Sourcing
The "Novice Buyer" Dilemma in China
July 8, 2008 – My friend who philosophizes that supply chain dysfunction in China is due in equal parts to novice Western buyers and Chinese factories, hammered home another “novice buyer” theme today. My friend has long been bemused by his observation that newbie Westerners do not want to buy from other Westerners in China. Instead, these buyers seem to think that they will get better prices and fulfillment if they cut out the Westerner and deal directly with the Chinese factory.
I have heard the stories and know enough about the climate here to issue the following advice: Do not disqualify a supplier merely because it is Western-owned or managed. In general, the Westerner in China will understand your expectations and service requirements much better than will the average Chinese factory (this means you’re less likely to have to do a second run to correct problems from the first run). Sometimes, they will get you a better price too (because as a newbie Westerner in China, you have a large target on your back!).
Why the Global Supply Chain is Dysfunctional
July 7, 2008 – A friend of mine had a profound realization today regarding sourcing in China and quality control. He has a company that produces prefabricated housing, and sources construction materials. Today, he was meeting with some potential clients with whom he had been in discussions for over one year. As he was going over the various items in the production process, he realized that his potential clients had no idea what he was talking about. This surprised him because the potential order size was large, and they had been working on this for quite some time.
Reflecting upon the meeting later, he had an epiphany. The internet has enabled an enormous amount of novice buyers to connect with Chinese suppliers (particularly through sites such as Alibaba and Global Sources). Many novice buyers do not become sufficiently educated before placing orders. This has two negative effects. First, capable Chinese factories may seek to take advantage of uneducated novices by producing substandard products. Second, the large amount of novice money flying around China has encouraged the birth of numerous incompetent suppliers.
As my friend put it, “The combination of novice buyers and subpar suppliers in China has in turn led to a dysfunctional global supply chain” that has recently manifested itself with the various well-publicized recalls. In other words, Western buyers are just as much at fault for sourcing poor quality control as are Chinese factories.
Sourcing Black Friday
July 4, 2008 – Today was “Black Friday” for us. We were expecting deliveries from six different suppliers for an event we are doing tomorrow. All six deliveries had issues. One delivery (from the States actually) did not come because although I FedEx’ed it, customs is holding it for inspection. Another delivery will apparently arrive at my apartment tomorrow morning between 3 am and 5 am. That will be fun. The root of the problem is that we requested most of our suppliers to rush the jobs. However, in one case, we ordered multiple samples from a single supplier that were incorrect. Their inability to match colors left limited time for the supplier to get the approved sample into production. It turns out that they are using a Pantone color book from 1998.
