China Sourcing in 2008
How has the Prediction Faired?
It’s Not Just About Cost and It is Not Just China
Making the Most of Your Shorter Supply Chain
Having a local, vertically integrated supply chain does give you control and eliminate some of the risks of extended international supply chains. Sadly, we see manufacturers who have made this transition who still have order lead times measured in months as well as mountains of inventory. Therefore, redesigning your supply chain is not as simple as just purchasing some machinery and hiring people. Take the time to develop a value stream map of your end to end supply chain from your suppliers to your final customer.
Consider both product and information flows. Calculate total costs through the supply chain such as those considered in Table 1 above. Applying Lean thinking will help you design a supply chain with considerably shorter lead times. This has many benefits, reducing inventory, reducing the risk of obsolescence and providing you the opportunity to respond faster to your market with a greater range of products more customized to your client’s needs.
Will China Sourcing Disappear?
In a word, no. China’s competitive advantages are built on more than cheap labor. China’s development has more in common with Japan than developing countries in South and Southeast Asia. It has been accompanied with a huge investment in high-quality infrastructure and an excellent education system. China has become the dominant manufacturer in a number of key sectors including electronics, toys and consumer goods.
However, the days of simply outsourcing your product or your key inputs to a Chinese or Asian supplier to save a dollar are coming to an end. Wise businesses will be already planning for a more localized supply chain.