Supply Chain Management in China: Building Resiliency
November 13, 2023
If your supply chain management in China is delivering decent results, it is common for even the most experienced importers to feel as though they do enough to manage it. Many importers are busy CEOs focused on many other things aside from their sourcing program. A competitive supply chain requires a sustained commitment of time and resources to stay ahead of challenges and to identify opportunities. This will help ensure a thriving sourcing process even when confronted with significant disruption.
Having a dedicated sourcing team can help tremendously to build resilient supply chains. There are three major initiatives that a dedicated team could work on every day to ensure importers stay competitive.
One of the main functionalities of a dedicated sourcing team is studying clients’ product lines and outlining potential improvements that could provide cost savings or additional revenue, such as:
- Product improvements and quality: Improvements to existing product specification sheets (PSS) or inspection specification sheets (ISS) or drafting of initial PSS and ISS for new products.
- Analyzing competitors: A great sourcing team should also study their clients’ key competitors—their websites, product offerings, and current suppliers. This enables them to keep a pulse on their market and identify new opportunities and areas for improvement. It also gives them product ideas in the interest of keeping clients’ brands competitive and innovative.
Many importers often measure cost savings in dollars and cents relative to product cost only. However, there are savings in terms of mitigating risks as well. A professional sourcing team always plans ahead. They gather and use relevant information to reduce or avoid the effects of possible challenges by:
- Vetting existing suppliers and/or qualifying existing, and potential suppliers: This can prevent future headaches and ensure competitive pricing. Vetting suppliers gives importers a clear vision of a supplier’s capabilities. At the same time, it avoids expensive and potential reputation-damaging quality issues down the line.
- Helping with contracts and negotiations: Suppliers rarely offer the lowest cost or best terms upfront. Having an experienced team negotiate the best terms at the optimal price saves money before it is spent.
- Implementing Quality Assurance (QA) protocols: One bad shipment can wreak havoc on a business. Importers can realize tremendous savings by implementing exceptional quality assurance processes, including post-production and pre-shipment inspections.
- Managing shipping and logistics: An excellent team will have extensive logistical planning experience and a robust network to ensure the lowest cost and on-time delivery. Getting goods to market when expected is crucial to ensuring cash flow.
- Staying on top of current events that may pose challenges: A China sourcing team must stay in the know about current events that may pose challenges or disruptions. This helps them plan for or prevent issues before they affect the sourcing process.
- Helping to protect Intellectual Property (IP): Ensuring IP protection will prevent importers from losing revenue to copycat products. There are many ways to do this, such as securing optimal Non-Disclosure (NDA) or Non-disclosure, Non-use, Non-circumvention (NNN), and mold and tooling agreements. Find more about these topics in these other blogs: 7 Ways to Protect Your IP and IP Protection: NDA or NNN?
Economic Opportunities for Supply Chain Management in China
Staying competitive in trying times relies heavily on being able to identify opportunities. A dedicated China team should always be searching for ways to increase profitability for their clients by:
- Benchmarking suppliers: Identifying many potential qualified suppliers ensures the best price and quality. Importers are often captive buyers. This means they’re loyal to a specific supplier because they’ve spent a lot of time building the relationship or are financially incentivized. Often, there are other suppliers that can provide superior quality and offer better costs.
- Identifying better components and raw materials by finding suitable alternatives at a lower cost, at equal or better quality.
Building resilient supply chain management in China and getting the best results requires an intimate understanding of the supply landscape. Having a dedicated China team to plan for and mitigate risks, identify opportunities, and help stay informed about possible challenges can provide significant cost savings to even the smallest importers, which translates into larger profit margins and a robust supply chain that can handle any challenges.
CPG has an office and team in Beijing whose objective is just this. For more information on how CPG can help you build a resilient supply chain, contact us.
Editor’s Note: This blog was originally published in April 2022.