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When outsourcing goes wrong

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These days nothing is easier than finding what you need in Asia and having it delivered to you: quickly, cheaply and of decent quality. Web is full of Asian manufacturers ready to fulfil any orders you have.

Nerijus Kukarėnas, responsible for European clients at PointOne International, shares his insights.

I’ve had a number of clients who took this easy road only to call me later asking to help them fix the mess. It’s one thing to buy several bolts and find out they don’t fit the description. Another is to order a major piece of equipment and discover that your smart investment is actually a health and safety hazard.

What’s interesting to note, is how all these people are otherwise highly business savvy professionals in their fields. Part of their success is ability to take risks and explore new opportunities, which can only be encouraged. Naturally, some learning comes from failing and learning from mistakes.

The main mistake in such situations is not the decision to outsource itself. This has already proven to be a rule of thumb in global economy: if you can save costs by outsourcing part of your production, do that. The mistake is not spending time to check, if supplier can be trusted.

Asian manufacturers are good at taking advantage of this short-sight. On Alibaba you can find thousands of suppliers, and from the first glance some of them look great - high rating, pictures showing exactly what you need and prices that are too good to resist.

In practice, the suppliers might be non-existent companies without easy way to check their status. What you see is not necessarily what you will get. Price can change dramatically when you include the trouble with customs, delivery delays or the costs when the order turns out to be defective. Not that tempting anymore.

Sometimes even knowing your partners doesn’t save from comic situations. Once we’ve sent a picture of golf tee for Chinese plastic manufacturers to ask if they can make some of them. After saying “ok, sure”, they’ve sent us a production example - ten times bigger and better fitted for soccer than a golf ball. Happily, after clarifying the size, our order turned out well.

On another occasion, we were lucky in deciding to pay a visit to the factory of the supplier. They were in the process of packaging the steel rods for one of our clients, so we were just in time to inspect them. It was enough to softly drop them on the floor and they were already bent - not something you would expect to happen with a hard steel part. Showing the defects to the production manager and requesting a rework of the parts helped us to ensure the quality and timeliness of the final delivery.

My goal is not to scare you off. As I’ve said, outsourcing is a normal decision for any costs-conscious business person. So it’s more of a reminder, that as always, good business has to be built on good relationships and mutual trust.

If you don’t have skills or resources to invest in making partnerships far away from home, let’s get in touch. And with those who prefer working on their own, I’m happy to share our fresh guidebook on outsourcing from East Asia.

Whatever road you choose, keep exploring!

 

Interested in personal advice? Don't hesitate to contact Nerijus or learn more about finding suppliers in East Asia.

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