Do not always focus on Lead Time when you source in China

I visited a small company yesterday and the president of the company asked me at one point how to shorten lead times from China. It was a good question though I am not sure lead time should be of the utmost concern to him since his company sells high end audio equipment probably ordered in low QTYs. I told him I thought the best way to cut lead times was to make sure you were organized, to keep mistakes in design to a minimum and to make sure you maintained good communication with your vendor so that delivery dates were adhered to or the customer was notified immediately when they changed. In other words, the goal should not be to cut lead time but to get the product delivered when you need it. The more I thought about this answer the more I liked it, for over the years I have seen more mistakes happen when people tried to rush orders, thinking about reducing lead time, the end result being that product shipped late and the lead time was in fact lengthened, not shortened.

This is not to say that lead time should never be a concern for importers. For some high-volume, short life-cycle consumer goods, or seasonal goods, lead time is very important because if you don’t ship product ASAP you risk losing market share to your competitor. With orders of this nature the discussions with the vendor are always centered on cutting production time and getting product out of China as quickly as possible. But once again there has to be a point where you need to accept the fact that vendors have limitations as well in terms of what they can do and how fast they can do it. If you fail to recognize a vendors limitations then you risk having them make mistakes in production that will result in a slower delivery time as they have to repair or redo defective units.

In the end if you are focused on cutting lead times it is probably better to look at the shipping end than the production end. There are “fast boats” and “slow boats” and you can cut your shipping time by as much as 2 weeks if you pick the right carrier. If you have a good shipping agent you still should be able to cut significant lead time off your delivery. But then again you will pay more for this service and that adds more unit cost to your product. You simply have to ask yourself if it is worth it.

In the end, I always tell people to live by these rules if they want to get their product out of China quickly.

1.) Know when you need your order and communicate this clearly to the vendor,
2.) Give your vendor the order early and work with their production schedule, not yours.
3.) Make sure your design is finished. Nothing slows down orders more than changes in design.
4.) Follow up 2-3 times a week when an order is in production.
5.) Do not assume anything.

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China, alibaba and the spirit of Jack Ma

All the news this week is about the alibaba IPO and Jack Ma. Jack Ma is the kind of person I met often when I first lived in China in the early 1990s, someone who saw China’s future not as an isolated nation at odds with the West but as a global power whose large, skilled workforce would give it a huge advantage over other countries where manufacturing had traditionally taken place. But Ma understood clearly that he needed to master English if he wanted to take advantage of the vast opportunities that Deng Xiao Ping’s reforms had presented to him and to others. And that is what he did. Largely self-taught Ma would make special trips to hotels in Hangzhou to practice his English with foreigners while he was a student in Hangzhou. He eventually learned English well enough that he became a teacher and opened his own school, a hint of the entrepreneurial spirit that lay within

When I read about how Jack Ma learned English in China 40 years ago I think back to my own experience in Shanghai 25 years ago when complete strangers would go out of their way to speak English with me. I remember vividly one time sitting by myself at a KFC on a Sunday evening poking at my mashed potatoes as a kid of about 10 came up to me and started to speak to me in almost flawless English. His English was so good I did not mind the intrusion. I knew I was in the presence of a child prodigy and I found it fascinating. After talking to him for five minutes his father came over and explained to me how he would bring his son to KFC every Sunday from the countryside so he could practice his English, a journey that must have taken 3-4 hours. It was irritating as heck when people came up to you and just started talking to you out of the blue. But at the same time you had to admire it. And if you want to understand how China has come so far in the past 30 years, from one of the poorest countries in the world to one of the richest, look no further than the spirit of Jack Ma.

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Sourcing and Cultural Intelligence

There was an article in one of the China English language papers the other day about the challenges Chinese companies face when they do business in America. Many Chinese companies are doing well here in the US but about 40% of companies are losing money. One of the main reasons cited for the failure of these companies is the lack of “cultural intelligence.” Cultural intelligence may be defined as one’s ability to understand the culture they are living or working in. Because they increasingly see the importance of cultural intelligence, more Chinese companies are trying to hire locals when they do business abroad as opposed to bringing staff over from China.

Cultural intelligence is also a trait you need when you source in China. A case in point is the concept of saving face, a concept which is best understood as maintaining ones dignity. You really need to understand the concept of face when you do business in China, or other countries in Asia for that matter. But understanding this concept is not easy when you come from a country, like the US or Canada, where admitting mistakes openly is considered a virtue. In China, on the other hand, people are not wont to admit mistakes because it is embarrassing to do so. When you are doing an order in China and mistakes happen your vendor will most likely not tell you about them because they do not want to lose face. It is up to you to discover those mistakes with constant supervision and/or to affect such a relationship with your vendor that they will gradually come to be candid about their mistakes and work with you. If you don’t understand all this when you source in China, in other words if you do not possess this kind of cultural intelligence, you will almost certainly face problems at production and delivery time. What then can you do? Well, always make sure you have someone on your team who has some advanced understanding of the country where you are sourcing your product. Ideally you want someone who has lived there and speaks some of the language. This will significantly reduce your risks when you source overseas.

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Look to your vendors for packaging solutions

I was on a skype call the other day with a client. He was showing me his new packaging which is night and day from his old packaging. The new packaging completely changes the product and elicits a very real response from the consumer, And this is not just my feedback but the feedback of everyone he has showed the product to, including his own retail customers. I don’t think it would be an exaggeration to say that his new packaging may very well result in more sales than what is inside the packaging.

My customer calls it “creative packaging” which is simply what the company he sources it from calls it. But it is that and more. In fact, packaging can do so much to enhance your product that it is worth exploring your options. Even if you have a package that you are satisfied with, you might end up finding packaging that is so much more efficient and attractive than what you are using now. Ask your vendors if they have suggestions for your packaging because they very well might. I saw so much innovative product packaging in Japan where I lived for the last four years – much more so than in the US – that I would not be surprised if some of the same innovative packaging had found its way to China. I would add that I have worked closely with vendors in China over the years on packaging and they are very resourceful. In short, don’t neglect your packaging. Sometimes what is on the outside will sell your product better than what is on the inside.

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