Excerpt from: China Supply Chain and Logistics Strategy
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| September 19, 2005 | | China Sourcing Trends Reiterated at Recent China Sourcing Conference in Shanghai | I recently attended a China sourcing conference in Shanghai. Attendees were mainly US and European businesses and the speakers consisted of industry professionals with a wealth of experience in China sourcing. The key issues discussed helped remind us all that sourcing in China is more than just getting the lowest price. In fact, China may not always be the lowest price producer. Value consists in a balance among several key drivers which help to push the entire supply chain to the next level. Rather than maintaining a myopic focus on a single driver like price, organizations with a China supply chain should work at understanding and building their strengths in the following areas:
Supplier Development – Focus on the long term development of your supplier base since efficient supply chains benefit the final customers. In order to do this effectively you need people on the ground in China who speak the same business language and who have the entire long term supply chain in perspective. You need to show the factories that it is in their best long term interest to work with you. This can only be done properly with a good strategy and the right people on the ground to implement it.
The Battle is Between Supply Chains – Don’t be narrowly focused only on price. Strategic sourcing entails understanding what you want before you start the search. What good is it to work with a low cost supplier if they have unreliable delivery? Various supply chain scenarios must be evaluated and this will mean weighing tradeoffs between sourcing, inventory, and logistics.
HR Issues – Human resources issues continue to be one of the biggest challenges to companies with sourcing operations in China. The Chinese job market is very hot and the battle for local talent is intense. Also, the pool of supply chain management professionals consists mostly of young and relatively inexperienced people. In addition, employees are not loyal and companies must find ways to motivate their local talent to stay on board.
One of the most important factors local employees consider is whether or not the employer provides them with a clear picture of their future. If the employee can’t see how working for you will help them advance their careers they will most likely jump ship. Companies in China are coming up with unique strategies for tacking these challenges, including leadership development headed by sourcing departments, rather than the HR department. | | |
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