Tag: sourcing

World Trade Month Wrap-Up

World Trade Month is observed each year in May.  The objective of this recognition is to create awareness, identify trends and drive market opportunities.

World Integrated Trade Solutions offers extensive data related to world trade.  The same site offers interesting visualization options such as the word cloud referenced below.

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In a 2015 ranking of the top 20 export countries worldwide via Statista, China ranked first in exports with an export value of about 2.28 trillion US dollars.

That same report went on to indicate:

The value of goods exported from China grew immensely between 2002 and 2014. In 2002, China’s exports were valued at about 327 billion US dollars. China’s export value grew to 2 trillion US dollars in 2012, the first year in which China exported more than 2 trillion US dollars worth of goods. Year over year export growth remained above 17 percent between 2002 and 2012, except in 2009 and 2012. In 2004, export value grew by over 35 percent. In 2011, China accounted for about 10% of global merchandise exports and about 4% of global service exports.  China’s greatest export product categories in 2011 was machinery and transport equipment, of which they exported 902 billion US dollars worth. In 2012, China exported 159 billion US dollars worth of clothes and clothing accessories.

At the community level, Pro QC’s Tampa team attended the International Town Hall event hosted by the Tampa Bay Export Alliance.  We heard from local leadership supporting trade initiatives throughout the region. And, we saw local companies highlighted for their successful sourcing and supply chain initiatives.  Jabil Circuit had a particularly interesting keynote presentation related to their supply chain visualization and Intelligent Control Tower.

To learn more about world trade, we recommend these sites:

To learn more about reducing the quality risks and cost associated with global trade, contact us! 

Verifying Suppliers… What You Want To Know

Verify-SuppliersAs a follow-up to an an article we posted in March, we wanted to go into more specifics regarding on-site supplier verification.

As noted, it’s not always cost effective to do a comprehensive ISO based or general QMS audit for each supplier you’re considering working with. But, there are basic questions looming that you need to make the right decisions…

One option for supplier verification is a basic on-site check.

What you find out:

  • Factory information
    • Type of ownership, address & contact information
  • Production Capacity (Annual Basis)
    • Category, total capacity, units shipped & % capacity
  • Export Markets
    • U.S., EU, South America, etc. & % volume
  • Key Clients (Past Year)
    • Name, product description & % volume
  • Key Personnel
    • Title, name, history & contact information
  • Number of Employees
    • Management, general office, production, quality, etc.
  • List of Major Equipment (Machines)
    • Description, model, quantity & condition
  • List of Major Gages (Equipment)
    • Description, accuracy, quantity & condition
  • List of Sub-Contractors
    • Name, process & location

Photos assist in the process of evaluation as well.

How do you evaluate you potential suppliers? One of our older blog posts that may be of interest is the use of a grid analysis for supplier selection. The categories listed above would help in deciding important variables and respective weights.

Contact us for more information, or to schedule an on-site supplier verification.  With local expertise and an unbiased assessment, supplier selection is less risky and cost-saving in the long-run!

Pallets from China can pose risks to supply chains

usa-palletFor this post, we welcome a friend to the Pro QC team, Daniel M. Krassenstein, as a guest blogger.  

Many U.S. importers regard procurement cost and pallet vendor selection as the shippers’ burden, but this is risky and exposes an importer to severe supply chain disruptions should their pallets not be compliant with local requirements and face rejection by border officials.

In addition, U.S. importers are missing an easy opportunity to improve their supply chain and their costs. Here is an outline of what is available in the market and their respective benefits and drawbacks.

Solid Wood Pallets

A. Risk of Beetles – The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service conducts inspections of inbound containers at U.S. Ports of Entry. If they find evidence of wood-boring beetles in the solid wood pallets (even if the bugs are long-dead), then your entire container gets rejected and will be sent back to China. I know this for a fact, as we dealt with such a situation a few years back and it was costly!

B. Preventative Measures – The Asian long-horned beetle is a threat to North American forests. The established methods to destroy the families of beetles whose larvae or adult forms eat and destroy wood are well accepted and include either heat-treating or fumigating (using methyl bromide) the solid wood pallet. The International Plant Protection Convention sets the standards and there is an approved international mark on the pallet itself, which certifies the treatment.

C. Problems in China – There indeed are reputable solid wood pallet suppliers in China who do properly either fumigate or heat-treat the solid wood pallets in order to eliminate this pest. However, I know from first-hand experience that there are also some solid wood pallet providers who are either incompetent, or who take short cuts, resulting in solid wood pallets that are noncompliant. So, at minimum, if you prefer solid wood pallets because of their durability, you should do your due diligence and actually audit the solid wood pallet supplier. Because regardless if your supplier procures the pallet, YOU, the U.S. importer, are actually paying for it as the costs are built in to your free on board cost and YOU are the one incurring the risk.

Alternative Pallets

There are various descriptions of Particle Boards — Press Wood, Plywood, Chip Board, Flake Board, Wafer Board, etc. The advantage of using this type of pallet is that on your Bill of Lading you can state “Shipment Contains No Solid Wood Packing Material” and thus avoid associated risks and costs of solid wood pallets.

However, these pallets may not be as durable as solid wood pallets. Typically, they’ll be fine for single use from China to your first U.S. destination, but if your customer wishes to reuse that pallet, the bottom stringers are more likely to break off or the composite wood blocks are more likely to break free than with the solid wood alternatives.

Other alternatives include Slip Sheets and even TELLAP Bag, a patented type of bulk bag with a sleeve for fork lifts built in to its bottom.

So far, our own experiments with either plastic pallets or metal pallets have not proven either cost effective or practical to use. And that brings us to…

Cost Factor

Obviously, your own sensitivity to absorbing the cost of a more expensive pallet will vary, depending on whether you are shipping higher-end electronic goods or cheaper commodities. In general, we’ve found pallet costs range from $25 (plastic), $15 (solid wood) to $10 (press wood).

In summary, your vendor in China likely does not even realize the impact of the pallets they use — they are most likely just buying the least expensive option that they can find. However, the U.S. importer has every right to dictate minimum standards and runs the risk of making a costly mistake if they do not do so.

Daniel M. Krassenstein is director of Asia operations for Procon Pacific. Contact Daniel M. Krassenstein at daniel.krassenstein@outlook.com.

This article was originally published on www.joc.com and was reprinted here with the author’s permission.

Welcome Year of the Monkey – Preparing for Chinese New Year

Anyone involved in sourcing from China has likely been preparing for Chinese New Year for several weeks.  The “new year,” also known as the Spring Festival, is marked by the lunisolar Chinese calendar.  The festivities usually start the day before the new year and continue until the Lantern Festival, the 15th day of the new year. During that time, factories and other businesses are closed.

What happens during Chinese New Year?

Chinese New Year is the most significant holiday in China.  It’s a time when the Chinese return to their home towns and celebrate with friends and family.  Learn more about the cultural aspects here. 

For those involved in manufacturing within the region, there’s an urgency prior to the holiday to ensure timely shipments. This is where proactive planning is helpful.

How can you plan for timely shipments? 

At Pro QC, account managers usually start reaching out to clients in October. We want to make sure clients are aware of the holiday schedule and also have an opportunity to request inspections of any pending orders. We are able to contact the suppliers and let them know that an inspection will be required. Coordinating the schedule allows us to keep clients informed of any delays.

What happens after the holiday?

Many workers will not return to their pre-holiday positions. Many will use the time off to look for employment closer to their families, or at manufacturers that have reputations of higher wages and/or working conditions.

In addition to the rush of orders waiting after the holiday, the staffing issue also presents quality concerns.  We urge all of our clients to inspect orders for a period of time before and after the holiday to ensure consistency.  With the increase in orders and staffing concerns, quality issues are very common during this time.

Why a monkey?

Each Chinese New Year is characterized by one of 12 animals which appear in the Chinese zodiac. The Chinese zodiac is divided into 12 blocks (or houses) just like its western counterpart, but with the major difference being that each house has a time-length of one year instead of one month.  This year it’s the Year of the Monkey, the ninth animal in the cycle

恭喜发财 / 恭喜發財 (Gōngxǐ fācái)

Wishing-You-A-Happy-Chinese-New-Year-720x320

Sourcing Quality Solutions

There are a variety of quality solutions that reduce costs and risk throughout the sourcing process. Connecting solutions to benefits is a compelling way to communicate the salience of quality. A few examples include:

Product Development

Detailed technical specifications and criteria assist in obtaining supplier quotations and with ensuring product later meets or exceeds expectations. Product documentation is key to getting maximum value from QC on-sites.

Product testing confirms if the product is meeting applicable standards requirements, or other requirements as necessary.

Supplier Selection

Identifying and/or validating suppliers makes selection a strategic and reliable process. Conducting initial supplier evaluations provides comparison data and further increases confidence that potential suppliers will meet your needs now and in the long-term.

Resource:

 

Manufacturing (Quality & Delivery Performance) 

On-site inspections throughout the manufacturing process are the best way to identify non-conformances early in the production process. Identifying and resolving issues prior to shipment reduces costs. It helps helps ensure the customer gets what they expect.

Resource:

Order tracking and container loading supervision avoids costly shipment delays. There’s no better time to demonstrate the importance of this than when Chinese New Year approaches!

Supplier (Vendor) Management 

Maintaining key performance data supports the decision making process, in addition to continuous improvement. Quality tools offer multiple ways of collecting and analyzing data for this purpose.

How do you utilize quality solutions throughout the sourcing process? Throughout the supply chain?

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