Strategic Sourcing Opportunities The Kingdom of Thailand is known as a tourist destination but also has a flourishing exporting business sector and strong economy ranked 9^th in Asia. What can it bring to your Sourcing or Procurement strategy.

Thailand is situated in the Indochinese Peninsula and shares borders with Myanmar (Burma) to the west, Laos to the northeast, Cambodia to the southeast, and Malaysia to the south. It has coastlines along the Gulf of Thailand and the Andaman Sea. A population of over 70 million people, has one of the lowest unemployment rates and is recognised by the World Bank as a “one of the great development success stories” in social and development indicators.

Thailand’s economy is expected to grow by 3.6% this year, up from 2.6% last year, supported by stronger private consumption, a recovery in the tourism sector and strong pent-up demand following China’s reopening, the World Bank said on Friday 21^st March 2023

Thailand’s development success has been built on a range of factors, Governmental, Geographic and Environmental to create an increasingly strong economic performance. Making it a country that has can offer many companies and brands strong strategic sourcing options, as part of a China+1 or Global Sourcing strategy.

1. Competitive Manufacturing Sector: Thailand has a well-developed manufacturing sector with a strong focus on electronics, automotive, textiles, and food processing industries. The country offers a skilled workforce, advanced infrastructure, and a supportive business environment, making it an attractive sourcing destination.
2. Strategic Location: Thailand’s strategic location in Southeast Asia is 2,800 Nm closer to Europe than Shanghai. It has well-connected transportation networks, including modern ports and airports.
3. Diverse Product Range: Thailand offers a diverse range of products suitable for sourcing. Textiles, Food products, and Agricultural commodities like rice and rubber are all part of Thailand’s strong agricultural heritage
4. Cost-Competitiveness: Thailand offers competitive production costs compared to many Western countries. Whilst it has the 9^thlargest Labour force in Asia, it is also has an ageing population. Governmental response to this is to invest in Educational participation for all age groups to build human capital.
5. Quality and Standards: Thailand has made significant efforts to improve the quality and standards of its products. The country has established a robust legal framework and regulatory systems to ensure product quality and compliance with international standards.
6. Trade Agreements: Thailand is a party to various regional and bilateral trade agreements, including the ASEAN Free Trade Area (AFTA), which provides preferential market access to member countries. It also has free trade agreements with several countries, such as Japan, China, Australia, and New Zealand, which further facilitate trade and reduce tariffs. It has relaunched trade talks with the EU with the ambition to deliver an ambitious, modern and balanced free trade agreement. EU Free Trade Negotiations
7. Cultural Factors: Thailand’s rich cultural heritage, skilled craftsmanship, and traditional industries like textiles and handicrafts make it an appealing sourcing destination for unique and artisanal products.
8. Business Environment: Thailand offers a relatively stable political and economic environment, attracting foreign investment and fostering business opportunities. The Thai government has implemented various initiatives to support entrepreneurship, innovation, and foreign investment, making it conducive for sourcing activities. The World Bank ease of doing business index has Thailand at 21 out of 190 economies.

Strategic Sourcing Opportunities Summary

Thailand offers great opportunities for companies Sourcing Strategies. However, it’s important to note that sourcing from Thailand also comes with challenges. Language barriers, cultural differences, intellectual property protection, and ensuring supply chain transparency are factors that require careful consideration and management.Conducting thorough due diligence, establishing clear communication channels, and working with reputable suppliers are crucial steps to ensure a successful sourcing experience in Thailand.

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 Thailand or to discuss your future supply chain challenges. Please contact@et2cint.com

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.

1. 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.
2. 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.
3. 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

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:

1. Skilled workforce
2. Lower cost of labour
3. Cultural alignment and compatibility
4. Favourable regulatory environment
5. Improving infrastructure
6. 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.

2. 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

5 reasons your business will benefit from a well-developed and executed Global Sourcing Strategy.

As the Canton fair opens for the 133^rd 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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

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

1. Electrical equipment
2. Plastics and Plastic products
3. Medical apparatus
4. Forestry products
5. 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

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

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.

ET2C Celebrating Twenty Years of Sourcing Excellence

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 Celebrating 20 Years 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.

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.

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.

ET2C Celebrating 20 Years 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.

ET2C Celebrating 20 Years 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.

ET2C Celebrating 20 Years 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.

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.

Sourcing solutions need to be reassessed to meet the demands of the ‘Next Normal’ and ensure you do not lose competitive advantage.

Sourcing solutions will be key to the success of any Retailer, Brand or wholesaler in 2021. The Pandemic has left the world fractured and supply chains have been disrupted. In 2020, most business had to scramble to shift both their internal and external processes to function to some semblance of normality. The challenge that now lies ahead in 2021 is how businesses position themselves to capitalise on a global recovery. Undoubtedly, the effectiveness of their supply chain and sourcing capability will be integral to their success and failure.

Sourcing Solutions – Key Themes

The context of this recovery can be framed in three main themes.

A) The Consumer

Lockdowns have accelerated the transition for many consumers from stores to online. In fact, it has been a forced change in many instances with non-essential shops having to close for extended periods. Consumers and retailers, therefore, had to rely on online interaction and relationships. In 9 of 13 major countries recently surveyed by Mckinsey on Pandemic-induced changes to shopping behaviour, at least two-thirds of consumers say they have tried new kinds of shopping. Moreover, in all 13, 65 percent or more say they intend to continue to do so. There is also a downside in that the consumer became even more fickle and the marketplace that much more competitive.

B) The Products

Notably, in a lot of markets, households have saved money and not an insignificant amount. The Bank of England has recently estimated that British Households have accumulated ‘accidental savings’ of £250 Billion. The consumer is therefore well poised – like a wound coil – to unleash pent-up demand for certain items once markets begin to reopen and lives normalise. Aside from travel and services sectors, the likely destination for this discretionary spend will be the fashion sector. Other sectors that have been resilient during COVID-19 will be impacted to a lesser extent. Companies need to be ready to take advantage of this spend.

C) Supply Chains

Supply chains have had to shift as well. Companies are all too aware now about the over-reliance on a small pool of suppliers or even focusing solely on one market. Building in resilience across your supply chain means greater visibility across all the manufacturers embedded within them but also the need to establish other market substitutes. The current freight rates out of Asia are a good example (up to $14k for a 40ft pre-CNY) and are pointing to other markets as potential opportunities that are not so heavily reliant on long shipping lead times.

Your sourcing solutions, therefore, need to factor in a range of complex, often inter-linked, issues at a time when businesses are primarily focusing on survival.

Sourcing Solutions for the Here and Now

There are many solutions that businesses can look to that address the current challenging environment. Clearly, the travel restrictions in place across regions and countries continue to cause challenges for supply chains where there is no ‘on the ground’ access.

Gaining access to these markets and getting the visibility you need across your supply base is key. Similarly, agility and speed to market will provide a competitive edge when it comes to sourcing new suppliers, identifying new innovations or even accessing new markets.

ET2C’s Solutions

At ET2C, we have a range of sourcing solutions to help you during these difficult times. These give you the access you need, but also build in the agility that is needed to leverage the benefits.

1. Virtual Factory Tours

If you are not able to get to your suppliers, let us bring them to you through our Virtual Factory Tours! These are live or pre-recorded visits on-site via video calls to walk you through the factory and give you the insight you need to make decisions supplier selection. It also gives you the opportunity to view the supplier’s processes and standards in real-time.

2. Buying Office Solution

The best way to get a cost-effective, but scalable solution on the ground across multiple markets. The dedicated team will allow you to develop deep relationships with your suppliers, identify new suppliers but importantly also conduct upstream sample reviews and shorten product development cycles.

3. Sourcing Services

We can give you access to multiple sourcing markets. Also, we can take on the supplier identification, assurance, management and quality aspects of your supply chain. We work as your partner on the ground delivering the products you need for your business.

4. Quality Services

Our quality team has over 20 years of experience of quality assurance and inspections on the ground in Asia. We make sure that we get to the factory to give the visibility you need across product quality and the standards you require.

5. Advisory

We are here to help! Whatever your needs for your sourcing, contact us and we’ll be happy to talk through any issues you may have.

Summary

Creating an agile supply chain in the current global sourcing environment will be essential to driving growth in 2021. There are many obstacles, but with the right sourcing solutions, your supply chain will create a competitive edge.

At ET2C, we are well placed to help manage your Asia Sourcing across multiple markets with teams on the ground as well as work with our clients on their shipping needs. For more information, please contact us at contact@et2cint.com.

Quality Assurance Consultants is an integral part of ‘knowing your suppliers’ but it has to be more than just an audit trail.

Quality assurance (QA) is a way of preventing mistakes and defects in manufactured products and implementing processes to avoid further issues. It also encompasses factory audits across a broad range of areas from financial due diligence to manufacturing processes and social compliance audits. Quite rightly, retailers and brands will insist on understanding more about their suppliers to varying degrees and this visibility is an increasingly important aspect of any global supply chain. Making sure that the supplier is who they say they are, has good systems in place and is not abusing their employees is now essential information to any Buyer, and also more and more of interest to the Consumer as well.

“Guanxi” has always been a word that reverberates around discussions on China – the use of personal connections for some personal, commercial or economic gain. There is no doubt that relationships are always important in any walk of life, and this is no different in China. That said, the South China Morning Post wrote an interesting piece recently on the quality assurance industry in China and the shadowy world of ‘consultants’ who were helping factories pass factory audits through deceit and fraudulent claims.

The Consultants

The article investigates the work of independent consultants – often ex-employees of large testing houses – suggesting that there are many incidents of these intermediaries effectively forging documents and bribing inspectors to get lower end factories across the line when it comes to passing the relevant standards. Once the audit has been completed, and the factory has attained the level required, then the orders start rolling in.

Often, with yearly audit cycles, one can argue that the system is open to abuse. Also, the fact that the suppliers often must pay for the inspections themselves and they are not unannounced in the main does not help with maintaining consistent standards over an extended period – audit today, gone tomorrow (and for a further 364 days).

The Industry- Quality Assurance

It is likely that there are incidents of such behaviour. And it is clearly wrong. The intention of any retailer or large organisation buying from China would certainly not be to fund this industry or to rely on sub-standard factories. Using these factories could lead to poor quality products, which can be very costly, or Brand reputational damage should use of such a factory enter the public domain. Quality assurance is an important part of understanding the supply chain but perhaps its application and implementation is where the real issue lies.

In a world in which retail is having to work harder and harder to engage with the Consumer and persuade them to buy products, different functions within large organisations are often competing for their own self-interests. Clearly, cost is commonly the weapon of choice in any negotiation when it comes to the Buyers. Driving the best commercial (low price) is still how most buying departments are judged and even rewarded. Whereas quality departments (and all the names in between) will be looking to ensure that the standards are up to their requirements. The result is an awkward marriage between commercialisation and quality assurance, which can often drive the wrong outcomes.

For example, the quality department will rightly say that workers must limit their working hours to 40 per week. At the same time, the buyers/merchandisers may point out that if the shipment that was placed late does not go out next week, then the factory will be charged 1% per day of the total order for each day late. At some point, there has to be a straw that breaks the camel’s back.

Conversely, if the retailers paid a little more and did not squeeze so much out of the price of a product, would they end up with sub-standard factories in the first place?

Quality Assurance

Quality assurance remains important and done correctly (regardless of some of the innate challenges mentioned above) there is no reason why there should even be this cottage industry of consultants at all. Here are some of our thoughts on how to make sure QA is working for your business:

1. ‘Own’ the Audits

This is not, and should be not, a ‘tick the box’ exercise where the inspections are outsourced accepted as presented. It requires a deep understanding of your suppliers, what makes them tick, and where the possible risks apply. The certification or standard is just the first stage, which then requires follow-up.

2. On the Ground

Having a team on the ground in any market will allow greater relationships to be developed and an understanding of the factories you partner with. This means more frequent visits to make sure they are meeting the standards (and indeed any corrective action plans as well).

3. Unannounced Visits

Always good to make sure Suppliers know auditors may turn up any time. It is always the best time to inspect a factory when they are ‘unprepared’ as it should not alter the standards in place.

4. Pay Audit Fees

When doing an external audit, to remove any leverage, it always makes sense for you to be the contracting party with the third-party auditor. Of course, if the factory agrees to pay this as part of your agreement, this can be deducted from future orders.

5. Prioritisation

Vendor identification and selection must be aligned to all functions (buying and quality). Understanding what the priority is will allow better factory selection through internal alignment.

Summary

Quality Assurance is a key part of any supply chain, wherever in the World. Make sure that you understand what the factory standards mean for your business and your consumer. The quality and buying functions are not mutually exclusive but it is important that there is alignment to drive the correct outcome.

At ET2C, we have our own inspectors on the ground, and have been helping our clients with quality assurance for the past 20 years. For more on Quality Assurance, or anything other information, please contact us at contact@et2cint.com.