China Sourcing Decisions for Management Professionals

Posted by sophiasmith on February 18th, 2014

When you are managing the operations of your organization, you will come across sourcing or procuring decisions. In technical terms, sourcing or procuring means the process of getting different parts, components or resources that a company needs to manufacture its own goods and services. In this regard, you have two choices—you can manufacture the inputs all by yourself or you can buy the inputs from external suppliers. 

In the management terms, such decision making is called the make-or-buy decision. By and large, these decisions are taken by the upper management. The decision of buying or sourcing products or services from other entities or suppliers is also known as outsourcing. For example, in the automobile industry, a truck is assembled with the help of more than ten thousand components or parts. It becomes very difficult for the automobile manufacturing company to manage the self production of such components, thus these automobile manufacturing companies outsource standard and general components from their independent vendors, also called as outsourcing vendors. Today, the sourcing services from China are in great demand.      

There are many benefits of outsourcing. With outsourcing, the companies can maintain their flexibility in meeting the varied needs of consumers. Manufacturing the parts in-house may incur huge amount investments in highly specialized assets for producing components or parts. If the company is inefficient in performing that process, then it will cost the company to increase the production costs.

Thus, by outsourcing such components to good suppliers, the capital cost and production cost can be reduced considerably. To remain competitive in the business world, it is imperative to remain focus on the core competencies of the firm. For example, many manufacturing companies focus on only producing products that are of high quality, and they outsource the logistics activities to a third party logistics companies.

Thus, the manufacturing company focuses only on production to constantly improve the quality of the product, rather than in the logistics part, where they may not be much capable. Also, it helps to focus on reducing the production times and cycle; so as to maintain the order fulfillment and reliability. Beyond advantages, outsourcing decisions to China factories may be risky for major reasons.

In outsourcing, there may be no control over quality or the material of resources; since the China suppliers may be novices on inexperienced. When you are dealing with Sourcing  and suppliers in china services or China factories, there is a risk that the supplier might share your proprietary technology with competitors. The outsourcing supplier might take undue advantage of the technology shared by you to design and produce their own products as a substitute to the outsourced products.

When you are outsourcing from suppliers in china, you will have to make sure that you have made the right decision. The decision of outsourcing can have a great impact on the cost of the final product, but there needs to be a thorough analysis that needs to be done. Sourcing from China suppliers can be done by opting for skilled expertise of sourcing agents

Tiger Global offer sourcing services We deal china product sourcing for our clients, building up a wide range of contacts, china sources great factory relationships with excellent experience of sourcing both unusual or new products.