{"id":4481,"date":"2022-06-23T08:16:13","date_gmt":"2022-06-23T08:16:13","guid":{"rendered":"https:\/\/api-hk.com\/quality-assurance-for-household-goods-blog-sourcing-diversification-new-countries-new-risks\/"},"modified":"2023-10-24T15:13:37","modified_gmt":"2023-10-24T15:13:37","slug":"sourcing-diversification-new-countries-new-risks","status":"publish","type":"post","link":"https:\/\/www.api-hk.com\/es\/sourcing-diversification-new-countries-new-risks\/","title":{"rendered":"Sourcing Diversification: New Countries, New Risks"},"content":{"rendered":"<div data-elementor-type=\"wp-post\" data-elementor-id=\"4481\" class=\"elementor elementor-4481\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-41bf5278 FTA-sec1 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"41bf5278\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-4d87001f\" data-id=\"4d87001f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-456361af service-para-1 elementor-widget elementor-widget-text-editor\" data-id=\"456361af\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.21.0 - 18-04-2024 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<p>With the outbreak of COVID-19, it became clear for many companies that there was a need for diversification in their supply chain-sourcing base. Businesses worldwide have become dependent on China, but leaving the country is not an option for all of them. The trend of avoiding trade war-related tariffs that had already started a few months earlier is persisting and brings new options to the table.<\/p><p><img decoding=\"async\" style=\"width: 457px; display: block; margin-left: auto; margin-right: auto;\" src=\"https:\/\/f.hubspotusercontent10.net\/hubfs\/2775265\/Sourcing_overview.png\" alt=\"Sourcing_overview\" width=\"457\" \/><\/p><p>China\u2019s advanced role in global manufacturing makes it almost irreplaceable in the short term. Although the diversification of manufacturing options mitigates the risk of one central point of production, the challenges of new developing sourcing locations are to be assessed within the development of a new sourcing strategy. Vietnam, India and Indonesia seem to be some of the preferred destinations for upper-end furniture goods, while Malaysia is typically targeted for promotional to lower-middle price wood and upholstery items. Other industries, such as toys and DIY, are also changing their focus to other sourcing locations, with India a top destination followed by other SEA countries such as Vietnam.<\/p><h2><strong>what are some of the challenges to keep in mind? <\/strong><\/h2><p>China has been an industrial superpower for the last decade, accounting in 2018 for 28% of global manufacturing output. The mature industrial setup developed by the manufacturing powerhouse is yet to be replicated by some of the new manufacturing countries. In many occasions, a shift or sourcing diversification is not supported with the addition of local teams on-site, which combined with the current travel restrictions, lack of knowledge of the local manufacturing practices, and the impossibility to replicate the systems already functioning in China due to its inadequacy with the local situation, increases the risk of compromising the production\u2019s safety and quality.<\/p><p style=\"text-align: center;\"><strong><em><br \/><\/em>68% of companies considering sourcing out of China think of product quality as the greater risk<em><br \/><\/em><\/strong><em><span style=\"font-size: 9.0pt; line-height: 107%;\">(Source: PwC \u2018Global Sourcing Shifting Strategies\u2019 report)<\/span><\/em><\/p><p>Some of the main challenges of the new sourcing destinations include:<\/p><p><strong>Lack of parts and components locally<br \/><\/strong>As an example, the furniture industry may face shortages of some metals and stone when producing in Vietnam, limited access to some wood species and components in Indonesia, or inadequate access in India to some hardware.<\/p><p><strong>Less globally qualified workforce<br \/><\/strong>Although some areas benefit from a highly skilled workforce, some countries present challenges when compared with China\u2019s mature market, such as more limited finishing capabilities or limitations when working with some materials.<\/p><p><strong>Lack of traceability of process and engineering changes<br \/><\/strong>Reduced visibility in terms of product development and adjustments in the manufacturing process increases the need for a more accurate and standardized manufacturing process when compared with China.<\/p><p><strong>New setups and lack of previous experience <br \/><\/strong>The new processes make it difficult for the local workforce to prevent inadequate factory practices and anticipate risks.<\/p><p><strong>Systems not adjusted to real risks of quality and safety <br \/><\/strong>Limited risk mitigation before design and production results in products of potentially lower quality, and longer lead times.<\/p><p><br \/>Specialized solutions, such as technical audits, can help mitigate these risks in addition to assessing new suppliers when shifting sourcing locations and helping to secure production.<\/p><p>A technical audit will allow you to identify whether the factory can correctly manage the supply chain and has an adequate setup to mitigate risks. A factory with good procedures, instructions, and a clear record will be more likely to run properly \u2013 even with a less experienced workforce \u2013 thus reducing the risk of product quality and safety.<\/p><p>Some of the common points checked during a technical audit will cover:<\/p><ul><li>Gesti\u00f3n de la calidad<\/li><li>Desarrollo de productos<\/li><li>Control de calidad entrante<\/li><li>Control del proceso de producci\u00f3n<\/li><li>Control de calidad del producto acabado<\/li><li>Resource management<\/li><li>Measuring and testing equipment control<\/li><\/ul><p><strong>\u00a0<\/strong><\/p><h2><strong>Our Technical Solutions <\/strong><\/h2><p>At API, we support our clients in their relocation to new destinations, helping them assess their suppliers\u2019 risk.<\/p><p>Our proven experience has strengthened our customers\u2019 \u2018out of China\u2019 strategies, benefiting from our expertise and supply chain knowledge. For example, we supported one of our customers in the relocation of some of their furniture lines to India with <strong>a tailor-made program with eight key steps that allowed the brand to shift a significant part of its orders\u00a0in less than six months.<\/strong><\/p><p style=\"text-align: center;\"><br \/><strong>&#8220;A tailor-made program with eight key steps allowed the brand to shift a significant part of its orders in less than six months&#8221;<\/strong><\/p><p>Some of the critical points addressed were:<\/p><ul><li>Identification of the local manufacturing specificities and inadequate factory practices<\/li><li>Product risk and quality improvement<\/li><li>Lead time improvement<\/li><\/ul><p>Some of our solutions to support brands, retailers and manufacturers in their relocation to a new sourcing location include:<\/p><ul><li><strong>Technical Audits: <\/strong>Nuestra <a href=\"\/es\/solutions\/auditing\/household-goods-factory-technical-audit\/\" target=\"_blank\" rel=\"noopener\">technical audit solutions<\/a> cover the critical points addressed by industry standards, and our expert approach combines product expertise and manufacturing knowledge.<\/li><li><strong>Dedicated Local Support: <\/strong>A lack of local support from your own teams in a new sourcing location can be remedied with API\u2019s Dedicated Local Technical Support Program. Benefiting from our experts\u2019 support on-site will allow a smoother relocation and help maintain quality during production thanks to an adequate risk assessment, resulting in process amelioration and improved product quality.<\/li><\/ul><p>Interested in learning more about how we can support you in shifting sourcing locations?<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-664f951 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"664f951\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-287d84f\" data-id=\"287d84f\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-c711eb1 elementor-widget elementor-widget-shortcode\" data-id=\"c711eb1\" data-element_type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-shortcode\"><a href='mailto:info@api-hk.com' class='blog_contact'>Contacta con nosotros<\/a><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"<p>With the outbreak of COVID-19, it became clear for many companies that there was a need for diversification in their supply chain-sourcing base. Businesses worldwide have become dependent on China, but leaving the country is not an option for all of them. The trend of avoiding trade war-related tariffs that had already started a few [&hellip;]<\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"elementor_header_footer","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4481","post","type-post","status-publish","format-standard","hentry","category-blogs"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.5 (Yoast SEO v22.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Sourcing Diversification: New Countries, New Risks<\/title>\n<meta name=\"description\" content=\"Look at the main challenges of shifting sourcing locations and how to mitigate these risks and to secure production.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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