Global Issues Tip - How to Avoid the Pitfalls of Overseas Partnerships

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How to Avoid the Pitfalls of Overseas Partnerships

Having the knowledge of the potential pitfalls will help to ensure the success of your overseas outsourcing.

By Sid Martin, PE, Sem3 Solutions

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There are many benefits to moving your manufacturing to Asia, but before making a decision that could significantly affect your company’s bottom line, consider some of the factors that need close monitoring in order to avoid potential problems: the difference in communication and culture; the shipment of finished molds and parts as well as actual mold quality.

Understand the Host Country
It’s important to gain the best understanding of the host country. Be sensitive to time differences, communication issues and culture. Although English is spoken in many Asian countries, communication and culture is dissimilar to that of the U.S.

For example, with the 12-hour time difference between the U.S. East Coast and China, meetings are typically scheduled in the early morning or late evening, which is beyond the American “9 to 5” day. Conference calls (usually scheduled at 6 a.m. or 8 p.m. EST) typically last longer than one hour and there may be as many as 20 people on involved. Clarity is key. Use simple sentences, express yourself slowly and allow for long pauses when waiting for a response during conversation.

When obtaining quotes from manufacturers, avoid using a broker if possible. Direct contact is preferred and your business card is very important at this point.

Visit the Facility
After you have selected an Asian manufacturer, visit the plant yourself. Make sure that you see all that you want to see. Your Asian manufacturer may not always be truthful about the number of equipment pieces in use or in actual working order. Avoid being deceived. Walk through every area of the factory and insist on seeing production areas close up.

If you’ve had your molds manufactured in the U.S., you have two choices. Either ship the heavy mold from the U.S. to a manufacturer that can use the mold or pay for the mold to be manufactured in Asia.

One potential problem with having molds made overseas is your satisfaction with the molds. If you own the mold in China, for instance, what happens if you’re not happy with your molder? You’ll then have to pay to have the mold moved in China and start relations with a new manufacturer. This can be a major issue because you will have to determine if your new mold manufacturer will be more reliable than your previous one.

Red Flags of Poor Performers

Failure to document processes or follow procedures. Too often manufacturers don’t document procedures or if they do, they fail to supervise workers and follow the procedures themselves.
Failure to prioritize work orders on the production floor.
Work areas are not clean, neat and safe.
Employees are not cross-trained, which helps to eliminate absenteeism and worker boredom.
Material expiration dates are ignored, which leads to poorly produced product.
Workforce does not understand the concept of 100 percent yield. Too often scrap is expected and rework is considered part of the process.
Process performance is not conducted on a regular basis and displayed for review.
There is a lack of formal training program and workers fail to understand how their jobaffects the company.
Customer questions are not answered in a timely fashion. Poor performing manufacturers take days to weeks to respond to you (the customer), as opposed to hours.

Address Product Shipment and Receipt
After operations have been arranged, the molds or parts manufactured in Asia need to be transferred back to the U.S. This is expensive and the material must be transferred across the ocean, which often takes six or seven weeks. In addition to the costly and time-consuming shipping process, there are specific issues regarding customs and regulatory manners in getting the parts back into the U.S. Oftentimes, you have to hire outside consulting help to even begin to understand the customs issues.

Solve Problems Immediately
Besides meeting U.S. Custom requirements and doing all that you can to ensure your molds will not be damaged during transit—at customs or by employees—there are other pitfalls to getting your material back. The most common problem pertains to diminishing quality or mold failure. You will have to rectify this problem immediately, and it will require senior executives to do so in person.

The root of a quality problem may reside with your manufacturer’s management team, who may not understand your expectations. Or, your manufacturer may be substituting inferior raw materials without your knowledge. Problems also may arise from communication and cultural issues. If you do not have knowledge of your host country and the norms, you are in danger of offending overseas manufacturing executives and workers.

As manufacturing issues arise, they must be addressed immediately and addressed as a company or group issue. Your concerns may not be heard the first time around. Sometimes one issue must be addressed three to four times before it is recognized as serious.

Manufacturing in Asia is highly feasible and can greatly increase your bottom line. Having the knowledge of the potential pitfalls will help to ensure the success of your overseas outsourcing.