is often chosen for containers that will hold hot liquid. In fact, PP is used to make the food containers for products like yogurt, sour cream and margarine. It is also made into straws, rope, carpet and bottle caps. A number of Governments have completely banned this type of material when in ‘straw’ format.

5 PP Plastic Sustainability Recycle

Recyclable: It is gradually becoming more accepted by recyclers. Because it breaks apart so easily, it is also found ingested by marine animals and littering beaches.

Reusable: Not suggested. Chemicals present in polystyrene have been linked with human health and reproductive system dysfunction. Polystyrene may leach styrene, a possible human carcinogen, into food products (especially when heated in a microwave).

6. PS – Polystyrene or Styrofoam

This material is a naturally transparent thermoplastic that is available as both a typical solid plastic as well in the form of a rigid foam material. PS plastic is commonly used in a variety of consumer product applications and is also particularly useful for commercial packaging. The solid plastic form of polystyrene is commonly used in medical device applications or in day-to-day items. The foam form of polystyrene is used most often as a packing material.
Since polystyrene is lightweight and easy to form into plastic materials, it also breaks effortlessly, making it more harmful to the environment. Beaches all over the world are littered with pieces of polystyrene, endangering the health of marine animals.

6 PS Plastic Sustainability Recycle

Recyclable: It is generally considered to be difficult to recycle.

Reusable: YES.

7. Miscellaneous Plastics

A wide variety of plastic resins that do not fit into the previous categories are lumped into this one. These plastics include nylon, PLA (polylactic acid), and polycarbonate and are found in certain food containers, signs and displays, computers and electronic devices, DVDs, sunglasses, and bulletproof materials.

7 Plastic Sustainability Recycle

Recyclable: These plastics are almost never recycled, but they could be transformed into plastic lumber and certain custom-made products.

Reusable: YES.

Plastic Packaging Recyclability

The conditions to successfully recycle plastics are multiple and in some cases more complex than others. Not only have you to consider the particular type of material but also its current conditions, for example regarding cleanliness, contamination and toxicity. Moreover, in each country, every town and city has different recycling programs, so you will often have to check your location’s rules to find out exactly what you can recycle. Not to mention that these could change over the time.

Sustainable Packaging – Our commitment

Plastic is not a bad material, but we have a shared responsibility to ensure that we are using it in manufacturing responsibly and giving consumers the opportunity to dispose of it in the least harmful way to the environment. We are working with our clients on many initiatives around sustainable packaging and products from across our sourcing markets. This includes bamboo packaging, the use of PCR in plastic packaging and re-engineering boxes to be made from pulp materials. Understanding your market, consumer and price-points are key aspects of identifying opportunities for you to look at sustainable packaging options.

We have local teams on the ground already working with suppliers in this field. Surely, we will be more than happy to discuss your needs with you. For all your sustainable packaging requirements, please contact us at contact@et2cint.com

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Die Casting Process: The Insight Series

Industry Insights / admin / Die Casting Process, Industrial, sourcing, Supply Chain

Die Casting Process The Insight Series ET2C Int. Sourcing Industrial Components

Die Casting Process is a manufacturing technique for producing metal components that are used in everyday use.

The Insight Series

We work with our suppliers to develop products across an array of different sectors that rely on varying materials and a range of manufacturing techniques. Undoubtedly, it is always fascinating to see how each of these products is made, whether it is the number of hands that touch the products as it is manufactured or the machines that are utilised as part of the production process.
This month, our insight series is back! We are going to take a look at industrial manufacturing and, in particular, the High Pressure Die Casting Process. Industrial manufacturing is an area that is growing as part of offshore production, with many companies moving to work with Asian suppliers to increase margin at a product level whilst not compromising quality standards.

Inside Industrial Manufacturing

Industrial manufacturing covers a broad range of techniques, processes and machinery. The application is similarly broad – engines, components, panels, wheels, tracks – essentially anything that involves the production of metal parts or plastic parts. Imagine, high temperatures, molten metal and large machines pressing., stamping and casting metal! Given the breadth of the topic, we have decided to focus on just one area for this issue.

High Pressure Die Casting Process

High pressure die casting is a quick, reliable and cost-effective manufacturing process for high volume production of metal components, where molten metal is forced under pressure into a securely locked metal die cavity (tool or mould as some people would have heard). It is then held in place by a powerful press until the metal cools and solidifies. After solidification of the metal, the die is unlocked, opened, and the casting extracted automatically.

Applications

Certainly, high-pressure die casting has wide application encompassing nearly 50% of all light alloy casting production, such as engine components, motorcycle components, household white-goods components, cookware, plumbing & heating, to name only a few. It is applicable to everyday items that can be seen around your house. The workers in the factory work with molten metals and workers wear suitably protective clothing and eyewear.
An example of a high-pressure die casting is provided in the below illustration. Precisely, this shows how the liquid metal is injected with high speed and high pressure into the metal mould. The basic equipment consists of two vertical platens. The bolsters are placed on these platens and this holds the die halves. Out of the two platens, one is fixed and the other movable, this helps the die to open and close.

High Pressure Die Casting Process

A specific amount of metal is poured into the shot sleeve and afterward introduced into the die cavity. This is done using a hydraulically driven piston to make the shape required. As you can imagine, unlike a shoe, there is a lot of this manufacturing that is automated, and the workers are there to operate the machinery.
Obviously, different metals require different heat, and these can reach up to 1090C° to cast the metal effectively. The table below shows the temperatures and also the number of products each die will produce before it starts degrading (at that point, you may have issues with the end product). This is important as generally this type of casting process is able to produce large volumes of product before having to replace the die, which itself is expensive.

Typical die temperatures and life for various cast materials

Jelly Sweets

So, have you ever wondered how jelly sweets are made? HPDC has a broad application and even used to make moulds for sweets. This strawberry jelly mould is made from aluminium (non-ferrous) material which is a versatile material that can be heat treated to give added strength together with lightness, corrosion resistance and high conductivity.

Jelly sweet mold Industrial molding souricng procurement 2

The specific casting temperature of this aluminium is 660.3 degrees C. Raw material is supplied in ingot form (left image) then turned into molten metal in a furnace to be transferred into the shot sleeve for the casting process to commence.
The end product is the mould that food manufacturers use to make a jelly sweet – and lots of them!

Advantages of High-Pressure Die Casting Process

As a manufacturing process, high-pressure die casting has a lot of advantages:

Low Costs. Given the speed of process, and the level of automation, HDPC is able to produce a lot of products out of one mould compared with other casting processes. This reduces the cost per unit, albeit sometimes the capital investment can be on the higher side.Tolerances
Tolerances. The process is able to produce close dimensional control (the metal fills the cavity) and good surface finish.
Weight Flexibility. Given the high pressure used in the production, HDPC is able to produce thin wall finishes, which leads to lighter end product, which still maintains rigidity and functionality.

Summary

Certainly, Industrial manufacturing is a fast-growing sector for offshore manufacturing, particularly across Asia where relative share has grown significantly. This is due to the cost reductions being significant but also overlaid with excellent suppliers and quality standards.
At ET2C, we look to provide our clients with insights across our manufacturing base. We already manufacture a range of industrial products for our clients across multiple markets. For more information, please contact us at contact@et2cint.com.

Cover photo credits: Goodwin Steel Castings . The title and logo have been added to the original image.

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