Thailand the land of smiles is also the land of opportunity for Strategic Sourcing
Thailand the land of smiles is also the land of opportunity for Strategic Sourcing Read More »
Turkey: A Powerful Export Market for Global Sourcing and Strategic Sourcing plans
Strategic Sourcing plans should consider the opportunities offered by Turkey. As Sourcing and Procurement teams explore opportunities to shorten supply chains, look for alternative suppliers or find new fast growing potential markets to work with Turkey should be part of their thinking.
Many companies are already seeing the positive benefits Turkey can offer them as Turkey’s exports gain pace. Turkish Export growth has seen three consecutive months of year on year growth. As demand and supply sides build to support deliver to challenges fuelled by
- Several years of turmoil and global trade impacts
- Reactions to the ongoing war in Ukraine
- A wider desire to reduce China exposure in Supply chains
- Rick and ESG benefits derived from moving some supply chain elements to Turkey
What can Turkey offer Sourcing and Procurement teams ? Why should it be considered as a core part of any Global Sourcing Strategy.
Turkey as a strategic sourcing destination can deliver a range of structural and economic benefits making doing business smooth and seamless.
- Geographical location: Turkey’s strategic location makes it a gateway between Europe and Asia, providing easy access to markets in both regions. It also offers access to major shipping routes, making it an ideal hub for international trade. The ability to rapidly visit suppliers without Visa restrictions is extremely valuable to many companies saving time and complex travel arrangements. Making building strong supplier relationships easier.
- Competitive pricing: Turkey’s lower labour and manufacturing costs, combined with its highly skilled workforce, make it an attractive option for sourcing products at competitive prices.
- High-quality products: Turkey has a long tradition of producing both a diverse range of products of very high-quality. Building on their traditional strengths in Textiles, Timber, Fruit and Spices to include more HI Tech industries
5. Trade agreements: Turkey has trade agreements with many countries, including the European Union, making it easier for buyers to source products and conduct business with Turkish manufacturers.
6. Ease of doing business: Turkey has made significant improvements in its business environment in recent years, including streamlining bureaucracy, reducing regulations, and improving the ease of doing business.
Turkey has a diverse range of exports but some of its biggest exports include:
1. Automotive parts: Turkey is a major producer of automotive parts, with exports worth over $20 billion in 2020. The country is home to several large automotive manufacturers and suppliers, and its high-quality parts are in demand worldwide.
2. Textiles: Turkey is one of the world’s leading textile producers and exporters, with exports worth over $10 billion in 2020. The country is known for its high-quality cotton and textile products, including clothing, fabrics, and home textiles.
3. Machinery: Turkey is a significant exporter of machinery and equipment, with exports worth over $9 billion in 2020. The country produces a range of machinery, including industrial equipment, agricultural machinery, and construction machinery.
4. Chemicals: Turkey is a major producer of chemicals, including petrochemicals, plastics, and pharmaceuticals, with exports worth over $8 billion in 2020. The country’s chemical industry is well-established and highly competitive.
5. Food products: Turkey is a major producer and exporter of food products, including fruits, vegetables, nuts, and processed foods. Exports of food products were worth over $7 billion in 2020.
Turkey’s biggest exports reflect the country’s diverse economy and its strengths in manufacturing, textiles, and agriculture. Alongside their traditional market strengths Turkey is fast building strong positions in several other markets.
1. Defense industry products: Turkey has seen significant growth in its defense industry exports, particularly in the Middle East and North Africa regions. The country’s defense exports have grown by over 20% annually in recent years, with total exports reaching $3.2 billion in 2020.
2. Electrical machinery and equipment: Turkey has seen strong growth in its exports of electrical machinery and equipment, which have grown by over 10% annually in recent years. Total exports in this category were worth $18 billion in 2020.
3. Medical devices: Turkey’s exports of medical devices have grown rapidly in recent years, driven by the country’s strong healthcare industry and growing demand for healthcare products. Exports of medical devices were worth $2.8 billion in 2020.
4. Iron and steel: Turkey is a major producer of iron and steel, and its exports in this category have grown by over 10% annually in recent years. Total exports of iron and steel were worth $14 billion in 2020.
5. Plastics: Turkey’s exports of plastics have also seen strong growth in recent years, driven by demand from Europe and the Middle East. Exports of plastics were worth $5.6 billion in 2020.
ET2C Is a global sourcing company with over twenty years’ experience working with our clients to deliver their Sourcing Strategies. Our offices in seven countries, including Izmir Turkey, ensure you always have a team on the ground to be your bridge to your Offshore suppliers.
Giving you independent feet on the ground and confidence with fast responses, removing time zone and language challenges.
If you would like to explore sourcing opportunities within Turkey or to discuss your future supply chain challenges.
Please contact us at contact@et2cint.com
Turkey: A Powerful Export Market for Global Sourcing and Strategic Sourcing plans Read More »
Strategic Sourcing from India – The Growing Economic Powerhouse
Strategic Sourcing from India, the high growth economy that should be in your Global Strategic Sourcing plan
With a population of over 1.2 billion, India is the World’s largest democracy, the second most populated country on the planet. It now boosts the World’s 5th Largest Economy WEF
Over the past decade, India’s integration into the Global Economy has been accompanied by similar levels of economic growth. Leading India to emerge as a Global Economic player and a country capable of playing a significant role in any product Sourcing Strategy.
“We believe India is set to surpass Japan and Germany to become the world’s third-largest economy by 2027 and will have the third-largest stock market by the end of this decade,” says Ridham Desai, Morgan Stanley’s Chief Equity
Building on their unique set of competitive advantages provided by:
- Skilled workforce
- Lower cost of labour
- Cultural alignment and compatibility
- Favourable regulatory environment
- Improving infrastructure
- Near-shoring and Re-shoring initiatives to move away from China benefitting India
The Regulatory environment has fuelled the delivery of six mega trends
1.Supply chain diversification
Fuelled by the global turmoil and moves by many companies to find alternative or additional sourcing partners to supplement China. India has benefitted from many companies in USA and Japan relocating supply chain partners to build future shock resilience.
- Key Export Market for India
Industrial components
Textiles
Electronics and EV technology
Manufacturing competitiveness in India has benefitted hugely from skilled work force and lower labour costs allowing highly competitive pricing position v other markets. India steel manufacturing also fuels the competitiveness of the manufacturing sector. The textiles & Apparel markets in addition to the cost and quality of labour India has easy access to high quality raw materials.
EV manufacturing and innovation and India’s ambition to be a Global Hub for EV industry and Technology. India will launch 40 models of EV car models from a range of Car brands. Support for the industry has been further supported by the recently announced the opening of the worlds largest EV hub supporting the manufacture of both vehicles and advanced cells.
3.Government initiatives
The Indian Government continues to strive to create the rights conditions for Export business to flourish. Foreign and domestic investment in manufacturing has increased supporting further output growth.
4.Capex
As many factories reach high levels of utilisation, benefitting from the strong growth in the Indian economy. Investment levels are rising rapidly both from Government and Private enterprise.
5.M&A
Manufacturing companies are using M&A as a way of building scale and adding capabilities to their portfolios and export capability. Deals were $108b in India in 2021 of which 16% were in the Manufacturing sector.
6.PE/VC funding
In the last few year significant investment has flown in India industrial and export sectors. Fuelling growth in the start up Eco System and building transformative growth. The Manufacturing sector benefitted from over 16% of this investment.
Summary Indian Export growth
Indian continues to build its position as a global export powerhouse. Strong infrastructure in pace, continued investment and Government commitment to creating to export growth helps to make India an easy country to do business in.
It has the second largest railway network in the world and a vast coastline with established seaports.
Strategically located nearly 10,000 KM closer to Europe and the USA.
For companies wrestling with the need to evolve their Sourcing Strategies. Starting to look at Off Shoring options or as part of a wider China +1 strategy India should be top of your list of countries to investigate.
Key export areas of
Industrial Components.
Textiles
Electronics particularly EV Technology
Can provide exceptionally high value and innovative products whilst retaining a lower-cost base.
ET2C Is a global sourcing company with over twenty years’ experience working with our clients to deliver their Sourcing Strategies. Our offices in seven countries ensure you always have a team on the ground to be your bridge to your Offshore suppliers. Giving you independent feet on the ground and confidence with fast responses, removing time zone and language challenges.
If you would like to explore sourcing opportunities within India or to discuss your future supply chain challenges.
Please contact us at contact@et2cint.com
Strategic Sourcing from India – The Growing Economic Powerhouse Read More »
Why you need a strong Global Sourcing Strategy for your business ?
5 reasons your business will benefit from a well-developed and executed Global Sourcing Strategy.
As the Canton fair opens for the 133rd time, bringing together business from across the globe. There is no better time to review and reflect on the need for a strong Global Sourcing strategy.As Sourcing and Procurement teams manage enhanced missions and a more elevated seat at the corporate table. Refining and delivering the Sourcing Strategy is even more important for corporate success.
- Cost savings: A well-executed strategic sourcing plan can help your company reduce sourcing and procurement costs by identifying opportunities to consolidate suppliers, optimize processes and build in new offshore supply partners.
- Improved supplier relationships: By working closely with suppliers to develop long-term partnerships, your company can benefit from improved quality, reduced lead times, and increased supplier responsiveness.
- Increased efficiency: Strategic sourcing can help your company streamline procurement processes, improve supply chain visibility, and reduce the time and effort required to manage supplier relationships. Speeding up Innovation, Npd and Packaging changes.
- Risk management: More strategic supplier partnerships can help mitigate the risks associated with supply chain disruptions, natural disasters, and other unforeseen events. Working together to jointly build a partnership for growth.
- Better alignment with business goals: A strategic sourcing plan can help your company align procurement decisions with broader business objectives, such as sustainability, innovation, and growth. Supporting the delivery of wider corporate ESG commitments.
Overall, a well-designed and executed strategic sourcing plan can help your company reduce costs, improve supplier relationships, increase efficiency, mitigate risk, and align procurement decisions with broader business goals.
Why you need a strong Global Sourcing Strategy for your business ? Read More »
Is Near Shoring still a good option for Sourcing Strategies as Globalised Trade Grows
Near Shoring Challenges as Globalised Trade Continues to Grow
The immediate rush and to change Sourcing Strategies, shorten supply routes and ‘Near Shore” is proving much tougher to achieve than anticipated for Sourcing
After the effects of the Global Pandemic, Ukraine War, US-China Trade conflicts and Inflationary pressures to name a few. There was a lot of talk about the need to shorten supply routes and Near or at least friendly shore sourcing.
The background to the rush to Near or Friendly shoring has been the nearly five years of open economic conflict between the US and China. US-China trade flows hit an all-time record of $690.6 billion in 2022. Connecting the countries by a larger movement of trade than any other Nations (without shared borders).
Suggesting that Globalisation is not showing signs of halting. DHL in their recent report suggest that the US-China trade relationship is beginning to show a “general pattern” of decoupling even as globalization more broadly remains resilient, according to DHL’s global connectedness index.
“International flows have proven remarkably resilient through recent crises, and they strongly rebut the notion that globalization has given way to deglobalization,” according to the report, produced with New York University’s Stern School of Business.
“Today’s threats to globalization, nonetheless, are real and demand serious attention,” it continued. “It would be a mistake to infer from the recent resilience of international flows that globalization cannot go into reverse.” What has been the real world experience of brands and companies looking to Near Shore as part of their Sourcing Strategy ?
US Apparel Companies Can’t See a Future Without China
Brands are finding few factories outside the country that can produce the quality and quantity they require.
When Lanny Smith founded Actively Black Inc. in 2020, he hired factories in China to produce the brand’s athletic wear. But last year, concerned about production delays caused by China’s Covid lockdowns, Smith explored buying elsewhere. He shipped samples to a supply chain agent who’d assured him there were alternatives in Latin America. “He hit me back the next day and said, ‘You’re not going to find anybody who can do this in the Western Hemisphere,’” says Smith, 38, a former basketball star at the University of Houston.
For many companies buying from China has become more challenging in recent years because of increased tariffs, snarled supply chains, factory shutdowns under Beijing’s Covid Zero policy and rising geopolitical tensions. Factors which have combined to make many Companies and brand owners investigate changing their Sourcing Strategy to be China +1 or to seek to replace China completely. Whilst on the face of it the idea has a lot of merit and upside finding suppliers who can match China for quality and price is not so simple.
Quitting China as a sourcing partner isn’t easy, and most progress has been concentrated in industries such as semiconductors that are considered vital to national security or have high added value. Producers of lower- tech, lower-margin and less added value products such as clothing, shoes, housewares and luggage are finding that few factories outside China have the machinery or the skilled workforce to deliver the quality and specifications required.
Since the 1990s, China has spent hundreds of billions of dollars transforming itself into the world’s premier location for manufacturing. Its factories have the machinery and expertise needed to produce quality products at a volume and pace that’s difficult to match. Along the 80-mile stretch from Shenzhen to Guangzhou, companies can weave, dye, sew, trim, label and package anything from T-shirts to tuxedos. And China’s investment in highways, railroads, air hubs and seaports has created a smooth path from factory gate to consumers worldwide.
Twenty years of Global Trading growth between China and the World is not something that can be dismantled quickly and easily. China’s advantages as a sourcing destination are so great that many companies that have tried to move away have returned at least a portion of their production there. Even moving away from the Chinese mainland cannot guarantee moving away from China. As China has expanded its influence, support for infrastructure and factory investment to other countries such as Ethiopia.
When companies move manufacturing out of China, they often end up working with Chinese- owned suppliers or sourcing components and materials from the country.
Summary
Sourcing strategies are not always quick and easy to implement, the initial idea to relocate manufacturing from China to other Asian or African markets can suggest instant benefits. China’s experience of supplying and shipping products around the World is difficult to replicate. For some markets this may well require more product side compromises to deliver the geographic move.
ET2C Is a global sourcing company with over twenty years’ experience working with our clients to deliver their sourcing strategies. Our offices in seven countries ensure you always have a team on the ground to be your bridge to your Off Shore suppliers.
If you would like to explore Sourcing Strategy options or opportunities within China or in addition to China or to discuss your future challenges.
Please contact us at contact@et2cint.com
Is Near Shoring still a good option for Sourcing Strategies as Globalised Trade Grows Read More »
Canton Fair: A Tipping Point for Global Sourcing?
The 133rd Canton Fair will open in April as China Factory output accelerates, supporting an upturn in China Sourcing but does demand remain subdued?
Dogged for months by shortages of raw materials, labour instability, a difficult Covid policy, quickening inflation and weakened consumer demand, the world’s industrial engine is still struggling to fire on all cylinders. For many weeks, anticipation has been running hot that China’s reopening would bring a tangible economic lift across Asia and perhaps the rest of the world. That day seems to have finally arrived, with purchasing managers’ indices — especially from China, but also beyond — showing the first glimpses that the World’s second-largest economy will start to lift orders in other corners of the globe.
The Canton Fair comes at a time when China is reopening to the West post Covid and notably a combination of raw material price softening and low container rates, put the spotlight back on ‘cost’ for buyers where this is now their sole focus in the short to medium term. The biennial trade fair is one of the high points of global trade events and is expected to welcome over 25,000 exhibitors and buyers from all over the world.
Is Demand Picking Up?
Although there is an expectation that this Canton Fair will be large (Buyers and importers will no doubt be chomping at the bit to get out and see some product rather than at a distance!), what are the factors that will dictate the appetite to get out on that plane?
1.Consumer Confidence , as a general trend, has certainly softened across many markets due to inflationary pressures which have hit discretionary spend. Every market has its own domestic economics that need to be assessed. There is however data coming out that points to a less bleak outlook than initially expected (UK is not likely to be in a recession in 2023 as initially thought) and this could lead to a pick-up in confidence going deeper into the year.
Shipping
rates have dropped to Pre Pandemic levels. A year ago container ships were queuing for births in ports to unload their cargoes, shippers were bumping containers and contract rates were not worth the paper they were written on. Container rates were at an all-time high and shipping companies took full advantage of the market impact (note the amount of blank shippings to prop up the market). A year on ships are being moth balled and sailings cancelled as demand has plummeted and spots rates dropped to Pre pandemic levels. The recent conference in the USA Davos by the Sea brought into clear focus the strained relationships and tensions between shippers and shipping line owners.
Inflationary cost
pressures on Brands, Retailers, Wholesalers and Importers. Pressure on cost has returned in many companies to counter inflationary pressures forcing prices up in front of the consumer. As we lived through the turmoil of the pandemic, the overriding issues for supply chain teams was to get product on shelf. As demand softens and inflationary cost pressures build in companies the focus for sourcing teams has shifted back to a focus on cost. Will China be a main beneficiary of this?
The Reopening of China
Has been rapid, and appears to be have weathered any Covid storm (we did not see any interruptions to factories even post CNY). It is seen as a potential catalyst to energise economies across Asia and the wider world back into growth. China factory output has expanded at the fastest pace in more than a decade. The sudden access to this market could not come any sooner.
Inventory Levels
Are still high across some sectors. This is impacting buying decisions as companies look to manage higher stock levels due to large buys in 2021/22 and weaker demand. It is key that this stock is sold through to set companies up for the remainder of the year.
Summary
The Canton Fair appears to be aligned to the reopening of China, and the expectation has to be that many people are anticipating travelling out to Guangzhou and further afield within China to see suppliers for the first time in 3 years.
The need to drive cost benefit to the bottom line is supported by vastly reduced shipping costs compared with the past 18 months and China is still well placed to off cost advantages. The Year of the Rabbit may just be as prosperous and lucky as intended!
For more information on the Canton Fair, China and other sourcing markets please drop us a line at contact@et2cint.com.
Canton Fair: A Tipping Point for Global Sourcing? Read More »
Malaysia Sourcing: Asia Manufacturing
Malaysia sourcing is a great alternative for any sourcing strategy, but what are the opportunities?
Overview
Malaysia Sourcing is a unique opportunity. Located between two and seven degrees north of the Equator between the Andaman and South China Sea, Malaysia is formed by 13 states. A population of over 33m people live on the islands that are 60% covered by Rain Forest. Its landmass is similar in size to Germany, Norway or Finland.
Economic development:
Malaysia has the third largest economy in South East Asia .Since gaining independence in 1957, Malaysia has successfully diversified its economy from one that was initially agriculture and commodity-based, to one that now plays host to robust manufacturing and service sectors, which have propelled the country to become a leading exporter of electrical appliances, parts, and components.
Openness to trade and investment has been instrumental in employment creation and Malaysian Income Growth, with about 40% of jobs in Malaysia linked to export activities. Malaysia’s economy has been on an upward trajectory, averaging growth of 5.4% since 2010, and is expected to achieve its transition from an upper middle-income economy to a high-income economy by 2024
Key Export Categories for Malaysia
- Electrical equipment
- Plastics and Plastic products
- Medical apparatus
- Forestry products
- Pepper
Malaysian advantages as a Market for Strategic Sourcing
Malaysia has several factors that make it a country that should not be overlooked in any sourcing strategy. It offers a dynamic and vibrant business environment with a well-developed infrastructure, a productive workforce and supportive pro-business Government policies.
“The focus will have to be on making it easier — ease of doing business,” he said. “That is one of the key opportunities for Malaysia.” Malaysian Trade Minister Tengku Zafrul Aziz
Malaysia has a well-developed infrastructure after investing in Roads, Rail, Ports and Airports to ensure good connectivity. The population has a high level of fluency in English (a legacy of British colonial rule).
The strategically strong position of Malaysia on the Straits of Malacca is on the major trade routes between Europe and China.
Summary
Malaysia has many assets that make it a sourcing country that should be a part of any companies Sourcing Strategy. Whether you are looking to build you first offshore sourcing plans or diversify into a Multi country strategy.
The ease of doing business, high levels of transport connectivity, Pro business government policies and skilled workforce make Malaysia a strong sourcing option.
Malaysia’s economy has been on an upward trajectory, averaging growth of 5.4% since 2010, and is expected to achieve its transition from an upper middle-income economy to a high-income economy by 2024.
ET2C Is a global sourcing company with over twenty years’ experience working with our clients to deliver their sourcing strategies. Our offices in seven countries ensure you always have a team on the ground to be your bridge to your Off Shore suppliers.
If you would like to explore sourcing opportunities within Malaysia for your sourcing strategy or to discuss your future challenges.
Please contact us at contact@et2cint.com
Malaysia Sourcing: Asia Manufacturing Read More »
Quality Control & Digitization
Quality control has always been an important part of any sourcing function. However, technology has evolved, and it is now possible to conduct inspections more efficiently and at the same time to collate data.
Overview
Quality control used to be the reserve of the ‘Policeman’; the ability to check in on factories on the basis that they were surely doing something incorrectly that would be detrimental to the quality output. As China opened up back in the early noughties, this was very much the case as offshore manufacturing (aside from Taiwan/Japan) was largely in its infancy. The anxious wait to check the QC report to see that the red coat was in fact both red and a coat. Of course, there are instances where this approach is still valid today and, in fact, recommended but often this is where the supplier relationship is fractured or there is a clear risk that needs to be addressed.
This approach has evolved over time. A collaboration is more apt to describe how quality control should sit between all stakeholders. It should be an open and fluid dialogue between the supplier and the buyer that is underpinned by trust. This means that where there are issues, they can be identified on the production line, allowing corrective measures to be implemented, rather than simply checking incorrect goods that are sitting waiting to be shipped. For example, identifying that one supplier has a high occurrence of loose threads allows this information to be relayed to the floor manager who can conduct additional training for the stitching workers. It also allows ‘quality’ to be part of an evolution of continuous improvement (in line with LEAN manufacturing principles or “Kaizen”).
Technology has a role to play as well. The ability to conduct inspections efficiently, with greater engagement between all stakeholders whilst collating data that gives direction on where any corrective measures should be focused is now possible.
Introducing Qarma
To help us continue to deliver our quality solutions to our clients, we have now partnered with Qarma going into 2022. Our aim is to empower our teams and suppliers to not just perform standardized and faster inspections via their Inspection App (the inspectors will conduct the inspections solely using their phones) but also to provide a more engaged and immersive quality experience.
Gone will be the two-dimensional quality control reports (and all the paper!), and in their place will ultimately be online reports and discussions. Rather than a static report, we are moving to a dynamic quality discussion to make sure that ‘quality’ continues to evolve. We are able to identify issues as early as possible and as close to the product as possible through real-time reporting and greater visibility.
Key Benefits
Some of the key benefits are set out below:
- GPS Location – Every quality report can come with an exact location for each inspection
- ‘Fresh’ Pictures – All photos are taken and registered through Qarma with a time and GPS stamp
- Barcode & QR scan – Inspectors can scan codes to start inspection and verify order
- Video Capture – A picture tells a thousand words; a video tells a million (and all high resolution).
- Image Annotation – Draw, write and enhance pictures with details
- Multi-Language – our inspectors can explain in their own local language, which can be instantly translated across 18 different languages
- Online Access – Clients can request online access and add comments and questions prior to finalizing the QC Report
- Data Collation – We will automatically collate all the Quality data for your factories so that we can identify any corrective measures that need to be implemented
Quality Control 20.22
The tool will be adopted across our sourcing jurisdictions into Q1 2022 so our clients will begin seeing changes to our quality reports and the information flow. We are excited about this journey, and we just wanted to give you a heads up of what is in store for the New Year. Should you have any questions, or want to collaborate with us on Quality going forward, please contact us at contact@et2cint.com
Quality Control & Digitization Read More »
Sample Development 2.0
Sample Development is a critical step in any production cycle, but given the boom in offshore manufacturing over the past two decades, how should companies change their approach to sampling?
Sample development generally requires a fair bit of resource and time. This is only made more complex given distances between Buyers and their factories (and add in time zones, communication/language etc). Whether it is agreeing the maquette for a shoe or getting the mold right for an injection molded product, there is an established process that many companies work through with their suppliers. In the majority of cases, this has not evolved with technological advances and leads to longer lead times, and costs than perhaps are needed.
The Sample Development Piece
Samples are integral to any manufacturing process. Although there are costs involved (more so in certain industries) in getting a sample made, the ability to ‘try before you buy’ is advantageous. Ultimately, although there are many different types of samples that can be made, the aim is to provide reassurance that the product meets your and your customers’ needs. For example, the garment industry usually requires multiple samples as you move through both the development and production phases. Without providing an exhaustive list, these can include Proto, Fit, Size-set, Pre-production, Production and Ship sample.
When it comes to molded products, the sample process can is significantly more costly. It requires molds to be made (which are expensive) based on drawings, and the skill of the manufacturer to get this precise. Once the mold is made, depending on the type of manufacturing, the mold has to be ‘tinkered’ with should the item not be coming out as required.
The Modern Era
There is no doubt that there still remain some manufacturing traditionalists when it comes to certain industries. The fall out is that sample development within such sectors can be stuck in a bit of a time warp. We all know that you “shoe-dogs” out there like seeing and feeling the shoes as they are made, and seeing them in the ‘flesh’. In fact, this is not wrong, but this perspective can sometimes drive the wrong behaviour when it comes to the evolution of sample development.
Another factor to consider is that of sustainability. A lot of these brands and retailers firmly sit within the sustainability camp – ethical suppliers, carbon neutral targets etc – and yet they are still spending significant amounts of money to courier samples back and forth around the globe, predominately from East to West and back.
So what should companies be doing? What technology is out there that they should be adopting to meet there needs. Of course, technology can be expensive so some solutions are not for every business, but that’s not to say taking simple, small steps can help companies change their sample development process for the better.
Sample Development 2.0
Whatever you are manufacturing, and wherever this is taking place, there are a number of steps or technologies that can be adopted to bring your sample development process into the 21st century.
1. Lean Sample Development
Sometimes, it is just not necessary to have multiple samples sign-offs. If a jean sample has a small error on it, then does it need to be remade? One large jean brand moved years ago from 4 samples pre-production to just one physical example, and the balance three samples were approved based on photos. This saves costs, time and is more sustainable, particularly where the factory is based overseas. Any experienced buyer should be able to approve a sample with photos, or even over zoom?
2. Digitization
Rather than simply using your iPhone to take photos, there is already software available to effectively digitize the sampling process. Particularly relevant to the Fashion sector, this type of software incorporates 3D design or virtual reality and gives buyers/designers the opportunity to see their designs and how they look before even one bit of fabric is cut. The opportunity to reduce waste, lead times and cost could be significant.
3. Additive/3D Printing
This technology has been around for some time, but has recently become less expensive (it used to be prohibitively so). The ability to change how we manufacture products is certainly exciting albeit a fair way off currently for the mass market. Importantly, however, its application for sampling products is now very relevant. Companies are able to cheaply 3D print products to check their look and functionality. One can even 3D print in metal, so the ability to sample products or components to make sure that they are fit for purpose negates the need to invest in molds during the sampling process. There are also many companies offering these services, so this can be done in your local market as well. Again, there is an opportunity to save time and cost with this technology.
4. Upstream Capability
Alternatively – a more traditionalist approach – it is possible for the design/development function to spend time within the factories sample room and collaborate with the manufacturer on site. More for the fashion sector, but it allows designers to go through multiple iterations on design more creatively, using fabrics and ideas that come up during the meetings. This is a little bit more difficult at present given the restrictions on travel, but there is stills cope to leverage partners on the ground.
Sample process: we can help!
We are well placed, being on the ground to help with your sample process. This can be working with factories with the technologies mentioned above or simply ensuring that we are your eyes and ears in our respective sourcing markets to minimize the cost, resource and lead time of the more traditional sample development processes.
If you want to know more and need any assistance with the sample development contact our team at contact@et2cint.com.
Sample Development 2.0 Read More »
Factory Audit: Getting the Big Picture
A Factory audit is a key component of driving visibility up your supply chain but what does it entail?
A factory audit is a necessary tool for any supply chain, particularly when you are dealing with global supply chains. Of course, you can inspect the products coming off the production line, but it is just as important to understand who you are partnering with.
Whether you are considering a new supplier or you have already been working with a manufacturer for a period of time and developed a solid relationship, factory audits are essential for your business.
Managing the supply chain when it involves factories in multiple locations in different countries can be challenging. The consumer now rightly demands high standards across both the supplier and its products. On one hand, you need to therefore properly vet potential suppliers. On the other hand, you have to ensure that current suppliers have the systems in place to produce quality products. You also need to be sure that your products are free of ethical, security, or regulatory concerns.
What is a Factory Audit?
A factory audit is a type of supplier assessment that takes place at the manufacturer’s facility. This type of audit is all part of ‘Quality Assurance’ and allows companies to gain the comfort of their suppliers and any risks involved in engaging them. An auditor assesses their systems, capacity, workplace environment, or capabilities to ensure they meet your requirements. While on-site at the factory, the auditor conducts a number of checks and provides a report to aid you in your supply chain decisions.
Internal or External Audit?
Certainly, factories might tell you that they have internal audit capability and procedures that result in very low defect rates. Although this is good news (look for ISO standards for process standards that will support certain quality standards, like ISO 13485 for medical products), it remains the case that an independent pair of eyes is still beneficial as it adds a level of objectivity.
Hiring a neutral third-party auditor to go to the factory gives you a more complete picture and allows you to understand where any potential risks lie. These can be around product quality, through to ethical issues such as overtime concerns for their workforce. For example, an audit could help you to:
- Decide whether a particular supplier will serve as a suitable long-term partner for your needs.
- Identify any financial risk or exposure should you be paying funds upfront.
- Ensure that your supply chain is free of problematic social or environmental issues.
5 Common Types of Factory Audit
According to your business needs or challenges, you might consider specific types of factory audits, as follows:
1. Manufacturing Audit
This is a detailed audit on a factories manufacturing capability, and will cover workforce, production capacity, machinery through to process flows. Ultimately, these in-depth audits will determine if a supplier is capable of producing your product specifications, lead times, output, and identify any potential challenges down the line.
2. Ethical Audits
This type of audit is related to social accountability (to provide healthy, safe, and ethical work environments along with sound labour practices and pay). An ethical audit ensures the appropriate work conditions are being followed. There are a number of audits that address concerns around ethics including SA8000, SMETA and BSCI.
3. Factory Risk Report
This audit is an in-depth review of the factory that covers everything from financials, shareholding, manufacturing capability, quality management systems, product quality, ethics through to a market assessment and price benchmarking.
4. Environmental Audits
This type of audit helps evaluate compliance with local laws and regulations as it relates to environmental protection.
5. Customs-Trade Partnership Against Terrorism (C-TPAT) Audit
Led by the U.S. Customs and Border Protection, the C-TPAT audit focuses on improving the security, with respect to terrorism, of private companies in supply chains.
Each company has a different requirement or need at any given time. Making sure you align these needs with the different types of audit will help you have both timely information and establish the best supplier network for your business.
What is the Difference Between Factory Audits and Quality Control Inspections?
A Factory Audit plays an integral role in understanding the full manufacturing process and is distinct from simple inspections because:
1. A Factory Audit Focuses on the Long Term
While factory audits focus on the ability to meet requirements and ensure product quality is maintained, a product inspection focuses only on the products from one particular shipment.
2. A Factory Audit sees the ‘the Big Picture’.
A Factory audit covers important areas such as quality management systems and manufacturing practices. Not only they can help you assess a supplier is a good fit to produce your product but also can help you find opportunities to further develop the working relationship.
3. A Factory Audit is more than ‘Product Quality’
As is clear from the different examples above, there may be many reasons to conduct a factory audit that are not just related to the product.
For more information about these differences, read our article on the difference between Quality Control and Quality Assurance.
Do you need a Factory Audit?
At ET2C we are well placed to manage your factory audit requirements. With our own dedicated quality team across Asia and Turkey, 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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