Read time: 2.5 minutes.
Today’s competition is too fierce and most companies have no other choice but making the China direct sourcing strategy a part of their overall strategy.
As I said not every company needs this strategy. If you are not sure, here are two posts that will help you:
1) 5 Issues you must know about China direct sourcing – 1
2) 5 Issues you must know about China direct sourcing – 2
Different companies have different needs that require them to learn how to implement a direct sourcing strategy. It could be because you must be a cost leader, it could be because you have to control your production process, it could be because you want to protect your IP. No matter which one, if you have all the sufficient resources, the China direct sourcing strategy gets you closer to all the above.
In the past (20 years ago) finding suppliers was a challenge. Many people made a fortune only because they had the phone number and contact person name of manufacturers. In the pre-WhatsApp and wechat era, it was difficult to find a manufacturer…any manufacturer. But now, when international phone calls are free, air tickets are cheap, and Chinese manufacturers travel the world exhibiting in every possible trade show, finding a factory is not a problem anymore. However, controlling the process and the quality is not always easy.
IS DIRECT SOURCING IN CHINA GOOD FOR EVERYBODY?
It does make sense for companies with a very diverse scope of activities (like retailers who import thousands of SKUs from multiple countries and don’t have regional offices in those countries) to work with local agents or trading companies. Managing suppliers and quality systems is very time consuming and requires the right skill set, the right experience and the right people in the right place and the right time. Trying to manage your suppliers without sufficient resources (people and time) could result in costs (quality and delivery issue) that are much higher that whatever trading companies and agents would have charged you.
Still, every company has core products and business scope. Every company wants to be in total control of its core product, their production process and have a direct relationship with the producer of these products. Markets demand better and cheaper products, shorter delivery times and an ever improving user experience. If you are like my customers, you probably feel that bringing the right product to the market on time, requires that you keep your own fingers on the pulse, have the ability to know when things don’t work the way you want them to, and the option to bring them back on track your way.