Don’t go it alone!
Though the US and China seem close to an initial trade deal, responsible importers must examine alternative sourcing locations outside of China. The following tips will help remove the fear from the process.
Where do I begin?
· Create a checklist to measure whether resourcing is an option for your product or a portion of your product’s production
· Create a hierarchy – prioritize the checklist and decide whether resourcing may work for you
· Engage a sourcing expert (your Janel representative will be happy to offer a referral)
· Model your new landed cost, lead times and supply chain map to help identify opportunities & challenges
· Consider the Mighty 5 (MITI-V): Malaysia, India, Thailand, Indonesia & Vietnam; Eastern Europe has become a production source for some products; or near-sourcing in Mexico or Canada
· Contact your Janel representative to help – we’re happy to engage our experts around the world to help identify sourcing options and to model landed costs and lead times
What considerations should I include on my sourcing checklist?
Does my company have the internal bandwidth to manage a change?
Is there appropriate capacity in the proposed new source country and factory(s) to manage our volumes?
Is there a skilled labor force in the new source country for our product? If not, is there suitable talent that can be trained and ramped up on a timeline that works for our business?
What does the future landscape look like for trade relations between the new source country and the US?
Are we moving production to countries that may present challenges (trade actions) in the future?
Does our current source have assets in another country already that we can leverage?
Are they willing to move talent from China to another country to help transition production so that we don’t have to establish a new procurement relationship?
Is the geopolitical situation for the new source country generally stable?
What are the prospects for the new source country’s investment in infrastructure in the near and long term? Are they suitable to our needs?
What is the current state of local warehousing, trucking and air/ocean international transportation out of the new source country (can I get my product on a boat when I need to and will empties be available)?
What will transit times look like on average?
Will the transit time be predictable vs. my current supply chain?
Do the international transportation routes from the new source country present any new challenges such as likelihood of container offload at a transshipment point?
Are there any new export regulatory issues related to the new source country (export clearance complexity or other agency purview) that could extend lead times?
What will be the new total landed cost for the product?
Will quality of the product and packaging be acceptable in the new source country
Are there any component material flow issues?
Consider “soft factors” – does the new source country present any risks to my brand? Are there social responsibility issues to consider such as forced or child labor, environmental sustainability, worker treatment, etc.? Be sure to know your consumer and their concerns.