The risks of sourcing in Asia vis a vis sourcing in your own country

There was a discussion on Linked In the other day about the risk of sourcing in Asia vis a vis the US. The opinion of the person who initiated the discussion was that for US companies at least it is far less risky to source in the US than in Asia. I totally agree with this and I always encourage people who come to me about sourcing in Asia to make sure there are no alternatives at home first, at least for some component parts or packaging.

I did take issue with one thing that someone said, namely that the only advantage to sourcing in the US is that there is no language barrier. In fact, there are more advantages than that and below was my response:

In some ways it really depends on your industry and what your product is but I think there is often a huge disconnect on assumptions about quality and management when manufacturing overseas. A lot of vendors, for example in the handicraft industry, do not understand the exacting QC standards of their overseas customers. You can spell everything out for them and train them over and over but sometimes they just cannot understand why that little speck of paint or that loose thread is not acceptable. Or the vendor might understand but some of his workers might not. This is not done out of negligence but simply results when foreign workers are not exposed to the sophisticated markets they are sometimes asked to make product for. This then is why it is so necessary to have a presence overseas if you are manufacturing there, especially when you have design driven products.. And this is why I advise companies I work with that they must spend time with their vendors. As I put it to them, the 10,000 people in rural China who are making the product that you will deliver to Williams Sonoma have never been in a Williams Sonoma store. This is the challenge. But as I said, I think it depends on your industry and product.

I would add as well that management style differs from country to country and often it is not the language of communication that is the issue but it is the very essence of the communication itself. In some countries when vendors meet with a problem they try to solve the problem on their own rather than communicate to the customer that there is a problem in the first place. They do not want to lose face. In the US when there is a problem, the customer most likely will be consulted immediately and vendors will not be allowed to choose their own solutions. “

Another person pointed out, and rightly so, that there are often a lot of costs associated with overseas sourcing if not done correctly. My response:

Regarding costs, I agree with you 100% on this. I always tell people that “there is a cost to low cost.” and they should know this before they get involved with overseas vendors. If they are prepared to invest all they need to in order to reduce the risk of sourcing overseas, by all means go for it. There are tremendous advantages to overseas sourcing, if done right. If they are not prepared to do this then in the end they may find that manufacturing overseas cost them far more than they had anticipated.



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