The Global Supply Chain Management in China Service
If you buy a lot of products from supplier companies from China, you can have an impact on those companies. If you can get them to use the supplier development process to improve their performance, for example, by improving their quality or cutting their costs, you will benefit greatly.
The process of getting suppliers to improve is often referred to as supplier development process. Most large companies have established their own supplier development processes, at least in terms of key relationships.
The question is, what makes sense for your company?
As we will see, the supplier development process needs to be adapted to the situation on both sides. There is no “one size fits all” approach here.
Table of Contents
The Global Supply Chain Management in China:
Here’s a comprehensive overview of the Supplier Development Process Flow:
1. Identify Needs and Requirements:
- Assess internal needs and define specific requirements for suppliers, considering quality, cost, delivery, innovation, sustainability, and other relevant criteria.
- Determine the types of suppliers needed (e.g., raw material suppliers, component manufacturers, service providers).
2. Supplier Identification and Screening:
- Conduct research to locate potential suppliers through various channels (e.g., industry directories, trade shows, online databases, referrals).
- Screen potential suppliers based on preliminary criteria to narrow down the list.
3. Supplier Evaluation and Selection:
- Issue a Request for Proposal (RFP) or Request for Quotation (RFQ) to gather detailed information from shortlisted suppliers.
- Evaluate supplier proposals based on defined criteria, including:
- Financial stability
- Technical capabilities
- Quality management systems
- Past performance
- References
- Cost competitiveness
- Delivery reliability
- Geographic location
- Ethical and sustainability practices
- Select the most suitable suppliers based on evaluation results.
4. Supplier Negotiation and Contract:
- Negotiate contract terms and conditions with selected suppliers, covering:
- Pricing
- Payment terms
- Delivery schedules
- Quality standards
- Service level agreements
- Intellectual property rights
- Confidentiality agreements
- Termination clauses
- Sign a formal contract to establish the business relationship.
5. Supplier Development and Performance Management:
- Onboard new suppliers, providing orientation and training on company processes and expectations.
- Regularly monitor and evaluate supplier performance using metrics such as:
- Quality
- Cost
- Delivery
- Responsiveness
- Innovation
- Risk management
- Collaborate with suppliers to identify and address performance gaps.
- Provide feedback and coaching to help suppliers improve.
- Conduct joint improvement projects and knowledge sharing initiatives.
6. Supplier Relationship Management:
- Build strong, collaborative relationships with key suppliers.
- Foster open communication and regular interactions.
- Engage in joint problem-solving and continuous improvement efforts.
- Recognize and reward supplier achievements.
- Resolve disputes fairly and efficiently.
7. Supplier Certification and Audits:
- Implement a supplier certification program to assess and verify supplier capabilities and compliance with standards (e.g., ISO, industry-specific certifications).
- Conduct regular audits to ensure continuous compliance with quality, social, and environmental standards.
8. Supplier Risk Management:
- Identify and assess potential risks associated with suppliers (e.g., financial instability, quality issues, supply chain disruptions).
- Develop mitigation strategies to minimize risks (e.g., alternative sourcing options, contingency plans).
- Monitor risk factors and implement corrective actions as needed.
9. Supplier Refinement and Reassessment:
- Continuously review and refine the supplier base to ensure alignment with business needs and strategies.
- Regularly reassess supplier performance and make adjustments as necessary (e.g., termination of underperforming suppliers, expansion of relationships with high-performing suppliers).
11 Notable Global Supply Chain Management Companies in China Example:
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Supplyia:
- Overview: A specialized China sourcing and supply chain management company focusing on small and medium-sized enterprises (SMEs).
- Services: Product sourcing, supplier verification, quality control, logistics management, and customized supply chain solutions.
- Strengths: Tailored services for SMEs, extensive local supplier network, and expertise in managing end-to-end supply chain processes.
-
Li & Fung Limited:
- Overview: A Hong Kong-based supply chain management and logistics company with a significant presence in China.
- Services: Sourcing, manufacturing, distribution, and logistics services across various industries.
- Strengths: Extensive network of suppliers and deep expertise in apparel and consumer goods.
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Sinotrans Limited:
- Overview: One of China’s largest logistics companies, offering comprehensive supply chain solutions.
- Services: Freight forwarding, warehousing, distribution, and supply chain management.
- Strengths: Strong domestic and international logistics network.
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S.F. Express:
- Overview: A leading logistics and supply chain service provider in China.
- Services: Express delivery, freight forwarding, warehousing, and e-commerce logistics.
- Strengths: Advanced technology integration and extensive domestic reach.
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CJ Logistics:
- Overview: A South Korean company with a strong presence in China, providing integrated logistics services.
- Services: Transportation, warehousing, distribution, and supply chain consulting.
- Strengths: Focus on innovation and sustainable logistics solutions.
-
DHL Supply Chain:
- Overview: A division of Deutsche Post DHL Group, offering supply chain management services worldwide, including China.
- Services: Warehousing, transportation, integrated supply chain solutions, and e-commerce logistics.
- Strengths: Global network and expertise in various industries, including automotive, retail, and healthcare.
-
Kuehne + Nagel:
- Overview: A global logistics company with a strong presence in China.
- Services: Sea freight, air freight, contract logistics, and integrated supply chain management.
- Strengths: Comprehensive service portfolio and advanced digital logistics solutions.
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CEVA Logistics:
- Overview: A global logistics and supply chain company, part of the CMA CGM Group, with operations in China.
- Services: Freight management, contract logistics, transportation, and supply chain solutions.
- Strengths: Expertise in automotive, consumer, retail, and industrial sectors.
-
Toll Group:
- Overview: An Australian logistics company with significant operations in China.
- Services: Integrated logistics, freight forwarding, warehousing, and distribution.
- Strengths: Strong focus on Asia-Pacific region and diverse industry expertise.
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Agility Logistics:
- Overview: A global logistics company with a presence in China, part of DSV Panalpina Group.
- Services: Freight forwarding, warehousing, distribution, and supply chain solutions.
- Strengths: Robust global network and focus on emerging markets.
-
DB Schenker:
- Overview: A division of the German railway company Deutsche Bahn, offering logistics and supply chain services in China.
- Services: Land transport, air and ocean freight, contract logistics, and supply chain management.
- Strengths: Comprehensive logistics solutions and strong focus on innovation and sustainability.
When to Consider Supply Chain Management in China?
Supply chain management in China is essential under various circumstances, particularly when a business is involved in manufacturing, sourcing, or distributing products. Here are some specific scenarios where supply chain management in China is crucial:
Manufacturing Needs
- High-Volume Production: When your business requires large-scale manufacturing, China’s extensive manufacturing capabilities can meet these demands efficiently.
- Cost Efficiency: To take advantage of lower production costs due to economies of scale and lower labor costs.
Product Sourcing
- Diverse Product Range: If your business needs to source a wide variety of products or components, China’s vast supplier base can provide numerous options.
- Raw Materials: When your products require specific raw materials or components that are abundantly available in China.
Entering New Markets
- Market Expansion: When expanding your business into Asian markets, having a supply chain managed from China can provide a strategic advantage due to its central location and robust infrastructure.
- Local Market Knowledge: To leverage local expertise and understanding of regional market dynamics.
Cost Optimization
- Reducing Costs: To optimize costs in terms of manufacturing, logistics, and distribution by leveraging China’s cost advantages.
- Negotiating Better Terms: To negotiate better pricing and terms with Chinese suppliers, which can lead to significant savings.
Quality Control
- Ensuring Quality: When high product quality is critical, managing supply chains directly in China can help implement strict quality control measures.
- Managing Production Standards: To ensure that manufacturing processes meet your quality standards and specifications.
Logistics and Distribution
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- Efficient Distribution: When your business requires efficient logistics and distribution channels to reach global markets, leveraging China’s advanced logistics infrastructure is beneficial.
- Customs and Compliance: To handle customs clearance, import/export regulations, and other compliance issues smoothly.
In some cases, you can really build a close supply chain in China partnership, and the benefits of single sourcing are usually justified. It’s a really great and productive relationship. Unfortunately, this doesn’t happen very often.
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