Everyday Western companies manufacturing in China offer countless high-quality products that make our lives easier. Chinese exports range from the lowest-tech toys to the highest-technology computer electronics. Yet for every successful sourcing experience in China, there is more than one disappointment or complete failure. So, the question is, “Why are some companies so successful at managing supply chains in China, while others are not?”
The answer is rooted in the fact that successful supply chain management in China depends on very different practices than in the West. Companies that don’t understand and adjust to those differences invite problems. This, coupled with all the new restrictions on the movement of goods and workers in and out of China, makes the smartest choice to have a team in China who manage such crucial process: the supply chain.
Based on years of experience working in China and guiding Western businesses as they establish and manage supply chains there, at EgeaidDay we know the secret sauce for success:
- Effective supplier qualification in China involves more than checking product samples, equipment, and quality documentation. It requires assessing the stability of a supplier’s to consistently meet the full range of your requirements, including those related to product, total cost of product acquisition, quality, and logistics.
We recommend to measure your supplier in six functional disciplines:
- manufacturing facility and process equipment
- manufacturing management processes
- quality systems
- technical support
- logistics and export capabilities
- general management and finance
- Before placing the first order, synchronize expectations through contracts. Innocent mismatches of expectations between Western customers and Chinese suppliers about Western commercial principles are extremely common. If you engage a Chinese supplier assuming its management intuitively understands how suppliers and customers interact in the West, you are taking a big risk.
- Test alternative supplier options and challenge existing suppliers to improve in terms of cost, delivery, and quality. Rising costs in major cities in eastern China, such as Shanghai, Guangzhou, Shenzhen, and Beijing, present challenges for Western companies that found qualified suppliers years ago. However, the improvement of technology and local workforce’s experience in secondary cities expands the options!
Back to our initial question: “Why are some companies so successful managing China supply chains, while others are not?” Supply chain success in China is no more difficult than anywhere else in the world, if you follow these key steps to success. We know that this is a lot to take in. This is why at EgeaiDay, we make supply chain in china easy and successful for you!