The horrific invasion of Ukraine and the resulting sanctions on Russia are starting to have effects that importers & exporters are feeling. Combined with the consequences of covid outbreaks and the already very high shipping prices, they will probably make for a rough environment in the next few months. Let's go through the 4 main issues one by one. 1. China is having a hard time containing covid For the past couple of weeks, many people from our Shenzhen office have been in … [Read more...]
Supply Chain Risk Management: No, Toyota Doesn’t Always Do Just-In-Time
I ran into a very interesting article from Bloomberg entitled How Toyota Steered Clear of the Chip Shortage Mess. Nearly all automakers announced that they would have to cut their production numbers due to a serious shortage of semiconductors. This was made even worse by a recent fire in a Japanese manufacturing plant. One might think Toyota would be seriously impacted by the general market situation and by one of their suppliers being temporarily unable to produce. Apparently, Toyota … [Read more...]
Manufacture in China, Vietnam, India, or Elsewhere in 2021? [Podcast]
![Manufacture in China, Vietnam, India, or Elsewhere in 2021? [Podcast]](https://qualityinspection.org/wp-content/uploads/2020/12/ManufactureinChinaVietnamIndiaorElsewherein2021Podcast-1140x445.jpg)
Manufacturers continue to plan the move of some or all of their supply chains out of China? But where next? Perhaps the word 'exodus' is a little over-dramatic, but there has certainly been a marked rise in companies trying to diversify their manufacturing operations away from China alone since around 2018. One reason is the US/China trade war and the punitive tariffs imposed by the US government on some 'Made-In-China' goods, but we can't discount the coronavirus pandemic, as the manufacturing … [Read more...]
How To Perform In-Depth Due Diligence On Your Supplier [Podcast]
Do your new or current suppliers pose a risk to your business? Sometimes the only way to find out if a supplier poses a risk is to perform some deep due diligence on them in order to assess their business health and if they're able to be a stable, reliable supplier for the long-term. Especially in these times where we're dealing with a pandemic, getting a realistic picture of how suppliers are doing is hard without the ability to be on the ground in China. But there are actions you can … [Read more...]
Supply Chain Risk Management, Part 5: Moving Manufacturing to Vietnam, Thailand, Malaysia, or India (Pros & Cons)
One of the main conclusions of many companies is as follows: 'diversifying our supply chain outside of China is a must in order to reduce risk'. There are two main reasons for this. First, the USA has been leading the charge against Beijing, and any change in the White House will not stop the current trend to "decouple" from China. The general public, the Congress, and the Senate all seem to agree that China is a "strategic competitor" and needs to be opposed. Second, some disasters can … [Read more...]
The End Of Just In Time Manufacturing? [Podcast]
![The End Of Just In Time Manufacturing? [Podcast]](https://qualityinspection.org/wp-content/uploads/2020/08/TheEndOfJustInTimeManufacturingPodcast-1140x445.jpg)
A number of blog posts, such as this one, have been popping up lately casting doubts on whether just in time manufacturing can survive post-coronavirus. They share some pretty strong words: Recent trade tensions between the US and China, as well as the COVID-19 pandemic, have highlighted that this supply chain model is increasingly untenable. Listen to this episode of the podcast to hear my take... … [Read more...]
Some Chinese Factories Are Going Bankrupt: How To Know Which Ones
Some Chinese factories have suffered serious blows recently. Large American companies are moving manufacturing outside of China, often abruptly. Many manufacturers were hit in 2020 by very soft demand and cancelled orders. Their government is becoming more serious in getting taxes paid and regulations complied with. And so forth. The logical conclusion? Many factory owners who have accumulated debt and don't see the light at the end of the tunnel are tempted to go out of business. If … [Read more...]
Supply Chain Risk Management, Part 4: How Much Inventory Do You Need?
If you make sure to sit on 6 months of inventory for every one of your major products, you will run much lower risks of being unable to supply your customers with what they need. You might even be able to cut a current manufacturer off and ramp up a new one, without any impact on your customers. There will be downsides, though. Working capital is expensive. Warehousing and transporting all these goods are not cheap. You may have to write off damaged, lost, of rapidly obsolete materials. (It … [Read more...]
Will China Lock Entire Provinces Down A Second Time in 2020?
In early February, I was wondering what effects the lockdown of China would have on importers. And, a few weeks later, importers suffered another (often more violent) blow: stores closed for months, a lot of unsold inventory, and weak demand across many product categories. … [Read more...]
China’s Corporate Social Credit System: Watch Out For Supplier Risk!
Recently, I watched a webinar entitled "China's corporate social credit system: evaluating the impact on your supply chain". It was organized by the European Chamber of Commerce in China, and the Head of Risk Consulting at KPMG provided some insights. If you buy products from Chinese suppliers and/or that are made in China, this development comes as good news... and bad news. … [Read more...]