China Business Blog and Podcast

SupplyChainBrain.com, the news site brought to us by the people behind Global Logistics and Supply Chain Strategies magazine, published an article yesterday about the importance of relationships in the supply chain.

The article, written by Jim Tompkins of Tompkins Associates, Technomic Asia’s parent company, emphasizes the importance of relationship building for effective Supplier Relationship Management. A quick excerpt:

China has become North America’s preferred overseas destination for low-cost sourcing. It seems like the perfect strategy, right? The North American company gets what it needs at lower costs, and the Chinese manufacturer/distributor gets the business it needs. Everyone is happy.

But there are clear signs in the business world that the honeymoon is over. This is because the most significant part of Supplier Relationship Management (SRM)–the actual Relationship–has either not been fully developed or has been insufficiently nourished in order to thrive.

Read the full article here.

The newest issue of Actionline, the magazine published by the Automotive Industry Action Group, includes an article written by Technomic Asia’s Steve Ganster. The article discusses some of the challenges small and midsize automotive suppliers face when exploring and entering the Chinese market.

From the article’s introduction:

China’s burgeoning automotive market is having a significant and strategic effect on companies’ supply chains. Western parts and material suppliers have little choice but to respond proactively to China’s exploding automotive market or risk not only missing new demand opportunities in China but also opening the door for both international and Chinese companies to come after them in the West.

[...]

In the past few years, first-tier parts makers have turned to their supply base, passing on the pressure to localize to second- and third-tier suppliers. This cycle creates both opportunities and threats at all levels of the supply chain. As a result, many small- to mid-sized firms (SMEs) are now challenged to respond — or else.

Read the full article here.

Yesterday the Wall Street Journal ran a front-page story about the difficultly of tracking down the source of contaminated foods in China. “Often, U.S. officials trace problems with food imports only within American borders, due partly to limited resources.” So they know a product came from China, but it’s very difficult to determine specifically where the contaminated products were introduced into the supply chain.

Technomic Asia’s Kent Kedl reminds readers of the WSJ article of the need to take responsibility for vetting suppliers and sources in China (and elsewhere, of course):

Industry analysts say many U.S. companies save money by sourcing in China but are reluctant to spend on vetting supply chains. “You can’t just throw the [orders] over the Great Wall and hope it comes back good,” says Kent D. Kedl, general manager for Technomic Asia, a consulting firm in Shanghai that advises U.S. and European clients. He says companies “need people camped out” in China.

Another person quoted in the article, Clara Shih, president of Best Buy Produce International, adds: “People in this country don’t really care [about food quality] as long as it’s cheap.”