Double edge sword

Double edge sword

Low cost region sourcing requires evolutionary change on the part of both parties.

Low cost region (LCR) manufacturers must transition their processes, practices, procedures to those which will enable them to compete on a global basis. The implications are that in addition to very competitive prices (30% to 40% reduction over domestic manufacturers), they must provide consistent, high quality products.

For the domestic integrators/ manufacturers, in addition to the to be expected language and cultural differences, the primary issue is dealing with the stretch-out of their supply chain. They may have become accustom to the flexibility of sourcing from a local manufacturer. For example; the ability to make product mix changes on the fly and the ability to expedite or push-out near term requirements. LCR sourcing adds ocean freight/ customs leadtime to the manufacturers leadtime.

Does a USA based distributor provide value to this supply chain?? There is the potential to assist the LCR manufacturer with the transition to global competition. The domestic integrator/ manufacturer benefits from a domestic stock which can buffer the changes in product mix and delivery requirements.

-- Timothy Chen