Outsourcing: Eastern Asian manufacturing provides much needed competition for the European marketFind out more
Outsourcing from East Asia is a risky move, evidenced by the experience of Snaigė, Lithuanian manufacturer of household refrigerators, freezers and vertical coolers, but Vilma Noruvienė, the company’s Head of Supply, is confident that the risk is worth taking.
“When we initially began working with Asian suppliers, their main advantage was cost. Currently, the price differences are smaller, but we still find outsourcing beneficial. The market there is much bigger and it gives us greater freedom of choice. While in Europe it’s easy to know all major manufacturers, only for glass manufacturing there are more than 80 different companies in China to choose from. This makes it easier to get what we need with favorable conditions”, - says V. Noruvienė.
Asian markets are highly competitive and hungry for European contracts, providing Snaige strong negotiating positions. The company is able to get better payment conditions, prices and discounts for larger orders. Another benefit from working with major Chinese manufacturers is their continuous improvements and innovations, and being able to access it permits Snaige to make its own production more innovative and efficient.
On the practical note, V. Noruvienė advises to be cautious with the ordering process. “We never buy blindly and pay a lot of attention to qualifying the supplier. We get their samples, analyze them, order test components and check them again. It can take from one year to one and a half years before the new supplier is selected. The supplier rarely meets 100 percent of our requirements with what is initially provided to us. It takes time to comment, wait for samples, and comment again and so on. It might sound risky, but it’s just a process and there is no reason to be fearful of it”, - says V. Noruvienė.
Happy and confident with their components supplied from East Asia, Snaigė does a lot of supply management themselves, but for certain projects support from PointOne International is necessary. “It is convenient to have a partner which is present in China and can help us with finding the right supplier for our needs or negotiate on our behalf”.
For Nerijus Kukarėnas, responsible for European clients at PointOne International, Snaigė is a great example of how much the expansion of the supply chain can benefit the manufacturers. “What seems first as a risk, brings clear benefits to businesses. Quality, better technologies, cost advantages - one by one they might seem unworthy of the effort, but together it is what helps our clients to be more successful and competitive than other local players.”