Posts Tagged ‘overseas sourcing’

Global Supply Chain Woes: Navigating Today’s Challenges

September 9th, 2010

asian-sourcing

Hiccups in the global supply chain have a wide reaching effect on the promotional products industry. Both domestic and direct import programs who source overseas will have to navigate a new series of challenges.

The global recession has also greatly affected our manufacturing partners in Asia. Asia is responsible for the manufacture of approximately 95% of ad specialty products. The net effect impacts price and deliverability. What are the issues and how do we proactively manage them?

The Issues

Inventory Shortages – In order to survive the recession, suppliers took a leaner inventory position. Subsequently, Asian manufacturers also took a leaner position in raw materials. Take cotton for example. There is now a worldwide shortage. The difficulty in obtaining yarns is causing production delays and increased material costs.

Fewer Factories – The global recession and subsequent lack of demand has resulted in a winnowing of production facilities. This may not have been obvious within the recent climate of curtailed need, but it is becoming increasingly evident as levels return to normal that there are fewer options out there.

Increased Cost of Labor – Manufacturing in Asia is simply becoming more expensive. Human rights issues have put pressure on governments to ensure better working conditions. Workers are beginning to organize and demand better wages and benefits. Populations are aging and younger workers are looking for higher status positions creating a labor shortage.

Lack of Container Space – The recession also hit shippers hard. With vessels still in dry-dock, it will take time for them to ramp back up. Upwards of 120 days on the water (if you can get your product on a vessel) is the new norm. The industry was previously at about 70-80 days.

Chinese New Year – It happens every year. The double whammy effect of Chinese New Year shuts down and causes major headaches for suppliers and Chinese manufacturing facilities alike.  The subsequent game of production catch up can be equally daunting. We have listed the schedule below for your review. The best way to avoid issues: plan ahead.

Proactive Management

Plan Ahead! – Your best protection against these issues is to give your supplier as much time as possible to position an order for success. End to end production will take longer. Allow enough time, particularly on the shipping side, to make in hands dates. A good vendor will tell you the reality of the situation not what you want to hear.

Expect Price Increases – There is a tremendous amount of pressure on price today. Between increases in raw material, labor, and shipping costs, product cost will rise. Some of this will inevitably be passed on. A good vendor will be solution focused and help you look for options or alternatives.

Lots of Communication on Both Sides – It is very important to stay abreast of fluctuations in the process. Make sure you are receiving good communication from your vendor regarding the status of your order. With good upfront planning, quality production art the factory can work with, and the luxury of additional time, vendors and clients can navigate current industry realities.

Overseas Manufacturing Partners Respond to Economic Downturn

March 4th, 2009

The recession opens up new opportunities for direct importing of products

If you have ever thought that taking your production overseas was not possible – look again. Overseas suppliers are taking measures to ensure that they remain an attractive alternative to domestic production. In order to boost lagging sales, some manufacturers are removing obstacles or improving service in the following areas:

  • - Reduced Minimum Order Quantities (MOQ)
  • - Shortening lead times by stocking popular models, ready for imprint
  • - Speeding up new product initiatives and release dates

Reduced MOQ
The dynamic of our highly inter-dependant global economy is moving into full gear across the supply chain. Lower MOQs mean more opportunity for moving certain production overseas. The cost efficiencies are attractive (on up to 30%+ in some cases) if your vendor has import experience and knows how to manage the process.

Go with someone who has a proven, long-term tracklist and good factory partnerships. This includes attention to communications, consistancy/quality, product testing, proper documentation and logistics.

Shorter Lead Times
With a new emphasis on speed to market, some overseas suppliers are beginning stocking programs similar to thier domestic counterparts. While this will most likely never replace a good domestic quick-turn program, it may enable you to save on longer term programs where you need cost-efficiency.

New Products
In order to capitalize on the power of difference, accelerated product releases will bring new innovations to the forefront in the battle for your business. Definitely geared toward longer lead times, but what a great reason to pick up the phone and have a conversation.

So go ahead! It may be well worth your while to revisit overseas manufacturing options and take advantage of a recession upside for a change.

IMC Marketer – Promotional Products - Overseas Sourcing - Direct Import Programs -  www.imcsuccess.com