Companies with little
or no global outsourcing experience have concerns about vendor selection,
quality control, logistics, and special know-how.
This section addresses these concerns. If you need further
information, please contact us.
Vendor
Selection
Question:
How does GDS
select offshore vendors?
GDS:
GDS will only recommend
sources that have been visited and found to comply with internationally
recognized quality standards. We personally visit every supplier often to make
certain each is credible and capable of expected performance. We strive to work
with manufacturers that have an established export business to the US, Canada,
and Europe. The common search sites that list suppliers are often filled with "suppliers" who are not suppliers at all in spite of what is found on their websites. The only real way to know is to visit them. That's exactly what we do.
Question:
How can we decide
about Taiwan or China?
GDS:
GDS has experience with
manufacturers in both of these countries as well as India. Various technologies are more
developed in one location versus another. Logistics, ownership, flow of funds, day-to-day support and country infrastructure, all play a role in vendor
selection. We provide extensive guidance on a case-by-case basis. Pricing can vary significantly depending on location and even within a specific location.
Quality
Control
Question:
How can we be
assured that the quality of the manufacturing meets our standards?
GDS:
GDS is tough on
quality. We have visited hundreds of manufacturers in Asia and only work with
those who have proven capabilities. We conduct thorough due diligence on every
new supplier as well. We ship documents and physical samples to each vendor
when working with a client, and we often oversee each stage of the
pre-production and production process.
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Logistics, Inventory, Freight & Duty
Question:
We utilize JIT
inventory in partnership with local suppliers. How can we take advantage of
offshore sources?
GDS:
There is room for a
balanced blend of both. The majority of affordable offshore suppliers have no
presence or inventory capability in the US. Often, the savings can justify carrying the inventory. Customers sometimes source a high percent of the forecastable demand and then use local sources to flex with demand.
Question:
Doesn't the
freight and import duty offset the savings?
GDS:
This is a fairly common
misconception. One client easily reduced the local cost of a simple item from
roughly $18.00 to less than $7.00, including freight and duty. Annual savings
exceeded $250,000. As a general rule, we strive for reductions of at least
20-25% reduction in cost, landed.
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Special Know-how and Technology
Question:
If we engage in
offshore sourcing, we may be transferring proprietary technology.
GDS:
This is a reasonable
concern, but for most industrial components, there is no problem because the
sources have no direct access to the market. In fact, there may be no desire to
enter the market at all. Western customers prefer to deal with a local presence
via OEM parties or distribution, and this presents a barrier of entry to
offshore sources.
Question:
We have a special
technology, and it cannot easily be duplicated.
GDS:
We often see modern
plants with the latest equipment - superior to what is found in the US. Solid
modeling, Pro/E, new CNC machining centers, etc., are commonplace. One common
mistake is to overvalue the technology and to underestimate offshore
capability.
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