As globalization continues to evolve the economies of emerging nations, new competitors are being introduced to production supply chains. In the recent past, a firm might have manufactured goods in China for U.S. consumers, but now the search for low-cost fabrication and assembly might have you manufacturing merchandise in Vietnam for eager high-paying customers in China.
With the pool of producers growing rapidly, the quest for cost control coupled with high quality and reliability has never been more important.
Here are tips to make the journey easier:
Use highly detailed specifications
When dealing with a new production partner offshore, give exacting detail in your specifications. Take nothing for granted, not only laying out the expected product requirements but also giving a full explanation of process and method of assembly.
If your product must conform to a government standard, be sure these are expertly translated and explained. If your specifications aren’t meticulous, expect shortcuts to be taken.
Over communicate
Often, problems can be solved only if you catch them early, but offshore production partners may be reluctant to share the challenges they face.
Part of this is cultural, as many are hesitant to disclose difficulties that show weakness. They also may have a sincere belief that they can eventually solve these challenges and “catch up” later.
Regular calls, videoconferences and visits build trust and allow you to find out about these issues before they become a crisis. Further, develop regular milestones to ensure that orderly progress is accomplished.
Expect delays
Build contingency time into your schedule, as offshore producers need a lot of time to develop the confidence to deliver on a just-in-time basis. Also, remember that many times a delay isn’t your production team’s fault. Things such as unanticipated delays in clearing customs in the country of origin can add weeks to delivery schedules.
Take into account time zones as well. An email about a specification issue from a U.S. producer might be asked and answered in the same business day, but offshore production almost always has a built-in delay of a day due to time zones. Those day-by-day delays add up.
Contractors need to earn a profit
While most people know that Chinese wages and costs have risen significantly over the past 15 years, many still think other emerging economies are manufacturing at extremely low levels of compensation. This belief can cause buyers to drive hard deals that producers may agree to, assuming they’ll recover costs later via high charges for changes once you’re fully committed.
You want to be one of the best customers — the customer these producers work hard to satisfy. If your deal makes you one of their worst customers, you can expect the lowest level of responsiveness and quality.
There are still great bargains to be had with global production but, as always, you have to work hard if you want both a good deal and great quality.
