3. Establish a safe environment in which technology, process and best practices can be shared openly — further strengthening both parties through ongoing relationship building.
4. Enable more flexibility to adjust to unexpected market changes, promoting an attitude of working together to find effective and fair solutions.
5. Ensure a higher level of stability and predictability in a very turbulent and uncertain environment, providing sustainability and effective risk management.
Successfully establishing partnerships is not easy and requires a shift from the prevalent vendor management attitude held by many firms today. The structures of these partnerships can also be diverse, ranging from contractual supply agreements to shared equity. The common denominator will be the foundation of trust and integrity undergirding the relationship. Management needs to be ready to explore new types of relationships to address the many unique challenges of an increasingly complex global supply chain.
As China-oriented supply chains have expanded and matured, having the appropriate resources on the ground has become more critical. These resources include the right people in the right reporting relationships, supported by the right amount of technology and processes. Yet even with the right mix of resources, performance will suffer without effective relationships that seamlessly integrate these resources with corporate headquarters (and other geographic centers as appropriate). In my experience, companies tend to be too slow to invest in these resources due to cost concerns, operational complexity and the difficulty in finding quality people. Yet these resources are the key to ensuring strategic alignment, achieving full transparency and developing quality partnerships.
Typically, Western companies will establish only basic quality control and procurement functions in China but stop short of adding resources in other important areas, such as product development and design. China is rich in these resources. Though they may be a bit raw, they can, with proper guidance, provide very cost-effective and even creative support to corporate teams. Additionally, deploying a senior company manager to China can empower the local organization and ensure smooth communication with headquarters.
Too much reliance on third parties for market intelligence or operational control handicaps a company's supply chain readiness. Having your own hands, feet, eyes and ears on the ground significantly enhances your ability to optimize your supply chain's performance.
In conclusion, the stakes for getting things right with our China-based supply chains have been raised, with the cost of failure potentially fatal. We need to do all we can to ready our supply chain to deal with tough and ever-changing challenges. Applying old solutions to a new, flat global marketplace just won't work! As I like to say to those struggling to get things right in China: "Everything is possible, but nothing is easy."
About the Author: Steven H. Ganster is CEO of Technomic Asia, a strategic consultancy with more than 20 years of experience helping clients plan and execute Asian growth strategies. Technomic Asia is a division of supply chain consulting firm Tompkins Associates. Ganster is also the author of "The China Ready Company."