China Business Blog and Podcast

Tompkins Associates’ newest podcast, “The ‘Buy’ Component of the Global Supply Chain,” suggests that a “buying” relationship built only on commercial terms is like a personal relationship based only on sexual attraction.

That is, there needs to be something more, such as commitment and communication, for both types of relationships to survive. Stresses, including the current economic downturn, tend to reveal the cracks between supply chain links.

“The market turbulence we are now experiencing is putting significant strain on buyer-supplier relationships,” says Steve Ganster, podcast guest speaker and managing director of Technomic Asia. “Transparency, trust and open communication provide the needed ingredients to work through these difficult times.”

Along with ensuring that strong relationships remain intact, Ganster reminds listeners that their supply chains should be used as offensive weapons to differentiate themselves from the competition. He stresses the importance of strategic thinking when making the “buy” decision.

“As the first component in the supply chain, ‘buying’ is crucial to the other steps. If you get the ‘buy’ phase wrong in your supply chain strategy, then ‘make, move, store, and sell’ are going to be much tougher to execute well,” he says.

“Carefully think through options, work with real-time market intelligence, and consider the longer term. Don’t make decisions based on short-term spikes or overreact to changes,” Ganster adds.

The recent podcast is the second in a series focusing on “buy, make, move store and sell.” “Supply Chains in the Global Economic Downturn,” the first of the new series, explores the economic issues affecting businesses in every nation today. In this first episode, Gene Tyndall outlines what companies need to do to survive and prosper in a challenging climate.

Tompkins Associates features a new podcast on the first and third Tuesday of every month. Visit http://www.tompkinsinc.com/podcast to subscribe via iTunes or any podcast feed reader, or to sign up for email updates

In the most recent episode of the Tompkins Associates Global Supply Chain Podcast, Technomic Asia’s Steve Ganster joins Jim Tompkins to discuss the importance of strong relationship management throughout the supply chain, particularly in Asia.

As Jim says:

In fact, I have heard it said that Western companies and Asian companies spell SRM differently. In the West, SRM is spelled capital S, little r and capital M (SrM). For the West, it is all about Supplier Management. To the contrary, in Asia, SRM is spelled little s, capital R and little m (sRm). It is all about relationships.

Read a full transcript and listen to the podcast with Jim and Steve here.

During the past couple of weeks, Technomic Asia’s Steve Ganster has spoken at three conferences addressing China sourcing and supply chain management issues.

On Sept. 24, Steve was in Wolfsburg, Germany, giving a talk at the Informationstechnologie für die Autoindustrie (Information Technology for the Auto Industry) conference. Steve’s presentation was about “Supply Chain Management in China’s Automotive Market.” Just prior to that conference, Technomic Asia’s released the most recent edition of its China automotive aftermarket research report.

The very next day, Sept. 25, Steve was in Munich, Germany, discussing “Sourcing in China: Trends and Best Practices” at the ROI Annual Best Practices Event. Then, back in the United States, Steve headed to Denver yesterday to give a talk on “Building Supply Chain Partnerships in China” Council of Supply Chain Management Professionals’ Global Conference 2008.

If you’re interested in more information on any of these subjects, or perhaps having Steve speak at an upcoming event, please let us know.

In the most recent issue of its Supply Chain Edge newsletter, Tompkins Associates published an article titled “The Asian Spin on SRM.” The article is co-written by Bruce Tompkins, principal at Tompkins Associates, and Colin Maxwell, a senior consultant at Tompkins.

The article explains that ” ‘relationship’ rules in ‘supplier relationship management’ with Asian sources.” From the article:

“Moving too quickly on sourcing decisions in low-cost countries may prove to be a short-term tactic,” notes Steven Ganster, managing director of Technomic Asia and author of The China Ready Company. “Businesses need a long-term strategy that focuses on relationships for effective sourcing in Asia, and the most successful sourcing companies have placed a premium on developing relationships with their suppliers. These relationships are the backbone of SRM,” he says.

Tompkins conducted a survey of companies that averaged nearly 10 years of experience in sourcing in China and more than 6 years of sourcing in all other Asian countries to gain further insights into trends and current practices in international sourcing and supplier relationship management.

Read more here.

The 2008 Supply Chain Leadership Forum, an event hosted by our parent company Tompkins Associates, takes place next week — Sept. 9 and 10 — in New Orleans.

The in-depth conference is subtitled “Emerging Trends and Best Next Practices.” It’s designed to help senior supply chain executives gain insights into hot topics, including reverse logistics and global supply chain capacity constraints, and understand how your current performance and operating practices compare to similar enterprises.

Technomic Asia’s Steve Ganster is one of the many presenters at the conference. He’s presenting “Global Sourcing Practices” of “top quartile companies,” helping attendees understand how their operations compare with those of industry leading companies.

For more information, visit the Supply Chain Leadership Forum site.

Our friends at our parent company Tompkins Associates have launched a new online audio series called the “Global Supply Chain Podcast.”

Tompkins Associates says its podcast series will “educate business executives on the advantages of adopting a global supply chain strategy, and any company that makes, buys, sells, or moves products will want to hear the series.” Here’s more info from the series description:

Your company needs a supply chain operations strategy that is responsive to a global market. The leading experts at Tompkins Associates explore the hot issues associated with global business today, including supplier relationship management, supply chain benchmarking and best practices, the facts versus fiction in globalization, and much more in this podcast series. Tompkins Associates designs and integrates global end-to-end solutions for companies that embrace supply chain excellence. In mp3 format and updated with a new podcast every first and third Tuesday of the month.

The first podcast in the series is called “Stop Debating Globalization: It’s a Reality.” Read the transcript or listen now.

You can check www.tompkinsinc.com/podcast for more or subscribe via the podcast’s RSS feed.

Technomic Asia’s Steve Ganster appeared live on CNBC this morning to discuss how U.S. food companies are adapting their China strategies to find success in that fast-growing market.

As companies are learning that what works at home won’t necessarily work abroad in the Chinese marketplace, they’re finding new ways to cater specifically to the needs and desires of Chinese people — rather than shoe-horning American products into a distinctly non-American set of tastes.

Watch the full segment, about 6 minutes long, here.

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.”