Dealing with Production Problems in China

Have you ever dealt with production problems, sub-standard goods or an unacceptable delay? Perhaps even a project that came to a full stop without warning. Follow these tips to help overcome production problems with your Chinese suppliers.

Keep a representative or local third party inspector on site in the factory. This is the only way you really know what is going on. You need someone who protects your interests on site. Mawson Global’s on the ground team will make sure our client’s needs are understood and acted on by supplier management.

Monitor progress closely. Shaking hands typically is not enough to ensure production will move along at a satisfying pace. More importantly, if you notice a factory is not moving in the right direction for even a few days, contact them immediately and try to understand why.

Complete a quality assurance check prior to any shipment. Even if you have a small order, any set back during production may have resulted in rushed production. Overall, not doing a final inspection prior to shipping will be more expensive than getting a third party to ensure that the products fit your quality guidelines.

Most of the production issues arise from selecting the wrong supply partner.  Make sure you are as important to the supplier as they are to you!  You can do this by selecting someone who is a similar size to your company, by making the time to personally visit the factory and by involving the supplier in your long term plans.

Mawson Global helps clients by developing and implementing strategies that remove the risk of sub-standard quality and that form lasting relationships with suppliers to ensure projects are completed on time at the right cost.

Tackling the Issue of Quality Fade

Quality fade is all around us, but many businesses and consumers don’t always know how to recognise this concept or know what they should call it.

Around the world, we’ve all been exposed to situations such as recalls for unsafe food products, cars with safety problems, dangerous toys, electronics and gadgets that break within days. Not to mention the buttons that fall off clothes on the first day or the zip that breaks in 48 hours after purchase.

This is ‘quality fade’, which describes a supplier systematically downgrading the quality of the products that a foreign buyer has contracted them to manufacture, in order to boost their profit margins.  Quality fade and the escalating business greed that drives it has become a significant issue for importers sourcing products from highly competitive low cost manufacturing countries, which notably include Vietnam and China.

Mawson Global experts regularly work with foreign companies who recognise they need support and assistance in establishing relationships with quality manufacturing partners in emerging and industrial countries.  Many of our clients have encountered deliberate quality fade problems in previous business dealings, with the excellence of early product runs and customer satisfaction frustratingly replaced by quality problems, customer complaints and lower sales over time. 

Sometimes quality fade issues are just annoying nuisance, but for other products such as foodstuffs or vehicles, profit-driven cuts pose a real risk to consumers’ health and safety on the other side of the world.

Unscrupulous factory owners will continue cutting quality and cost corners until confronted or exposed.  This is a common problem in China, with shrewd suppliers proffering plausible enough excuses if questioned, aware from experience that many international buyers will shrug off a small problem, believing it was simply a mistake.

We can introduce you to trusted suppliers who are serious about quality, helping you to develop a reliable long term manufacturing partnership. We provide advice on negotiations to achieve clear outcomes based on agreed specifications, structuring contracts before production starts that protect both parties; and on quality control steps which include setting up inspection procedures and standards.

We will advise you to save yourself future trouble and money by independently checking the factory before entering a working relationship.  Always work within formal contracts to avoid potential issues that often arise from more informal arrangements, which are found to be unenforceable in the manufacturer’s country. We recommend using a third party auditor regularly, or if you start to be aware of quality fade issues with a supplier.

Your contract with a manufacturer must specify that they take responsibility for product quality control, including catching defective products before they leave the factory premises and accepting liability for handling any quality problems post-sale. 

Over time, it is critical that foreign buyers maintain a close watch on product quality, to avoid the headaches of quality fade problems that increasingly impact your resources and bottom line. 

Three Steps to Avoid Recalled Products

The Scenario:

The product you imported has now been distributed all over Australia and Europe and you have found  it does not meet labelling laws and needs to be recalled – at your expense!

We’ve all seen it happen before, a product gets recalled, not because it is faulty or subpar, but because a business overlooked the importance of following all rules and regulations for labelling and packaging. The question remains, how can you ensure your new product is not recalled because you overlooked a labelling requirement in another country.

Follow these three steps to ensure your business does not have an expensive product recall.

1.       Find consultants in your country or the countries you do business in to draft the labels and help you understand all the requirements for import

2.       Use third party inspection agents to check labels prior to shipment

3.       Use a customs broker to find out what paperwork you need to import the product

Over preparing and double checking is the first step to saving time and money in the long run. You do not need to be the expert on each rule and regulation your business will face, but it is important to hire someone who is an expert.

What other precautions can you share to make sure a labelling mistake does not lead to an expensive recall?

Benefits of Global Sourcing for Small Businesses

Global Sourcing: An opportunity that delivers more than just reduced costs

Small manufacturing businesses often face challenges that lead to conflicting priorities. While at one hand there is a need to significantly lower operational costs, there is also an increasing pressure to deliver high quality products to achieve strategic advantage in the marketplace. The cost of raw materials continue to increase while companies are forced to sell the products at a low price due to growing global competition, causing the profit margins to remain all-time low. In these challenging scenarios, small and emerging businesses struggle to keep up and just stay in the game whereas their energy should be channelized to launch new strategic initiatives to be able to grow and evolve.

Global sourcing provides promising opportunities to small businesses by reducing costs, improving bottom lines while helping them achieve competitive edge through improved agility to deliver quality products faster. At Mawson Global, we understand that while achieving lower costs of operations is unarguably the most important driver to adopt global sourcing, the realized operational and strategic benefits go much beyond.  

1. Reduced operational overheads through low cost of labour and low costs of raw materials available through global sourcing
2. With supplier base not restricted to the domestic market, global sourcing offers companies the additional choices and opportunities to transact with more competitive suppliers on a world-wide level.
3. Access to new technology platforms, innovative product designs and distinctive skills not available locally. It offers an increased opportunity to innovate and improved ability to deliver superior goods, helping companies achieve high performance throughout the supply chain.
4. Small companies benefit from enhanced competitive edge through increased capacity to innovate, faster time to market and greater flexibility to respond to changing consumer demands.
5. Leverage follow-the-sun model for enhanced productivity and faster turnarounds
6. Ability to focus on strategic imperatives and core-processes, redirection of cost savings on innovation strategies.
7. Achieve much higher utilization and scalability of resources with quick ramp up/down time to meet project requirements as and when needed.

Mawson Global can help small and emerging enterprises to find a reliable, cost-effective overseas supplier. Our global sourcing services aim to drive efficiency and help small businesses to gain access to new markets. Our global sourcing initiatives are much more than the promise of reduced costs from less expensive labor. If you are small business looking to benefit from global sourcing, we can help you locate suppliers with specialized skills, low cost labor and raw materials, enabling you to focus towards creating strategic initiatives, build roadmaps to innovate better and reach new market opportunities faster.

We’re able to minimize the risks associated with global sourcing specifically because we have teams placed in the countries where the suppliers are located. In a nutshell, Mawson Global works as your extended team towards a common goal of achieving enhanced operational efficiency and deliver very tangible benefits for bottom-line impact across your supply chain. Whatever product you need, there is a reliable, more cost-effective overseas supplier out there, and we’ll find it for you.

Distributor of name brand beverages, snack foods and confections experiences enhanced savings

Organization: Distributor of name brand beverages, snack foods and confections

Looking to Source: Soda bottles

Results:

• Annual cost savings of more than $200,000.
• Rapid procurement of multiple sourcing options.
• Diverse pricing options from a variety of qualified suppliers.

The Objective

For 13 years, our client has been the state distributor for Cadbury Schweppes beverages, which includes Pepsi Cola, Gatorade, Spring Valley and Red Bull. The company also bottles its own line of specialty soda drinks.  The company contacted Mawson Global in order to improve its bottom line by discovering a reliable global sourcing partner to save on the cost of materials for soda bottles.

The Approach

After learning of Mawson Global’s proficiency in sourcing materials, our client engaged us to identify reliable global sources for its soda bottle business.

Our China-based staff researched a variety of suppliers, along with the company’s product specifications for the bottles, and we were able to recommend reliable suppliers producing the material in several China provinces.

We utilized our proven rating system to identify the top suppliers by marking efficiency levels, reliability and quality. Within a number of days, we presented the client with four soda bottle supplier options from different suppliers in China in our informative, easy-to-read Sourcing Report.

The Benefits

Significant Annual Cost Savings

Substantial Savings: As a result of Mawson Global’s global sourcing expertise, the client selected a vendor that will help it experience an annual cost savings of $200,000.

Outstanding ROI: Because Mawson Global operates on a fee-for-service model; the client only pays once for the process that now will save it significant costs for years to come.

Less Stress & More Flexibility

Multiple sourcing options: Mawson Global was able to identify a number of suppliers to fit our needs.

Future options: Because of Mawson Global’s approach, the client not only has acquired a provider for its current needs, but also has direct access to suppliers for future glass projects.

Comprehensive approach: Mawson Global not only conducted its Sourcing Project to identify the best soda bottle partner(s) for the client, but also conducted our Quicklook analysis, as well as our Research Project.

Quick Results

High Efficiency: Mawson Global sourcing experts conducted a timely and robust search for suppliers that not only could provide the required materials, but also could do so with significant cost savings.

Skilled, professional staff: Our staff in Asia has been with Mawson Global an average of six years, and they have streamlined the process of selecting trustworthy, reliable suppliers that meet our high standards for quality and customer service. This team, combined with our proven supplier ratings system, is why we were able to quickly address our client’s request for global sourcing options for its soda bottle business.

2014 Forecast for Global Sourcing

As the economy continues to rebound after the tough global recession of the last few years, many companies and markets are poised for a resurgence. For firms in manufacturing and other industries that rely on global sourcing, 2014 stands to be a growth year.

While budgets are always a top consideration, this year the focus will shift from slashing costs to investing in relationships that scale production, break open new markets and increase revenues.

Here’s a closer look at the trends we expect to drive global sourcing in 2014:

Small- and medium-sized firms grow through sourcing: Global sourcing is synonymous with big business. Retail giants drive up profits by sourcing components and products cheaply around the globe thanks to complex value chain management. Increasingly, small- and medium-sized firms are taking advantage of global sourcing by partnering with qualified sourcing companies. As a result, they’re able to access production capacity, cheaper components and affordable global talent. Small businesses can then reinvest those savings into growing their companies and better serving their customers. 

Integrating global marketing with global sourcing: Another trend that’s on the rise is the increasing integration of global marketing services for companies doing business abroad. From building relationships with a country’s leading suppliers to paving the way to do business in a new market, global marketing provides international businesses with an insider perspective on foreign markets. Global marketing services provide businesses with insights into distribution channels, on-the-ground representation and help identifying the best partners to meet top business goals.

Technology plays a bigger role in delivery: Several technologies are changing the service model in the global sourcing field. Big data is giving better insights into the savings and efficiencies that sourcing creates for specific businesses, and making it easier to pinpoint bottlenecks that need to be addressed in the production process. Cloud-based technologies and mobile devices are making it easier to stay connected with suppliers 24/7, and creating global communications infrastructures that are fully integrated to streamline communications and data sharing. Finally, there’s an increasing focus on enhancing global security across partners and along the value chain to better protect valuable client information, financial data and trade secrets.

2014 promises to be an exciting year for companies that are ready to grow through investing in technology, integrating marketing with global sourcing and making global sourcing accessible to companies of all sizes. If you’re ready to leverage global outsourcing to grow your business in 2014, contact Mawson Global today for assistance with your global sourcing, marketing and commerce solutions.