Sourcing Manager Thailand

Global sourcing contradictions

Contradiction is an unwritten part of the job description of every logistics manager and a business reality across most supply chains. A case in point is the following interesting study of an international retailer sourcing products from China, written by Randy Kritkausky of http://www.ecologia.org an advisory organisation specialising in economic sustainability and.

Safety versus quality: Global retailers, consumer groups, Chinese government officials, foreign governments, global media, and most importantly individual consumers, are asking serious questions about the safety and quality of products in the Chinese supply chain that produces much of the world's manufactured goods and food commodities.

The weakest of several weak links in China's supply chain is a debilitating contradiction between constructive product quality and safety demands in the supply chain, and financial disincentives in the value chain. This contradiction exists even among "socially and environmentally responsible" companies where the contradictions can sometimes be most crushing.

For example, it is now common for international wholesalers and retailers who buy Chinese products to establish their own manufacturer's code of conduct, and/or apply product and workplace standards created by international organisations or civil society bodies. These buyers send auditors and certifiers to the factories from which they buy. This sends a message: social and environmental responsibility, product safety and quality, and environmental performance are important.

An international retailer was seeking a range of bathroom fittings from a Chinese supplier who was required to share the details of his manufacturing process with his buyer. The buyer wanted to know the source and cost for every component of the product. The buyer claimed it would use this information to negotiate a mutually agreed profit margin of a few percent. Presumably the buyer was also going to help the supplier to become more efficient.

In fact, the foreign buyer took the supply information and set up its own Chinese production facility. The buyer then terminated its contract with the established Chinese producer. It planned to increase its profits and squeeze out the middleman using information obtained under false pretences.

But the story did not end here. The giant global retailer could not manufacture a product of sufficient quality for its stores. It came back to the original supplier and asked him if he would continue to supply the range of bathroom products temporarily. He refused. He had already found new customers who would pay and treat him fairly. The manufacturer now operates outside of the formal guidelines of the code of corporate conduct that he previously was required to follow: a code that he admits made his business better.

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