From: "Saved by Internet Explorer 11" Subject: Production & lead time in Asia: A complete guide Date: Wed, 9 Nov 2016 08:57:00 -0800 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----=_NextPart_000_0023_01D23A67.3BC22F30" X-MimeOLE: Produced By Microsoft MimeOLE V6.1.7601.17609 This is a multi-part message in MIME format. ------=_NextPart_000_0023_01D23A67.3BC22F30 Content-Type: text/html; charset="utf-8" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.globalsources.com/NEWS/SIC-production-lead-time-in-asia-a-complete-guide.HTM =EF=BB=BF
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Path: Sourcing News & = Advice=20 >> Smart=20 Sourcing >> Production & lead = time in=20 Asia: A complete guide
by Fredrik Gr=C3=B6nkvist
Lead times, when outsourcing production to Asia, involves much more = than=20 assembly, packing and shipment. Yet, many importers are far too = optimistic about=20 the time it actually takes to get from deposit payment to delivered = produce.
In this blog post, we guide you through the four phases of = production,=20 quality assurance and delivery. We also explain how you by simple = measures can=20 reduce the risks for serious delays, and why you need to consider the = risk of=20 quality issues.
Custom designed products, and components, often require additional = tooling,=20 such as injection molds. Prints, = for example=20 logos, may also require additional tooling, which by most manufacturers = must be=20 ordered from a subcontractor. Making, and adjusting, a new mold may take = anything between 14 to 60 days, depending on its complexity. However, = the=20 tooling is usually good for more than one order, sometimes hundreds of = thousands=20 of units. In other words, this lead time can be deducted from all future = orders.
When a manufacturer states a certain production time, they are not = only=20 referring to the time it takes to assemble the items. For some products, = the=20 assembly process is very brief, and is counted in days, sometimes even = hours,=20 for small quantities. However, production cannot begin the day after = you=E2=80=99ve paid the initial deposit.
As Chinese manufacturers maintain a minimum amount of materials and=20 components, purchases must be made from the subcontractors =E2=80=93 = which in turn may=20 need to start production on their end. This is why manufacturers in most = industries hesitate to set a production time shorter than 30 days. Then = again,=20 the production time varies greatly depending on the industry, and the = volume=20 ordered. However, in most cases, the production time is set somewhere = between 30=20 to 60 days.
Upon completion of mass production, a wise importer assigns a Quality = Inspector to check up on the goods, prior to delivery. While an = inspection can=20 be scheduled with short notice, often within 72 hours, the QC report and = its=20 photos may not be available until a day or two after the occasion. = Delivery of=20 reference samples, if required, may take up to a week, sometimes more, = to=20 arrive. All in all, it adds up.
Buyers in the United States, Europe and Australia may also be = required to submit product samples for compliance = testing, which is even more time consuming. In my experience, it can = take=20 days before testing companies even issue their invoice, and then another = 10 to=20 14 days before the results are back.
This is the part is what most importers worry about. However, this is = the=20 only lead time where you can actually be quite certain to avoid delays. = First,=20 the cargo must be transported from the factory to the nearest Port of = Loading.=20 This doesn=E2=80=99t take much longer than a few hours, but include = scheduling and=20 waiting time, and you=E2=80=99re looking at one to three days.
Upon arrival in the Port of Loading, = the cargo is=20 then placed in temporary storage in a warehouse. Depending on the = arrival=20 timing, the cargo can usually be loaded on the next container vessel = within 2 to=20 4 days. Obviously, the transit time varies entirely depending on = location. Below=20 follows an overview for a a few routes:
As the cargo lands in the Port of Destination, the cargo must first = be=20 unloaded and go through customs clearance, all of which adds on another = two to=20 three days, before the cargo can be forwarded to the final = destination.
Phase | Duration |
---|---|
Tooling Production | 0 =E2=80=93 60 days |
General Production Time | 30 =E2=80=93 60 days |
QC & Compliance Testing |
Quality Inspection: 3 =E2=80=93 5 days
Compliance Testing: 7 =E2=80=93 20 days |
Shipping |
Inland transportation (China): 1 =E2=80=93 3 days
Transit time (Sea): 7 =E2=80=93 33 days
Transit time (Air): 4 =E2=80=93 10 days
Inland transportation (Local): 1 =E2=80=93 2 =
days |
Total | 46 =E2=80=93 180 days |
As if what you just read wasn=E2=80=99t bad enough, it does get = worse. Many Chinese=20 manufacturers are all but masters of time management. Delays during the=20 production is anything but unheard of. Yet, it is possible to at least = make sure=20 that its not your order that=E2=80=99s put on hold.
Chinese suppliers rarely hesitate to take accept new orders, even if = their=20 production plan is already filled to the brim. After all, once a buyer = has wired=20 the deposit payment, they are stuck, and will think twice before taking = their=20 business elsewhere. Yet, what you can do is to make sure that = it=E2=80=99s the other=20 sucker that gets his or hers patio furniture delivered in late October, = rather=20 than you. The solution is something as simple as a late delivery clause = in the=20 sales contract, written as follows:
If the entire batch of products is not completely manufactured, = packed and=20 made ready for inspection, within XX days (counting from the date = of the=20 deposit payment), a deduction of US$XXX shall be made from the = balance=20 payment, for each consecutive day, until this requirement is = fulfilled.
In all honesty, it is still not an easy task to enforce a breach of = the late=20 delivery clause. That said, this has saved our clients from delays for = years,=20 and I cannot remember a serious reported delay for at least the last 3 = years.=20 Considering the number of clients, and orders, we=E2=80=99ve managed = since then, I dare=20 to say that it works quite well. Still, it does make sense, even from = the=20 supplier=E2=80=99s perspective.
Imagine that you, as a factory owner, can=E2=80=99t keep your = production schedule and=20 must choose between two buyers. The first has no late delivery clause, = perhaps=20 not even a sales contract, while the other requires a daily deduction of = US$500.=20 I dare to bet you=E2=80=99d prioritize the latter.
A Late delivery clause is likely to make the supplier think a few = times=20 before putting your order on hold. However, the more serious delays are = often=20 caused by factors, outside of the suppliers (direct) control. A = statement I=20 often make while writing for Chinaimportal.com, is that quality issues = are=20 certain. The question is not if, but how severe they=E2=80=99ll be.
Serious quality issues, both cosmetic and functional, may sometimes = not be=20 discovered until the later stages of production, or even after the = entire batch=20 is packed. In a situation where a high number of defects are discovered = during=20 the pre-shipment quality inspection, = the only=20 wise decision is to start over from scratch and order a remake. Same = goes for=20 compliance issues, in case your product fails such testing.
Fredrik=20 Gr=C3=B6nkvist is the co-founder of ScandinAsian Enterprise in Shanghai. = Since 2010,=20 he and his team have helped hundreds of companies worldwide, primarily = in the EU=20 and US, to develop and manufacture products in China. He is also the = main=20 contributor on http://www.chinaimportal.com/,=20 a leading knowledge base for small- to medium-sized enterprises = importing from=20 Asia. For further questions, you can contact him on www.chinaimportal.com/contact-us/.
Read more Sourcing=20 News & Advice