Supply Chain Strategy: Recessionary Headwinds

Global supply chains are being tested like never before with constant disruptions that have now spanned 17 months since the beginning of the Covid-19 Pandemic.

Global supply chains are complex. This is often taken for granted when goods arrive at your warehouse.  In fact, these global supply chains often involve large distances, multiple countries, many companies and lots of people that all need to be appropriately in sync to deliver the products you order on time. With all the recent Covid-19 disruptions, there are now concerns about the fragility of these global supply chains and the implications for the remainder of 2021.

The Covid ‘Monkey’

It seems that no Country can really shake the ‘monkey from their back’ when it comes to Covid-19. Even countries that have a ‘zero covid policy’ are struggling in the face of the Delta variant. Where the East has largely enjoyed 15 months of normality (if that even exists anymore) whilst the West has lurched through multiple lockdowns in 2020 and 2021, the converse is now true. The West has been quicker to vaccinate their populations and is now ‘opening up’ on the basis that there will be a ‘vaccination wall’ to minimize hospitalizations. Meanwhile, the East – with many countries pointed to as examples of how to deal with Covid-19 – is now broadly in a state of panic given vaccinations were not seen as a priority. No country, regardless of their Covid strategy has truly loosened the Monkey’s grip.

From a sourcing perspective, this is currently having a significant impact on the ability to both manufacture and ship goods, which deserves a quick market-by-market recap.

China

China is still open for business but the spectre of Covid looms large. Yantian Port was temporarily shut down due to a Covid outbreak. Seen as one of the busiest ports in the World, it was a good example of the impact Covid can have on the movement of goods. Although there was some significant disruption at the time, with goods being moved to alternate exit routes, the Port was re-opened in a matter of days notwithstanding the backlog of shipments that still needed to be processed.

Just recently, Mid-August, Ningbo was likewise shutdown on the back of one case of Covid. This is a Port that moved 5.44 million 20ft equivalent units in 2020. This only further exacerbated the current fractious shipping landscape by limited the outflow options for shipments.

There have been other disruptions that have hit the region, such as the typhoon that hit the East Coast of China in Late July and the dramatic flooding that has only exacerbated the current issues. And this is all in the build-up to Black Friday and the busiest quarter of the container shipping year – Christmas and Chinese New Year.

This has all had an impact on prices at the factory gate; a combination of Covid induced fragmentation of logistics capability and excessive demand from the West super-charged by the need to replenish inventory stocks. In July, the factory PPI was up 8.8%.

Vietnam

Southern Vietnam is currently in a state of paralysis. The Delta variant has led to HCMC (the epicentre) being in some kind of lockdown for the past 8 weeks, with some of the largest case numbers (plus 6,000) being reported today midway through a two-week complete lockdown in which people are forbidden to leave their apartments.  Although there have been continued Directives issued, there appears to be little let-up in the case numbers.

Surrounding provinces in the South have also been impacted, and with them the industrial zones of Bing Doung. Factories are operating in isolation where they are given permission to under the “3 on-site” model, which means workers can live and work on-site, or at least be transported in a bubble from a single separate accommodation location to the factory site to work and back at the end of their shift. The target date of 15^th September for the local economy to be re-opened may perhaps be a stretch, but with a significant vaccine drive and severe lockdowns, there is still hope.

India

The devastation that the Delta variant had on India back in May, when new cases peaked at just under 415,000 in one day, was hard to watch. Cases have now ameliorated to a 7-day average of approximately 40,000 per day, 10% of the cases back in May. Manufacturing has opened up and factories are largely operating again. There are still challenges with shipments, but that is not solely a local Indian issue.

Turkey

Turkey is currently benefiting from its proximity to Europe with the high freight rates. The manufacturing sector has largely managed to remain open right up to Ramadan back in April. Even though cases were up as high as 60,000 per day, these have since settled to a third of that figure as a result of lockdown measures and also a successful vaccine drive.

Two plus Two equals Zero

It is a difficult picture to pull together with any sense of predictability, which makes decision-making that much trickier. Global supply chains are cumbersome and not easily uprooted. It takes time, and with the Covid-19 appearing in different places at different times, it is not easy to plan anything. The one predictable piece of this puzzle is the predictability that there will be some kind of disruption within global supply chains.   This Monkey is not going anywhere soon and the simplest advice we can give is:

• It will benefit companies to build in additional flexibility. Look at different provinces, different regions, different markets.
• You need ‘boots on the ground’ to react quickly to any incident as it appears.
• Keep your options open.

We are heading into the busiest time of the year for the shipment of products out of the East, and the current environment is most certainly going to result in stock shortages during the festive season as well as not-insignificant inflationary pressures (see our petition for the UK Government to counter these inflationary pressures).

Summary

At ET2C, our solutions are centred around flexibility.  We provide our clients with access to a range of markets and suppliers on the ground across Asia.  We are well placed, as your Sourcing Partner, to help you during these difficult times. For more information, please contact us at contact@et2cint.com.

Supply Chain flexibility and planning processes are key to navigating unpredictable and volatile markets.

Supply chain flexibility takes time to develop – just like resilience – particularly where companies are leveraging manufacturers from across the world. Supply chains that on paper look simple are often in fact more complex – if only on account of distance, logistics, culture and language. In addition, the current sourcing landscape is fractured with borders shuttered and outbreaks of COVID-19 a common occurrence.

The past 18 months have seen extremes of unpredictability and volatility across retail and sourcing markets. Whether it is the closure of manufacturing markets (March 2020 in China), bricks and mortar retailers being forced to shut during the many lockdowns or the current unforeseen Covid implications on freight rates out of Asia, supply chains had to react to events as best they can.

The ‘Bullwhip’ Effect

The challenge with shifts in demand at the consumer level is the potential for the ‘Bullwhip Effect’ to ripple back up the supply chain and create distortions in inventory production at the manufacturers. This effect was first identified in the 1960s at MIT’s Sloan School of Management and highlights the consequences of the decisions made by each ‘player’ in the supply chain to maximize their profits. The result is that each supply chain participant has a greater observed variation in demand and thus greater need for safety stock.

In periods of rising demand, players up the supply chain increase orders and their safety stock. Conversely, when orders fall or drop, stock levels are not reduced. The Bullwhip effect causes these variations to be amplified up the supply chain.
The consequences can wreak havoc with inventory levels up the supply chain leading to potential periods of excess stock through to stock shortages. Whatever the case, the financial impact can be significant on all players up the supply chain. Ultimately, this can lead to poor customer service, staff shortages, cost reductions and potentially business failure. One good example of the Bullwhip Effect was at the beginning of the Covid-19 Pandemic and the sudden spikes in demand for masks and medical equipment from China.

Further studies of the Bullwhip effect in the 1990s showed that it is not only irrational behaviours that caused this supply chain phenomenon. There were four rational behaviours of the players within the supply chain’s infrastructure that also impacted the demand vs safety stock holdings. These were:

a) Demand Forecast Updating

When different players update their demand forecasts due to unexpected events, and multiple times up the supply chain it can have an artificial impact on demand planning and safety stocks.

b) Order Batching

Commonly due to market price volatility, low stock levels or logistics costs, companies may look to batch orders into less frequent larger orders. Periodic batch orders create high volatility in demand.

c) Price Fluctuations

Price increases (or future increases) or decreases because of inflationary factors or discounts can create demand shifts. This makes it harder for players upstream to predict demand and related safety stock levels.

d) Rationing and Shortage Gaming

When demand exceeds supply, manufacturers may ration their products. Attempting to ‘game the system’, buyers will order more than they require to achieve the volume they require. When supply returns to normal, some customers cancel orders leaving excess stock levels.

Supply Chain Flexibility

Ultimately, it is demand planning that companies often get wrong and that leads to these ripples of data moving upstream creating production inefficiencies. Of course, demand planning is difficult to get right at the best of times and even more so during a period of extreme unpredictability. Demand for certain categories has in fact been extraordinarily strong this past two quarters as markets have opened up, which has had a dramatic impact on freight rates. However, as Covid continues to rage across the planet, even where vaccination strategies have been implemented, the belief that the uncertainty of the past 18 months was abating is now hanging by a thread. Stock markets, spooked, are beginning to turn red and there are inevitable risks that customer demand may drop – potential Bullwhip territory.

There are certain measures companies can take to manage the impact of this effect, and it largely points to embedding flexibility within your supply chain.

1. Demand planning (JIT)

Just in Time systems that are all part of lean manufacturing are all excellent in making sure that inventories are minimized (in some cases non-existent) and react to demand pulls. We can all learn from Kanban and other agile systems.

2. Decision Making

Critical, but often overlooked, the ability to make quick decisions that are multi-functional builds in flexibility. In short, circumstances can change quickly and companies with multiple layers of hierarchy and processes will struggle to adapt as required.

3. Understand the Trade-Offs

Do not be blinkered when it comes to decision-making. Of course, there are priorities in any business and its decision-making process. But understanding the tradeoffs – for example, MOQs, payment terms or dye charges, etc. – will give flexibility of option at a time when perhaps normal requirements are not so relevant. A good example of this was again when businesses were desperate for medical supplies at the beginning of Covid and initially some refused to put down deposits. They soon realized this was a necessity to get the required stock.

4. Flexibility of Production Process

Shifting manufacturing location and being able to quickly re-tool or develop the same products in different markets will drive flexibility, just as will having ‘back up suppliers.

5. Collaboration & Partnerships

Seeing suppliers as ‘partners’ is essential to creating flexibility at factory level. This will enhance communication and understanding of demand movements but also enable the factory to provide additional help should it be around stock holding, minimums or pulling in additional capacity should it be required.

Summary

Supply chain flexibility has never been more important. In the midst of volatility and unpredictability, it is essential that your supply chain is delivering value to your business. The alternative has a sting in its tail!
At ET2C, our solutions are centred around flexibility. We provide our clients with access to a range of markets and suppliers on the ground across Asia. We are well placed, as your Sourcing Partner, to help you during these difficult times. For more information, please contact us at contact@et2cint.com.

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 Trends 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?

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.

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 Trends 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.

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.

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

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 a wide range of sectors, using different materials and manufacturing techniques.

It is always fascinating to see how each of these products is made—whether it’s the number of hands that touch the product during production or the machines that power the process.

This month, our Insight Series is back! We are focusing on industrial manufacturing and, in particular, the High Pressure Die Casting Process.

Industrial manufacturing continues to grow as part of offshore production. Many companies are now partnering with Asian suppliers to improve margins at the product level while maintaining high-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 a wide application, accounting for nearly 50% of all light alloy casting production. This includes engine parts, motorcycle components, household white goods, cookware, and plumbing & heating items, to name a few.

It is also used in many everyday products that you might see around your home. Workers in these factories handle molten metals and always wear protective clothing and eyewear for safety.

An example of a high-pressure die casting is shown in the illustration below. Here, liquid metal is injected at high speed and pressure into a mould.

The basic equipment includes two vertical platens. Bolsters are mounted on these platens to hold the die halves. One platen is fixed, while the other is movable, which allows the die to open and close during the process.

High Pressure Die Casting Process

A specific amount of molten metal is poured into the shot sleeve and then introduced into the die cavity. This is done using a hydraulically driven piston, which forms the required shape.

Unlike traditional handcrafting, much of this process is automated. Workers mainly oversee and operate the machinery rather than manually shaping the product.

Different metals require different heating levels, and temperatures can reach up to 1,090°C to achieve effective casting.

The table below shows not only the casting temperatures but also the number of products each die can produce before it begins to degrade. At that stage, defects may appear in the final product.

This durability is important. High-pressure die casting can produce large volumes of products before the die needs replacing—a key factor, since dies are expensive to manufacture.

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.

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.

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.

A Buying Office addresses the current challenges of sourcing from Asia and drives value back up your supply chain .

Offshore Supplier Management

1. Presence on the ‘Ground’

2. Visibility Across Production

3. Supply Chain Resilience

4. Development Cycle Acceleration

5. Upstream Quality Capability

ET2C’s Buying Office

Summary

Small business Over the past decade, the barriers to entry for consumer goods brands have been greatly reduced. Back in the mid-20th Century, you would need a lot of cash for a manufacturing plant and business experience before you could even start to think about selling products. Globalisation and technology changed all that. Mass outsourcing of manufacturing, particularly across Asia this past three decades, enabled companies to both buy products to sell and importantly to design their own ranges. Today, with platforms like Alibaba, access to thousands of factories is readily available through the touch of a button.

small business Pitfalls for Young Growth Companies

But this is just the start of the journey. There are many pitfalls that then present themselves as one puts pen to paper (or signs virtually) on an agreement with a ‘Gold Star’ Supplier that you have found on Alibaba.
Over the years, we have come across many companies that have done the hard yards; designing, manufacturing and taking their products to market. Inevitably, however, there are always going to be issues when a young growth company is transacting halfway across the world with factories that sit within different time zones and cultures.

Small business – too many limits.

These problems are exacerbated further when you have limited clients, limited cash and limited resource. One false step on quality can mean the department store that you have persuaded (perhaps even begged) to take your product can mean a brutal (and costly) rejection. Or when a factory makes a mistake in production that means the products require re-work on site, how is a company with limited resource able to address this? And if your product fails chemical testing that you were not aware was a requirement to sell in your chosen market, what are the ramifications?

Sourcing Tips for Young Growth Companies

Arguably, your supply chain will determine the success or failure of the business. It has the ability to scale your business by delivering what you need. Here are some of our tips to keep in mind:

1.Technology is an enabler, not a fail-safe

Of course, platforms like Alibaba have allowed buyers the world over to find suppliers for their products, but it is important to still understand who that supplier is, what they do and how they are suited to your needs.

2.Visit your Suppliers in Person

Just as you would if you were manufacturing down the road, it is essential that you have visited the manufacturing facility, spoken to the owners and satisfied yourself that they are the right ‘partner’, which may include social and ethical compliance.

3.Be Clear on Product Specifications at the Outset – small business

Make sure you have as detailed a product specification as you can draw up that meets your own needs. Certainly, you should agree, sign and chop this with your supplier, to ensure that there is no misunderstanding. Where possible, include any packaging requirements and shipping marks. Also, chemical and physical testing would be advisable as well given this may impact price.

4.Quality is Paramount- small business

You know better than anyone what your product proposition is to your customers and how ‘quality’ fits within this. So, make sure that you have visibility on the production (inline) and also implement an independent quality control so that you can check the products before anything is shipped. You do not want to be shipping problems to your market as this will only increase the costs.

5.Terms & Conditions- small business

Different markets have different (and often contradictory) rules of law. Never assume that a standard contract will provide sufficient legal recourse when it comes to IP or recourse for faulty or delayed goods. You need an agreement in place that has jurisdiction in the country where your goods are being manufactured. Otherwise, it is likely that the contract is not worth the paper it is written on.

6.Never Assume Anything- small business

A catch-all. Just remember you will often be operating in an alien marketplace that speaks different languages. Surely, commonsense is not something that you should lean on.

Get all these right, and there is a real opportunity to nail the supply chain piece!

ET2C Int. helps Young Growth Companies scale their businesses

Small Business – How to grow?

At ET2C, we have a track record of helping young growth companies scale their businesses. We understand your needs and have the capability and reach across Asia to manage your suppliers without any upfront costs. For more information, please contact us at contact@et2cint.com.

How Do You Find Your Best Sourcing Company?

Now that you’ve decided to explore your supply chain options abroad, hiring the best sourcing company for your business can mitigate costly issues in the supply chain. In a time when customers are demanding ethical, eco-friendly, and long-lasting goods, it is more important than ever to engage in transparent and strategic sourcing.

Unfortunately, even the most environmentally-minded consumer limits how much they are willing to spend on a product. Sourcing in Asia represents an opportunity to fabricate products at reduced prices without sacrificing quality, but hosts a range of latent miscommunications and risks. Thankfully, hiring a sourcing company can save time and diminish liabilities.

Why Should You Hire a Best Sourcing Company?

Once a company decides to invest capital in any venture, it is worth their while to hire consultants capable of sidestepping costly issues. Just as hiring a lawyer to review a trademark prevents lawsuits, strategic sourcing companies are worth every mistake their clients don’t make. From properly filing documents to exercising local business etiquette, minimizing missteps maximizes profit. Discovering your best sourcing company can also free up your valuable time to focus on other aspects of your business.

Best Sourcing Company Country or Countries

This may seem pretty simple, but it’s important to consider the origin of your products based on a complex web of factors. While it may have historically been cheapest to produce your product in China drivers such as local import duties might make other Asian markets more cost competitive overall. Determining the best possible value for your product at your price point requires an understanding of not only local markets, but regional and international markets.

Each sourcing company in Asia retains access to different suppliers and factories. Some are solely market specific and only operate within China or India etc. If you have done adequate due diligence and know exactly which markets best serve your company based on your product mix, a direct to supplier approach may be appropriate. However, if you harbour uncertainties about which country will supply the best value, international sourcing companies provide the opportunity to evaluate several markets at once. This is increasingly important given the current international trading landscape.

Sourcing companies with ties to several countries can also restructure your supply chain should better opportunities in other countries arise. For instance, tariffs imposed on one nation may make another more desirable for lower importation fees, or a country’s government subsidies for products in your industry may reduce costs. International sourcing companies can help reevaluate the supply chain over time to ensure that your business is not over reliant on any one country.

What is Strategic Sourcing?

Sourcing is “a strategy in which a business seeks to find the most suitable location for manufacturing a product”. Rapid growth of manufacturing capabilities across Asia and low labour rates drive the region to be one of the most cost-effective for outsourced production.

Sourcing

Before you can determine which is the best sourcing company suited to your needs, you must decide what sort of service you need. Depending on your familiarity with the market, level of desired support, volume of spend, in-house capability and ability to appropriate time and funds, you may want to explore the different options available.

The best sourcing companies spend years developing connections in their regions and when you employ their services, they grant you access to their vast network of certified suppliers and manufacturing contacts; visibility across production should be an integral part of any supply chain given quality requirements. Touching base with a sourcing company before production begins ensures that you acquire an understanding of the realistic capabilities of your manufacturing partners, from reasonable pricing and quality to practical timeframes.

Strategic Sourcing

Procurement is “the acquisition of manufactured goods from an outside external source.”If sourcing alone sounds useful but a little daunting, procurement services take a holistic approach to the process of fabricating of your product. Supply Chain Managers work with you to develop the strategy of how your product will be sourced, assembled, and even shipped. If the thought of messing up the logistics is holding you back, procurement services work with you every step of the way to ensure that the process runs as smoothly as possible.

For companies looking to re-evaluate the efficiency of their existing supply chain or maximize the benefits of a new project, supply chain management relies on personalized sourcing solutions to minimize supply chain disruption, quality defects, and other issues that can quickly escalate.

If you’re not certain which option makes the most sense for your company or you want to understand your options when sourcing from Asia, then consulting with expert sourcing agents can help determine the best path for you to pursue.

ET2C Best Sourcing Company Solutions

While a wide range of companies and individual sourcing agents can manage your supply chain, ET2C Best Sourcing Company offers a few unique additional services. We believe in a transparent “boots-on-the-ground” approach for businesses to access their supply chains.

Dedicated Team (“Buying Office”)

Sometimes international companies want a more hands-on approach and our buying office service provides upstream access to their supply chain. Through a dedicated team with the relevant experience, ET2C Best Sourcing Company helps manage the ‘on the ground’ sourcing function in the corresponding Asian market. It is a cost effective way for companies to leverage the benefits of Asian sourcing whilst removing the risks.

Sourcing Teams

ET2C Best Sourcing Company merchandise and quality teams translate expertise across a range of categories that cover China, India and Vietnam. With the option of organized, single-point vendor management entry, companies can reduce time and effort trying to coordinate a series of vendors. A large pool of suppliers and manufacturers drive highly competitive pricing and increased efficiencies. Quality assurance is of utmost importance and ET2C’s partners assure Best Sourcing Company ISO, ETI, and SA800 brand protection compliance.

Whether you’re seeking advice or full-scale Supply Chain Management, contact us at ET2C Best Sourcing Company for all your strategic sourcing needs. We have a dedicated team primed to find sourcing solutions for your company through our network of over 2000 supplier contacts across China, Vietnam and India. Our mission is to deliver long-term sustainable value to our clients’ supply chains that creates cost and quality benefits to their purchase channels from key global sourcing markets, while ensuring the sourcing process is simple, easy, and convenient.