The answer depends a lot on a few things.
Three of them are very important:
Your sourcing strategy, your resources and your capabilities.
It is very possible to control your production at a very affordable cost. It all depends on how you design your sourcing strategy considering your resources and capabilities.
People who have been sourcing in China long enough, know that there are some Chinese factory owners who are not in full control over their own production. I am not just talking about poorly managed factories. I am talking about the difficulty to source stable labor, the consistency of their materials suppliers, power failures and a few more variables that are out of the factory owners’ control.
So if the factories themselves are not in control of their own production, how can you be in control? Well, you can be … at least to the extent where you can ensure a very high rate of successful on time deliveries and focus your time on creating a stable sourcing system.
It all begins with the way you run your sourcing function. Large companies set up sourcing offices with highly skilled staff that is involved in the purchasing of raw materials, check production daily and report of progress to headquarters. That is necessary from a certain scale and for certain types of sourcing methods. Smaller companies send one of their people once or more a year to meet with their suppliers and find new ones.
No matter big or small there is one common resource they all use: Own people on the ground. And this is almost self explanatory. You act and make decisions based on information – Reliable information. And again, as many people who’ve been in the sourcing business in China for a number of years will tell you, if you don’t have your own people on the ground, getting reliable information can be hard.
When I say “own people” I mean people whose agenda is similar to yours as much as possible. And that’s where the source of the problem is.
Depending on the strategy, your people in China may be agents, trading companies, suppliers, employees or service companies.
No matter who they are, the key to getting reliable information from them and get them to do things that promote your business and not do things that work against you is to do two things at the same time:
Depending on the strategy, your people in China may be agents, trading companies, suppliers, employees or service companies.
No matter who they are, the key to getting reliable information from them and get them to do things that promote your business and not do things that work against you is to do two things at the same time:
1. Show they will benefit if you benefit, and lose if you lose.
2. Make sure you have several other information channels to verify the information they give you, and know of their actions.
The best way to control your production begins with making sure the people you work with have the motivation to work for you, because they benefit from the cooperation and that you are in a reasonable control of what they are doing because you have ways to verify it yourself.
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