Sunday, September 23, 2007

On the issue of product recalls

Merle Hinrichs, CEO of Global Sources, recently went on CNBC to defend the quality of products made in China. Somehow, I think this pronouncement came a bit late. The company failed to capitalise on the situation early and make an ethical (and potentially beneficial) stand on the issue of sourcing from China by emphasising its competitive strength: Unlike other free B2B websites where anyone can post information, Global Sources pre-screens suppliers by visiting them at least three times before their products get listed. This ensures that verified suppliers are real companies offering real products. Furthermore, the listed suppliers pay the highest rates in the industry to market their products through Global Sources. Such upfront investment is another clear indication that these suppliers are financially sound and committed to their export business. And by that extension, these suppliers should also be more quality-conscious.

In the light of the recent spate of product recalls, many people are quick to throw out the baby with the bath water by condemning the hundreds of thousands of China suppliers that deliver reliable products on a consistent basis. The problem is, all too often we suffer from the tunnel vision of "price" and forget that strategic global sourcing is about so much more. While the Internet has helped to flatten the world (as noted by Thomas L. Friedman in his book, "The World Is Flat"), it should not replace good old fashioned business sense. True, the pressure to make extra margin by cutting corners is prevalent in low-cost sourcing centres, but the burden really lies with the buyer to pay closer attention to supplier quality and management throughout the various tiers of the supply chain in order to detect potential problems before they occur.

And this is why I feel the message from Global Sources (if it had released one) would be particularly compelling.

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The rationale for Elegant Living


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