Global Supply Chain Sourcing Manager Blog

Optimizing Your Supply Chain, Are you prepared for the Unexpected?

One of the question that is most often asked at our internal meetings here at DirecSource is  - What If?”

That would be – What if we learned that one of the factories we work with went bankrupt and all of our clients money and product line were tied up in that factory? What if it was discovered that the factory were using underage children or forcing worker to work extended hours. What if you learned that substandard raw materials were being used in your product line?

These are questions that we find many brands are not prepared to ask and they are the types of questions that we ask ourselves every day. With that said, we enjoyed the recent story by T. Nguyen on Source Consulting “The Importance of Optimizing Your Supply Chain with Risk Management”

Here is an excerpt:

What is risk management?  It is the process of looking at potential sources 

of disruption to your supply chain that can create financial and physical damage.  The next step would involve the business and supply chain leaders evaluating the assessment and fix the weaker points and preemptively doing their best to prevent the risk from happening in the future.  It may be impossible to prepare for every single disruption, but this practice allows for contingency plans and preparation for worst case scenarios.  However, as common sense as th

e method may seem, many businesses still have not adopted these practices and optimize their supply chains.

We couldn’t agree more. If you’d like a free supply chain check up to learn if you have a health supply chain click hereand one of our supply chain experts will be in touch shortly.

DirecSource Launches Third Episode In Supply Chain Educational Series

 

ANNISTON, AL—April 30, 2012—DirecSource, a leader in global sourcing and manufacturing, has released the third episode in its Supply Chain Educational Series.

The DirecSource Educational Series is a free online newsletter offering tips on some of the most important planning aspects of manufacturing and sourcing.

Manufacturing Quality Products

DirecSource’s network of factories are pre-screened and certified. By tapping into our network of credible facorties, you can avoid quality control issues down the road. With our 20 years ofmanufacturing experience in Asia we can spot a bad factory and avoid factories with a history of quality control issues.

Check out the article “How to Conduct Quality Control with Chinese Manufaturers” by Anthony Goh and Matthew Sullivan from Business Insider. Here are some steps that Goh and Sullivan recommend to ensure quality control while working with manufactureres in China:

Visit the Factory in Person

Visiting the manufacturing site of the Chinese company you wish to source from is an essential first step of quality control in China. Do not simply rely on information provided over the internet or on trade websites. Additionally, if you do make a trip to China to visit the company, do not only visit the company’s corporate offices but also their factory. Seeing the factory will enable you to ensure that the company is a legitimate business entity and makes products according to your company’s standards.

If your company cannot send its own representative to visit the manufacturing site it should hire a professional and credible service provider to visit the factory on your behalf. The person who inspects the factory should have technical knowledge of the product and its manufacturing process. 

Check the Company 's Background

In addition to visiting the factory, your company should also request from the manufacturer references and case studies of its work with other foreign companies. By checking with its previous clients you can learn more about the quality of the company’s manufacturing process and if it is a company which will meet your company’s quality standards. 

Communicate Standards

If your company has determined that the manufacturer has high quality standards, it is also important to be clear with them about your company’s specific standards. As part of this process your company should develop and maintain a good relationship with the manufacturer. This relationship will make it easier for your companies to understand each other’s business culture and to resolve problems in case they arise. By building a relationship your company can feel comfortable doing business with the manufacturer and they can clearly understand your company’s standards.

Monitor the Manufacturing Process

Your company should have a staff member or qualified representative monitor the manufacturing process in person to ensure quality, especially if it is your first time working with the company. Even if you have taken the steps described above to ensure that company can meet and understand your company’s standards, you should operate on the principle of “trust, but verify” and have someone on the ground to confirm that these standards are met. In addition, by having someone on site your company will be able to resolve any problems that may arise during the manufacturing process more efficiently than if you do not.

 

Avoid the stress and uncertainty of working with a factory on your own. DirecSource can help you connect with the right factory for your brand, and ensures you produce safe and good quality products through the entire manufacturing process.

View the full article here.

Read more about DirecSource quality control services.

The Difficulties of Controlling your Supply Chain Remotely

Having a global supply chain comes with a range of benefits as well as difficulties. Companies who outsource manufacturing are often leaving their products to be made blindly overseas. With DirecSource, we have employees on the ground in the factory to ensure your products are being handled on time and in the most efficient way.

Check out the article “What Can We Learn From Supply Chain Management Mistakes?” by Ray Karaffa to learn some challenges in Supply Chain management that occur without a representative on site:

Supply chain people are expert in global management of the product manufacturing movement and less inclined to factor cost. Speed is of the essence. Finance people approach from a balance sheet perspective.

There are difficulties of trying to run a production line remotely, in a different time zone and off your ERP system where visibility is non-existent. In the United States, the informal system of shortage meetings and hot lists are the actual way things get shipped anywhere close to on time. A lot of companies are finding it next to impossible to run a world-wide shortage meeting to get the job done.

DirecSource is an American company with employees stationed on the ground in China. Allow us to tap into our network of factories and employees abroad so you can avoid the difficulties that come from managing your supply chain and production line remotely.  

Want to learn more about manufacturing in China? Sign up for our free Global Sourcing Educational Series. 

Read Karaffa's entire article here.

The Advantages of Manufacturing In China

 

Trying to decide if manufacturing in China is best for your products? Many factors have made China the world leader in manufacturing. High quality and low cost are always important, but check out this artcile from the Economist about some less obvious "enduring strengths" of Coastal China:

First, it is close to the booming Chinese domestic market. This is a huge advantage. No other country has so many newly pecunious consumers clamouring for stuff.

Second, Chinese wages may be rising fast, but so is Chinese productivity. The precise numbers are disputed, but the trend is not. Chinese workers are paid more because they are producing more.

Third, China is huge. Its labour pool is large and flexible enough to accommodate seasonal industries that make Christmas lights or toys, says Ivo Naumann of AlixPartners. In response to sudden demand, a Chinese factory making iPhones was able to rouse 8,000 workers from their dormitory and put them on the assembly line at midnight, according to the New York Times. Not the next day. Midnight. Nowhere else are such feats feasible.

Fourth, China’s supply chain is sophisticated and supple. Professor Zheng Yusheng of the Cheung Kong Graduate School of Business argues that the right way to measure manufacturing competitiveness is not by comparing labour costs alone, but by comparing entire supply chains. Even if labour costs are a quarter of those in China to make a given product, the unreliability or unavailability of many components may make it uneconomic to make things elsewhere.

China's abundence of workers provides not only higher productivity but security as well. Tap into DirecSource's 20 years of experiance manufacturing in China and our network of hundreds of factories and you'll be on track to a successful global supply chain. 

To read the entire article visit the Economist. 

What's Your Supply Chain Risk Exposure?

It's something that every company should be thinking about - knowing in advance how your company or brand would survive in the event that something unforseen happens in the supply chain process. At DirecSource its something we think about all the time and its why companies choose to bring on partners like DirecSource, knowing someone is watching their entire supply chain throughout the product manufacturing process.

To that end, we really enjoyed Dan Gilmore’s recent piece in Supply Chain Digest: Supply Chain: Risky Business? 

Speaking in regards to a recent speech by Dr. David Simchi-Levi of MIT, Gilmore raises the topic of how do companies actually quantify their supply chain risk?

In his story, Gilmore notes:

Most companies seem to be stuck on simply categorizing risk along two dimensions, such as probability of occurrence and the size of impact were a particular disruption to occur. Because that's the best we have had. This approach has at least two issues: (1) there was no quantification of the impact, so how much a company might invest to mitigate a given risk remained something of a guessing game; (2) it almost by definition looks at risk as independent individual events, and does not really consider the issue from a full supply chain context.

Enter the new Risk Exposure Index. A key concept here is what Simchi-Levi calls Time to Recovery, or TTR. This refers to how long it would take a company to fully recover from a major disruption, such as by ramping up production elsewhere, finding new sources of supply, changing out materials, or other means. That in turn leads to calculation of the Financial Impact (FI) of the disruption through its TTR.

Another key concept is "unknown unknown" risks, which is really what the Risk Exposure Index is designed to address. Risks like demand fluctuations and lead time variability present risk, Simchi-Levis says, but can be modeled and therefore well addressed. But the unpredictable risks are a much tougher game.

We tend to think of unknown unknown risks in terms of natural disasters, especially after the Japan earthquake/tsunami and Thailand floods in 2011. But it includes a lot of other utterly unpredictable sources of disruptions as well, such as a fire at a factory or the political uprisings in the Middle East last year.

In his story, Gilmore also talks about the importance of forecasting.

The core message is this: far too many companies are giving up too much responsibility and control to first tier suppliers, to their peril. It is important, said Choi, that companies not "lose control of their bill of materials," and maintain high levels of visibility and often direct control of second and third tier suppliers. Apple, of course, seems to be a prime and successful example of doing just this, renowned for maintaining strong control over most of its suppliers at each level, but Choi and Linton (who not long ago left a similar position at LG Electronics for Flextronics and is clearly a deep thinker about such issues) say the trend seems to be for many companies to just outsource the management of the lower tiers to the tier 1 suppliers, and then rigorously manage those tier ones. There are all kinds of benefits for maintaining that multi-level control, they said, especially around reducing risk that in the end also means reducing costs. Linton also noted when at LG, by starting to break through the tier 1 paradigm and working more directly with tier 2 chip manufacturers, LG was able to get a much better and more accurate read in 2009 on where the economy and electronics markets were headed - and made investments and plans for the quick recovery which did in fact materialize when many others were frozen, worried a true depression was coming.

To read Gilmore's full story click here.

China Sourcing Risk Management Starts with Choosing the Right Factory

Your new product designs are complete and now its time to decide on a factory. 

If you’re an established brand you probably have a factory you’ve worked with and your natural inclination is to initiate your new project with them. 

Maybe you’re working on a project line extension - you’re company makes shoes and now you’re getting into the bag business - or possibly getting into a new market for the first time.

Whichever situation best describes you – you’re about to make the most important decision in the success or failure of your new project. READ MORE

The Importance of Manufacturing Adaptability

The ability to adapt with new technology, ideas and supply chain changes can make or break a brand. Paul Tates article “Manufactruing Leadership: Will Adaptability Rule the Future?” poses the question “Are today’s manufacturing leaders as adaptable as their factories and supply chains?”

At DirecSource—that’s what we do! We audit our factories regularly to ensure that our clients are producing the best product possible, while saving them time and money. Our relationship with over 500 factories in China gives us the adaptability we need to provide the best service for our customers.  

Check out an excerpt from Tate's article from Manufacturing-Executive.com to learn the increasingly importance of adaptability in manufacturing:

“Many of the world’s leading manufacturers have worked hard over the past decade to create more flexible production platforms and make their supply chains more resilient and responsive to change.

There’s been little option. Companies have faced rapid and unprecedented shifts in market demand, global competition, supply chain dynamics, and the impact of disruptive new technologies. These challenges have demanded swift and increasingly flexible responses. 

And it’s not going to get any easier in the future. Shortages of skilled workers and the expectations of a new generation of tech-savvy employees are putting increasing pressure on companies to adapt to a new set of rules in the 21st-century manufacturing world.

So, are today’s senior manufacturing executives now ready to embrace adaptability in the way they lead their organizations – just as they’ve done at an operational level for their production and supply networks?

Adaptive leadership goes far beyond operational issues. It encompasses broader but increasingly essential leadership qualities for building an open and flexible vision of the future; the personal skills to inspire people to think differently about problems and obstacles; and the professional ambition to drive extensive cultural change across borders, functions, and generations.

There is no “business as usual” anymore. That’s the last refuge of the unenlightened and the uninformed. The manufacturing world, and the manufacturing world’s customers, have moved on. The question is, can your company move along with them?”

To read the full article click here.

Too Many Losing Sleep Over Their Supply Chain

That’s the title of a recent story that ran in Material Handling & Logisitcs by Tom Andel which caught our eye. Far too many of the customers that come to DirecSource admit they’ve lost control of their supply chain. From raw material sourcing to manufacturing to shipping and logisitics there are so many moving parts that companies now must keep track of to ensure they stay on-time and on-budget.

At DirecSource – managing the supply chain for our branded partners is our business and we couldn’t agree more with what Andel says:

If there were a company listed on the New York Stock Exchange called “Your Supply Chain,” your broker would probably urge you to stay away from it. Too risky. And many corporate executives across the country agree—their supply chains are risky. According to a survey by McKinsey & Co. of more than 600 C-level executives across a range of industries worldwide, more than two thirds of respondents said that supply-chain risk had increased over the last three years, and they expected it to continue increasing over the n

ext five years—especially in the following areas: 

• Global competition



• Complex patterns of customer demand



• Financial volatility



• Global markets for labor and talent



• Exposure to differing regulatory requirements



• Environmental concerns 

DirecSource Helps Brands Move From Product Concept to Completion

No matter how great your invention or product development is –there are critical decisions you’ll make that will directly relate to the success or failure of your great idea.

Choosing the right manufacturing partner is the first of a series of critical decisions you’re going to make to bridge the gap between product concept to product completion.

With that in mind, we enjoyed Karen Klein’s story “Find A Manufacturer for Your Invention” in Bloomberg Businessweek.

Determine how your product will help its target market and whether distributors will carry it. Then explore online for potential investors.

DirecSource works with a range of companies spanning from medical device companies to brands that make product for mothers and infants as well as brands in the outdoor, fitness and lifestyle markets. In each case, critical decisions are made relating to the type of factory we place those brands in. Providing complete project oversight we take the responsibility to ensuring that the plant’s we choose have the manufacturing capabilities to ensure that the vision of the product developer or the inventor is delivered with the final product.

Here is Klein’s story:

Last year, my invention for people with troubled feet was patented as an alternative to foot surgery. I would like to have a manufacturer reproduce about 100 pairs of my prototype so I can test the market and see how well it does. Where can I find a U.S. manufacturer to do this? —P.J., New York, N.Y.

Many inventors have great ideas, but like you, they need help taking steps toward commercialization, production, and distribution. Particularly with a medical or health product, there’s quite a hurdle to get from invention to market, especially when you may have to compete with the huge research and development budgets of such household name brands as Medtronic (MDT) or Nike (NKE) to do so.

Your first challenge is to successfully answer three questions, says Bill Donohue, vice president of Genedge Alliance, a Virginia-based affiliate of the Manufacturing Extension Partnership, which operates as part of the U.S. Commerce Dept.

You have to let your potential customers know: what exact problem your invention solves; what about it will entice distributors to carry it and customers to buy it; and finally, why they should believe you and the promise you’re making.

“Answering those questions is not easy at times” for entrepreneurs, Donohue says. For instance, in order to prove your product is a viable alternative to surgery, you’ll need to have an independent organization—preferably academic-oriented—run third-party clinical trials. The trials would compare results from your device with the surgical procedures it is designed to replace.

Those trials can take years to conduct properly and will likely be expensive. “There may be a need to evaluate alternative materials of construction and design characteristics to come up with the right combination of comfort, durability, and affordability. This may require specialized knowledge in orthopedic mechanics, as well as engineering design,” Donohue says. It’s likely that you may find yourself partnering with established companies in this industry or seeking funds from outside investors such as venture capital firms, he says, to get your product launched.

Since you’ve got a patent, start by visiting MEP’s marketplace hub, where you can evaluate thousands of prospective manufacturing partners. You can get questions answered and find low-cost coaching help to develop a commercialization plan for your product through the Industrial Technology Assistance Center of New York City, or the New York state MEP affiliate in Albany.

You might also consider attending the upcoming MEP conference in May, in Orlando, Fla. While such gatherings can be expensive, entrepreneurs often find that in-person exposure to ideas, processes, experts, and potential collaborators can speed them along through the learning curve tremendously. Good luck!

With over 25 years experience contract manufacturing in China and well over 500 factories in our supplier and manufactuer network, we’ve specialized in providing complete solutions to companies of all sizes who are looking to craft the best products in a range of industries spanning from toys to medical devices as well as fitness, outdoor and lifestyle products.