Since I suck at blogging on a regular basis, you should really read Dan Smith at China Law Blogand Renaud Anjoran at Quality Inspection Tips. It’s not that I don’t see two dozen things each day I want to blog about – I have hundreds of articles archived that I fully intend to blog on someday, probably after each is three years out of date – but I just run out of time each day.
Well today Dan had something that really struck a chord with me. In his post, “Moving On Out To China’s West Side. Why Things Go Slowly.“, he writes:
…we were hit with a flurry of companies looking to move out from places like Suzhou and Shenzhen and Dongguan to places like Yantai, Jinxue and Datong. Two of these have already begun the process. Note though that I intentionally used the ambiguous term “move out from” as opposed to “leave” because in none of the cases is the company going to shut down any operations. At least not yet. Their plans are to open ancillary facilities elsewhere, see how those go, and then, based on that, decide what to do with their existing facility or facilities.
China supply chain management 101
This is priceless advice. In years past it was not uncommon for me to have clients shut down existing domestic supply chains before the Chinese supply chain was properly up-and-running; in some ridiculous cases, before the Chinese suppliers were even really identified.
DO NOT DO THIS.
If you are ever thinking of establishing a new supply chain, regardless of where it is, get it established and running in parallel with your current system. And then run it in parallel for a couple of years, slowly changing the ratio so that the majority of your product comes from the lower cost source. Then once all the bugs are worked out and you are absolutely convinced you are ready to shut down the old in favor of the new, run them in parallel for another year just to be safe.
PassageMaker can help you manage your Chinese suppliers, but I will advise you NOT to give me 100% of your demand right away if you have existing suppliers or your own production lines. Keep your existing system as back up and average your costs down. My goal is that you be successful and making me immediately responsible for your whole world is not a good decision for anyone.
But that’s just my rant for the day. Your thoughts, please.