Transparency is clearly becoming an important thing.
(did you get my joke there?)
As the years tick forward people want to more and more know everything about everything.
We want to watch our favorite stars on instagram.
Markets and fandom pay for extra content on Patreon.
And corporations, markets and governments want to know WHO is actually making their stuff.
Of all the nerve!
But it’s not that crazy.
One side of the fence believes supply chain clarity is doable.
Another side believes it’s just corporate speak. It’s another barrier in driving the small business into the ground. While at the same time believing that Asian vendors won’t play ball.
Regardless of your belief on the reality of supply chain transparency; here’s a few practical results and benefits.
It’s a good thing.
It helps to stamp out the evil of modern slavery.
Tracking your materials for eco and health purposes? Transparency is the ultimate solution to match materials to the approved source.
When it comes to transparency in offshore and China manufacturing how will this affect the promotional product industry?
The promotional product industry lives on fast turnaround, heavy customization and low prices.
When there’s a custom or bespoke project, buyers source from China.
Gone will be the days of ordering as normal.
You’ll spend time making sure every tier of the supply chain registers in the system.
This will be a process.
This is more than revealing names and address.
This doesn’t mean simply giving out an address and name. In fact when some so-called “standards” require name and address, many times what’s provided isn’t accurate.
Along with transparent requirements are structural, safety and social obligations.
This may hinder buyers’ lead times.
Backpacks? A whole new supply chain required…
Branded acrylic caddies? Starting to put this all together will take months…
…and it will take a long time making sure down the tiers of vendors, accurate information is openly shared. Bye bye in getting to market quick.
And if you want to use the transparent responsible factories, the price may eat a big chunk out of precious margin.
Now with a transparent supply chain, the vendor..or should I say vendors down the line, have every right to start increasing prices.
Their thought may be, “I’ve revealed my sources and spent time upgrading our standards. Here’s my new price to justify the work.”
Let’s run a few scenarios on the benefits….
Will a global drink brand be pleased when they know their vendor (the USA-side distributor) is giving their order to a factory that’s really just a series of houses in a small town where the local women get together and sew the hoodies?
If transparency was the rule of your RFQ systems, you’d know to STAY.AWAY.FROM.THE.VILLAGE.
I mean the optics are bad, not to mention the broader ramifications.
This isn’t hypothetical.
I’ve visited these villages. The people didn’t seem to be under duress. It may’ve been good money for them.
But as you’re buying and selling for corporations, there needs to be more oversight.
When companies are not “in the village” a trained quality inspection team can go in and evaluate risks.
How about local government checks?
Let’s say China is doing a heavy-handed sweep of certain facilities that don’t have such and such global license.
If transparency was apart of the supply chain you can avoid this.
Nevertheless the buyer presses forward.
Now the factory closes.
Goods are stuck, half finished.
Money changed hands.
End-brand now cancels the order.
How about a factory fire in a substandard facility that lacks proper safety plans?
If transparency were the rule of the day, this factory would have been x’ed off the vendor listing.
This is the kind of stuff that can show up on Fox News…or MSNBC, pick your flavor.
Does transparency fit the Chinese culture and business method?
In short, no.
Does that mean they cannot adapt if they want to do offshore business?
Of course they can.
The largest suppliers undoubtedly are already transparent (or more so) with big money buyers.
But for the suppliers that are on the fence in deciding if worth it? Well, considering today’s climate of tariffs, trade wars and increased labor, they are not anxious to do this.
From my years of living and working with and in China.
I know that Chinese are not naturally transparent as Westerners think of transparent.
In China, you reveal what you must reveal. Must meaning when there are not longer any options and even then, it’s murky.
Transparency isn’t in the forefront of their thinking.
There’s not something necessarily nefarious behind it.
It’s simply not how they are wired.
They don’t show their cards.
This will only start taking a true hold once buyers WANT to do it.
Not because they don’t want to lose public face.
Not because the higher-ups require it.
But because it’s the right thing to do.
Get expert help to find a manufacturer in China who can deliver on their promises
Over at Sofeast, we made a list of 10 verification steps for checking a potential Chinese supplier in this free e-book: How To Find A Manufacturer In China: 10 Verification Steps
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- What you can observe during an on-site visit
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If you’re new to outsourcing to Chinese suppliers, or just want to get the inside track on how we suggest importers can work better with their Chinese manufacturing partners, go and get that e-book (free, behind a short registration form).