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| INSPECTION |
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| SUPPLIER
MANAGEMENT |
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| PRODUCTS &
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| ABOUT AMREP |
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Outsourcing
Blackholes in China and Everywhere
How much do you lose in marketing and inventory when your supplier
continues to have high rejects and returns? How much is the cost of having your
employees doing the resorting and rework on products from your suppliers that
do not work? How often does the supplier
accept returns and do rework when he is far far away? The only reason you do
outsourcing is because labor and cost is cheap and you have to beat your
competitors' pricing. Here are some "supplier black holes" which I gathered
from talking with customers that found our Supplier Management Services both
useful at the Hong Kong Consumer Electronics show. I hope they make you wiser
in working with suppliers if you are a first timer in the business of overseas
procurement.
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One customer from Malaysia bought 10,000 telephones from a supplier in
Shenzhen. Half were faulty upon arrival and he had to rework on the defective
items. He could not do an on-time delivery to his customers. The supplier would
not replace the defective parts. SAMPLES WERE GOOD AND
THE PRICING WAS SENSATIONAL. HIS LOSS WAS EVEN BETTER.
Next time he would use AMREP.
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One American Customer could not understand why his
supplier was using unapproved UL components which kept
blowing up the electrical circuits. PRE-PRODUCTION SAMPLE WAS GOOD AND WAS UL
CERTIFIED. He confronted the Supplier's Big Boss who said that "the production
manager was doing something bad that he was unaware of". LOSS OF SALES AND
LEGAL SUITS. Next time he wanted to use the AMREP Quality Watchdog.
I am obviously very pleased when customers go through some financial pain before
deciding that the cost of using AMREP is less expensive than the unfortunate
surprises from suppliers which cost them an arm and a leg. However, I find it
very difficult to understand why buyers and procurement managers never
understand the meaning of SUPPLIER RISKS AVOIDANCE
and RISKS PREVENTION.
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