Jul 30, 2020
When Sourcing from Asia - Being Local will save Time and Money!
How to save 50 to 75% on salaries and up to 15% on shipping? Would delivering new products, weeks, or months earlier to your markets, increase revenues? Would you save money by virtually eliminating incoming QC when receiving shipments? Many more benefits are not only possible but necessary, especially in the current economic climate, to successfully compete and win! In 2012, my first day of work was flying to Ningbo, China to set-up a local office. In early 2014, to establish an option to China, given some of the challenges even then, we started dual sourcing and set up in Hanoi, Vietnam. No Great Firewall was just one big benefit. It was a small company, but the competitive advantages gained with a local presence, were significant and understood.
How can having a local presence minimize your organisation'a time and costs?
Being local allowed us to visit factories as soon as the need arose, no delays, no international trip to plan, or scheduling a video conference at a convenient time. Most factories were less than 1 hour away. Doing “in process” quality control allowed us to become part of the team, there to help the factory achieve our shared goals, shipping quality product, on time and in full. Understanding the challenges in manufacturing and addressing them together saves time and money. Lower costs are not only for factory staff. Experienced colleagues with bachelor’s or master’s degrees in business, engineering etc. are a fraction of the home country cost, saving 50 – 75% or more. Almost everything from internet access to office space costs less in low cost countries. My phone plan was $3 per month in Vietnam!
How did having a local presence transform our operations?
- As remote work has taught us recently, we do not all have to be in the same location to make progress.
- Video conferencing with remote team members can drive success and contribute significant time and cost savings.
- Data and software are easily shared globally in real time.
- By cross training functions and having a shared system, data entry and analysis can be done globally, vacations and holidays can be covered remotely, keeping data updated and accurate, further reducing costs.
Improving the product development process.
- Visiting and checking samples are accurate, assembled properly and testing them to required standards, before they are airfreighted can save weeks or even months.
- Working with the factory to understand the challenges in production and assembly, and clearly communicating them to the product development team saves time and cost.
- More frequent factory visits will lead to working with the factory to improve processes. Identifying the rate limiting steps and the most challenging issues, discussing solution options, and working to improve them, can help achieve annual cost savings.
Reduce costs and delays with freight and logistics.
Contract with full-service freight forwarders, serving the factory locations, as they are local, their costs are also lower, and the savings are passed on, expect to save 10 to 15% or more. You also eliminate the need to wait for overseas approvals from the home country freight forwarder. When goods arrive at the destination port, you have the option of your preferred broker and freight company, simply make the introduction, or delivered to the warehouse terms (DDU / DDP).
Setting up is less expensive than you think.
Many smaller and medium sized business buy internationally but do not take full advantage of all the opportunities to reduce expenses and save time. A local presence in many cities in Asia no longer means expensive homes in cities like Hong Kong or Shanghai. With the changes in Hong Kong and China, it is important to investigate your supply chain, have options to ensure supply and maximize cost and time savings. Consider being local – it will make you more competitive, faster, and more profitable! A properly matrixed organization can take full advantage of the benefits noted above and more. Many projects and processes can effectively be progressed by two shifts a day instead of one! Also, you will be where you need to be - when you need to be!
If you want to find out more download the full whitepaper below.
About the author: Having spent over 20 years in purchasing, sourcing and supply chain in Asia, Europe/UK and the USA, Mark Almond has an in depth understanding of the challenges facing companies’ supply-side economics. Business is constantly getting more competitive, constant improvement and efficient issue resolution are keys to a world class supply chain.