china-outsourcing

There are several China outsourcing strategies that work for different companies depending on their size, industry and the level of product and vendor requirements.

Each of these strategies is suitable (or not) for different organizations not only because of the above mentioned but also because of management styles and company culture.

There are several China outsourcing strategies that work for different companies depending on their size, industry and the level of product and vendor requirements.
Each of these strategies is suitable (or not) for different organizations not only because of the above mentioned, but also because of management styles and company culture.

Product focused China Outsourcing strategy.

This strategy is suitable for organizations that deal with a big variety of products but are limited in resources. It is also suitable for products with low-risk levels such as consumer goods (in comparison to invasive medical devices, these products are of low risk).
In this strategy, the sourcing team is examining the product only, and do not look into the long term ability of the manufacturer to continue and manufacture the same product with the same quality standards.
They also do not look how robust is the manufacturing process and what are the chances that future lots may contain inferior goods.
However, that does not mean that this strategy is not good. In industries where buyers buy from a big number of suppliers and the products risk level is low, there is no return on the investment of auditing every supplier and taking the time to ensure that the production process is robust.
In these industries, all defects can be identified during a final inspection, and in those industries, that is enough.

Vendor focused China outsourcing strategy

This strategy is suitable for organizations that would like to work with their vendors for a long time.
The reasons may be that it is more cost effective to focus more buying power on each vendor.
The reason may also be that one manufacturer has the ability to produce a group of products the buyer is interested in buying, and by buying from one vendor multiple products, the company can save a lot of sourcing efforts.
But usually, the reason is that when the requirements from vendors are high, it is not easy to find a good supplier. There are a lot of requirements from suppliers: service, business ethics, effective communication, machinery list, credible history, financial robustness and above all, a supplier has to be trustworthy.
So once a suitable supplier was identified, the relevant team was trained to work according to the buyer’s process and requirements, companies usually invest their resources in going through the learning curve of working together. That could take time and quite a lot of man hours and dollars spent on flight tickets and damage control.
However, if done well, and trust and healthy relationship was built, the investment worth it.
If you are not sure which strategy is best for your organization or how to go about and implement either of these strategies, please contact us by:
Phone: +185-6668 3420
Email: amit@csoprojement.com
Skype: ABRaphael.
Or simply leave us a message using the form below.