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In this tough economy, global supply chain management and execution have become invariably strained. In the US and Asia, the financial stability of buyers and manufacturers is making supply chain management more difficult on companies needing to service their customer base.
As a result, Asian manufacturers are often requesting tighter payment terms and increasing prices for those companies not meeting their volume requirements. Additionally, Asian manufacturers are less willing to conduct product development trials unless they have good relations with the buyer, belief these trials will lead to defined orders and a commitment to the relationship with the US buyer.
However, companies purchasing from vendors in the US and Asia are dealing with their own issues, including their end-customers demanding lower prices in spite of falling volumes and concern their vendors will reduce the raw material quality in order to maintain their profit margins.
In this environment, East West has observed several trends in the Asian marketplace. The global slow-down has been accompanied by a price reduction of certain raw materials, including steel and chemicals which has resulted in lower prices for industrial and consumer goods. Additionally, air and ocean freight costs have also fallen.
Since many Asian manufacturers have been stung by Western buyers who have reneged on sourcing contracts, often leaving the Chinese manufacturer with inventory problems, or buyers who provided unrealistic volume expectations to obtain inexpensive pricing, many Asian manufacturers are gravitating to seasoned buyers who have a good reputation in the marketplace, represent serious buyers with decent volumes and have a history of working with manufacturers as the buyer's market changes.
These supply chain trends create opportunities and challenges for Western firms sourcing and subcontracting in Asia. For companies buying products in Asia, the opportunity is to obtain lower prices for raw materials and finished goods which can be passed on to their customers or internalized for higher profit margins. The challenge is for Western firms to identify the right suppliers who are financially stable and committed to the manufacturing practice.
In an effort to assist Western firms purchasing from Asia suppliers, East West supports our clients with a seasoned supply chain team and on-the-ground execution capabilities. We have a proven track record with Western clients and represent the buyer 100%, not the Asian manufacturer. Based on our experience, we have a deep knowledge on numerous Asian vendors, including which manufacturers are poor suppliers.
Our value is the ability to serve as the Asian 'procurement arm' for our Western clients. We meet directly with vendors to support the product development efforts, conduct contract negotiations, access comparable pricing information on other suppliers, and conduct supplier assessment on existing and potential vendors. Additionally, East West conducts Social Responsibility audits on these suppliers in order to meet the client's requirements, which are often demanded by the end-customer.
Our clients are often companies which have been sourcing and subcontracting in Asia but are not satisfied with their existing vendors. Their supplier issues include poor product quality and Quality Control testing procedures, vendor's financial stability, lack of product development support, fluctuating pricing, loss of Intellectual Property, and late shipments. They want East West to serve as their procurement team in Asia and manage the supply chain process from product development, vendor selection, product quality testing and shipping.
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