Report from the Northeast Supply Chain Conference, Day 1
By Maria Varmazis -- Purchasing, 10/1/2007 8:00:00 PM
The Northeast Supply Chain Conference and Exhibition kicked off today in Marlborough, Mass., with more than 300 New England-area buyers attending seminars on topics including sourcing in China, managing and mitigating supply chain risk, and negotiation strategies and tactics.
Six Sigma consultant Richard Crowe was one of four morning session speakers, and like many in the supply chain world today, a topic at the forefront was the potential for risk when sourcing in China. "One recall wipes out 10 years of outsourcing savings," said Crowe. While reviewing the tenets of Six Sigma sourcing and its emphasis on reducing variability in the supply chain, he urged buyers in attendance to ask the tough questions of themselves and their purchasing teams about quality, infrastructure and availability needs when considering low-cost country sourcing. Basic unavoidable issues like language barriers and even time zone differences can be a burden to a supply chain, so Crowe emphasized the need for clear, detailed communications and documentation when sourcing in China, even when there are already industry standards presents, such as ISO.
Sometimes just moving operations to location within the U.S. can cause problems, by lengthening leadtimes for example: "In-country sourcing can be as bad as outsourcing," Crowe said, "but you can get on a plane more easily to talk to your suppliers." Crowe also told the audience not to expect anyone else in their organizations to consider these supply chain complexities, as other departments (such as finance) will be focused on other needs, often exclusively the bottom line. "As we go into further into globalization, it's your job to ask these questions," Crowe said.
Over the lunch break, Stephen Slade, senior director of applications and industry marketing of industrial manufacturing and supply chain at Oracle spoke on what he termed Oracle’s "value chain," a new take on supply chain management designed to be more flexible and responsive to consumer need. "Technology maximized the value chain," Slade said. He believes that in many contexts, information delivered to the consumer by responsive technology can be more valuable to a consumer than the parts or goods themselves, citing competition between UPS, FedEx and DHL as one example of a "technology war." The ideal "value chain" that Slade cites as a best practice is where customers, suppliers and business partners are linked through a constant flow of supply and demand data.
Consultant Michael Chester of International Manufacturing Consultants took the earlier theme of risk in China sourcing a step further with a seminar on supply chain management in China. He emphasized the need to constantly ask questions and drill down into a situation for as much detail as possible, as both language and cultural norms will impede how information is shared, especially if something goes wrong. One way to make sure mistakes made by a Chinese supplier aren't repeated, Chester said, is to provide examples of how other suppliers have successfully fixed a prior mistake, as well as to ask specifically why something went wrong.
Several attendees were concerned about protecting intellectual property when dealing with Chinese suppliers, and asked Chester how best to protect it. "With difficulty" was Chester's answer. He emphasized that there is no fool-proof way to assure that Chinese suppliers might not use proprietary information later when dealing with a competitor. Some measures Chester recommended for a company to take included hiring an intellectual property attorney both in the U.S. as well as in China, and even to avoid providing all the details of everything that goes into a unit, especially if the supplier is only working on one small part of it.
"Intellectual property abuse is going to happen, so you need to mitigate the risk as you would any other risk," Chester said.
Be sure to read Purchasing.com's Back to School blog, which will be live at the NECON 2007
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