Over the past few years, both buyers and sellers have been migrating further into China in seek of lower wages and lower product costs. But, there is of course a trade-off in that shift, namely around increased logistics costs and more uncertainty. I came across this recent article that talks about these themes: “Supply chain uncertainties deter inland move“. It also nicely weaves in concepts around geographic proximity to resources, backed-up with specific examples.
One thing is for sure: for importers that are sourcing from this region, the dynamic nature of it requires agility. By this I mean, the ability to change sourcing locations based on changes in the landscape, whether raw material prices, labor pools or developing supply chain infrastructure. You can’t do this by hard-wiring your technology systems, instead you’ll need a flexible, easy-to-change IT platform that can keep pace with the change.
How fast could your organization switch from a supplier in Zhoukou to one in Hubei?
One idea: run a stress test, a scenario-based model. For example: catalog all of the switches that would need to be flipped, and assign estimated time and effort to accomplish these. This will, without actually doing it, give you insight to the potential impact of a required change. Some might find it’s extremely difficult, and other not so much. In fact, I’ve talked to a couple of importers recently that take these simulations to the next level: they actually do it! They actually invest in “sample” orders and shipments. They sourced and moved the product, and monitored how well their organization, and their partners, performed.
Interesting: supply chain agility test!