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              Home | Global Practice Lines | Asian Sourcing Process

              Asian Sourcing Process
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              Our Experience
              Gibson Consulting has extensive experience in global sourcing having helped dozens of clients in the US, Western Europe and Asia define and implement a global procurement strategy. Our resources in China provide accelerated turnkey solutions for clients looking for alternative low-cost supply.

              What We’ve Learned
              Despite the number of companies sourcing overseas, it’s not an easy process, nor guaranteed. A successful Asian Procurement Process must have local representation, in-country staff to conduct ongoing due diligence and negotiating must be locals vs. locals, not locals vs. westerners. Relationships with local government officials are critical. Ongoing quality audits from prototype to production, filters (criteria for suppliers), quality, price, CAD/CAM capabilities, location, language (e.g., English speaking), logistics, certified for export, equipment and process inspection are all key. Companies also should be careful of Chinasource.com websites and qualify their vendors first before sharing their data.

              Supply Chain, Strategic Sourcing, Globalization, International, Asia, Process, Methodology

              Despite the number of companies sourcing overseas, it’s not an easy nor guaranteed process…

              • Basics (must have)
                • Local representation
                • In-country staff to conduct ongoing due diligence
                • Negotiating – locals vs. locals, not locals vs. Westerners
                • Relationship with local government officials
                • Ongoing quality audits from prototype to production
              • Filters (criteria for suppliers)
                • Quality
                • Price
                • CAD/CAM capabilities
                • Location
                • Language (e.g., English speaking)
                • Logistics
                • Certified for export
                • Equipment and process inspection
              • Intellectual Property (doesn’t really exist)
                • Need to be protected in US first
                • Be careful of Chinasource.com websites
                • Qualify vendors first before sharing your data
                • Balance, start with component parts first; Do not end up competing against yourself
              • Processes (focus on quality)
                • Focus on Quality Assurance – ISO certifications do not mean anything, must review and document the manufacturing process yourself
                • Bring Chinese inspectors to the US for quality training; sometimes require six months to one year of training
                • Prototype quality is not reality; must quality audit first production run
                • Supplier vs. Design vs. Material – Do not change all three at the same time unless absolutely critical
                • Be careful of the misquote; sweat the details – suppliers may low-ball and adjust prices after you have moved production to China

              Where do the savings come from?

              - Savings

              • Labor …………………………………………………………………………… 70% to 90% Less
              • Tooling………………………………………………………………………… 30% to 60% Less
              • Real Estate (manufacturing facilities) ………………… 50% to 70% Less
              • Equipment (capital) ………………………………………………… 30% to 50% Less
              • Utilities………………………………………………………………………… 20% to 60% Less
              - Add Backs
              • Transportation and Logistics Costs
              • Inventory
              • Customs / Duties / Tariffs
              • Inspection Costs / Monitoring Content
              • Legal, Accounting, Tax fees

              China Sourcing can deliver Unit Cost Savings of 30%-60%

              Supply Chain, Strategic Sourcing, Asian Labor, Rate Comparison, Labor Rate

              Supply Chain, Strategic Sourcing, Globalization, International, Asia

              What we’ve learned

              • Expect to triple and quadruple your project timelines (vs. sourcing domestically) from supplier research to final discussions, if doing it for the first time
              • For many components, it is useful to send actual part in addition to, or in lieu of drawings and specifications
              • Some state-owned companies don’t have a clue what their costs are
              • Prototype quality is not always production quality
              • Most of the time, the decision maker does not speak English creating ineffective and inefficient meetings
              • Understand the impact of China sourcing on marketing strategy; Made in USA vs. Made in China
              • Still a communist country, local governments will do nothing for you, but you can do nothing without them
              • Standards must be set for everything (e.g., size and color)
              • Understand areas of China and their respective expertise
              • US business logic does not always apply
              • Must sweat the details
              • Example category – of the thousands of wire & cable harness manufacturers in China; we found only 25 capable and qualified suppliers

              Today, there is little difference between international business and business. It is vital to act now and act swiftly. Don’t wait until you see your customers and competitors going to China- start small and enjoy early successes. Keep in mind, China is a tool, not a silver bullet for business. It is important to look for good legal and professional advisors.

              Gibson Consulting has extensive experience in global sourcing having helped dozens of clients in the US and Western Europe define and implement a global procurement strategy. Its resources in China will provide accelerated turnkey solutions for clients looking for alternative low-cost supply.


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