Integrating China into Your Global Supply Chain - Lessons Learned from Global Supply Chain Integrators

For too long, many companies have exhibited tunnel vision in their approach to doing business in emerging markets, such as China, India, Brazil, and Russia. Some have seen them purely as venues for low-cost sourcing; others have considered them rapidly expanding pools of customers who are attracted to imported goods. But a new breed of company that we call global supply chain integrators (GSCIs) has recognized that these markets are more than just low-cost source markets or the mega-growth markets of our age: At a minimum, they are both.

The predominant example, of course, is China, with its established manufacturing base and a huge population that is steadily growing more affluent. However, the number of companies that have truly integrated their supply chains to take advantage of this opportunity is still small. Few companies have truly both understood and implemented strategies that leverage the game-changing nature of China in the global economy. But those that have are already reaping the benefits, and can offer key lessons to companies that want to follow in their footsteps.

The Players on the Field
Many multinational companies (MNCs) pursue sourcing and market growth opportunities in China separately, without integrating them; alternatively, they do not see the full potential in China, and therefore suboptimize around narrow objectives.

While driving their “China sourcing” programs, for example, procurement managers are usually well aligned with the objectives of manufacturing, logistics, and quality assurance. However, in many companies they all too frequently fail to work with sales and marketing to consider how best to evaluate the total benefits that a China presence could offer their companies.

On the other side of the coin, marketing and sales managers are often blinded by the promise of selling to potentially hundreds of millions of customers, without considering how major sales success in China could impact the global sourcing practices and manufacturing operations of their companies through the additional volume that this would provide. ...

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