China Sourcing Can Be Hard On Supply Chain

May 11, 2007
Busy ports causing supply chain disruptions.

Have a back-up plan when sourcing from China as congestion at U.S. west coast ports could delay products coming in from China, said the Boston Consulting Group. European port congestion is increasing as well.

"In their rush to source from China many companies are blindly walking into a strategic trap. The trap is thinking that sourcing from China will result in lower product costs, when in reality the supply chain dynamics will, in many cases, drive up overall costs and reduce profitability, "explained senior partners, Georgle Stalk Jr. and Kevin Waddell, in their report," Surviving the China Riptide: How to Profit from the Supply Chain Bottleneck."

The authors suggest that U.S. companies look at home or to Mexico for manufacturing locations. They also point out that Western Europe might be better off sourcing in Central and Eastern Europe.

In addition to transportation problems there are other problems according to the report, "Existing rail infrastructure to disperse the flood of goods from China ... is also being strained, with freight out of Los Angeles and Long Beach [America's busiest ports] already very near capacity and freight out of Oakland, Seattle and Tacoma expected to reach capacity in the next couple of years."

In view of these problems, Stalk and Waddell advise companies to take a second look at their China sourcing and consider a variety of options:

  • Build "land-side" capacity at ports not yet overwhelmed by congestion.
  • Explore shipping alternatives, such as air freight, "that may appear costly but may actually lower overall expenditures by reducing hidden costs."
  • Invest in "premiums" and "capabilities" -- paying higher prices, for example, for priority service ("premiums") or improving the company's own abilities to move goods quickly and efficiently past or around congestion.
  • Diversify supply with "multiple suppliers and supply points" or produce critical components and products domestically, accepting higher production costs as a tradeoff for lower supply-chain costs andreliable delivery schedules.

To view the report in .pdf format, visit:

Interested in information related to this topic? Subscribe to our weekly Value-chain eNewsletter.

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!