JÄGER Busi­ness Blog

Rub­ber & Plas­tics: Glob­al sourc­ing is
not always the best pro­cure­ment strategy

13.10.2021   |   Wern­er Kruckenberg

Glob­al sourc­ing is still con­sid­ered the gold stan­dard of pro­cure­ment strate­gies, even in the rub­ber and plas­tics indus­try. Sourc­ing mold­ed parts from South­east Asia is so wide­spread that many com­pa­nies no longer even con­sid­er oth­er options. How­ev­er, pur­chas­ing deci­sion-mak­ers are unnec­es­sar­i­ly lim­it­ing them­selves with this mind­set, because even glob­al sourc­ing is not a uni­ver­sal solu­tion for all pro­cure­ment sce­nar­ios. It often makes sense to switch to Ger­man sup­pli­ers, despite the high­er pur­chase price. 

The qual­i­ty of inter­na­tion­al sup­pli­ers often varies

One thing must be made clear from the out­set: Ger­man sup­pli­ers are not fun­da­men­tal­ly bet­ter than inter­na­tion­al ones. There are also excel­lent rub­ber, plas­tics and tool pro­duc­ers in oth­er coun­tries that sup­ply top-qual­i­ty goods. In addi­tion, inter­na­tion­al sup­pli­ers often have brand­ed prod­ucts from large cor­po­ra­tions in their port­fo­lio, the qual­i­ty of which is the same all over the world. 

How­ev­er, the prices of these top sup­pli­ers are also cor­re­spond­ing­ly high for local con­di­tions, which con­tra­dicts the inten­tions of glob­al sourc­ing. It makes lit­tle sense to trans­port goods halfway around the world if the pur­chase price is ulti­mate­ly the same as what a Ger­man man­u­fac­tur­er would have charged. Those who pur­chase goods from over­seas usu­al­ly do so in order to reduce costs. And this is almost always at the expense of qual­i­ty. 

The issue here is not the gen­er­al lev­el of qual­i­ty, but con­sis­ten­cy. The dimen­sion­al tol­er­ances of low-cost inter­na­tion­al sup­pli­ers are often much high­er than Ger­man com­pa­nies are used to. For exam­ple, it is com­mon for the Shore hard­ness of rub­ber sheets to be spec­i­fied with a tol­er­ance of ±5 points. In con­trast, tol­er­ances of ±10 points are very often applied to export goods, which can result in large dif­fer­ences for the cus­tomer. Thus, one batch of wash­ers may have a hard­ness of 75 Shore and the next a hard­ness of 60 Shore, even though both have passed the supplier’s qual­i­ty test. 

For pro­duc­tion, such high vari­a­tion is prob­lem­at­ic. Euro­pean stan­dards and reg­u­la­tions in par­tic­u­lar leave lit­tle room for vari­a­tion. How­ev­er, this fact is often dif­fi­cult to com­mu­ni­cate to over­seas sup­pli­ers. From their point of view, the require­ments of Ger­man cus­tomers seem metic­u­lous, which makes coor­di­na­tion even more difficult.

Large dis­tances com­pli­cate new development

Devel­op­ing new prod­ucts when com­pa­nies from sev­er­al coun­tries are involved is a dif­fi­cult process. Com­mu­ni­ca­tion and coor­di­na­tion are already time-con­sum­ing under nor­mal cir­cum­stances. If pro­to­typ­ing is added, the effort increas­es fur­ther. In the rub­ber and plas­tics sec­tor, there are usu­al­ly two sam­pling loops before the mold­ed part goes into pro­duc­tion. If a defect is dis­cov­ered here, the sup­pli­er has to make improve­ments and send the sam­ple to Ger­many again, which can take sev­er­al days even by air­mail. 

In mold­mak­ing, these delays are even more seri­ous. If an error occurs here, the cus­tomer must send the tool back for cor­rec­tion. By sea, this can take six to ten weeks. The air route is faster, but eats up the price advan­tage. Then the sup­pli­er has to rework and send the tool back to Europe. The entire process can take three to four months. 

There are ways to reduce these delays, but they come with oth­er draw­backs. Send­ing per­son­nel abroad to sam­ple the tool, for exam­ple, is not always prac­ti­cal. In turn, bring­ing in a Ger­man man­u­fac­tur­er for rework negates the cost advan­tage of glob­al sourcing.

Cen­tral ware­house of the JÄGER Group

Com­mu­ni­ca­tion prob­lems often occur

The greater the dis­tance between client and pro­duc­tion part­ner, the more dif­fi­cult it is to work togeth­er. This starts with the fact that office hours may not over­lap in dif­fer­ent time zones.

Chi­na, for exam­ple, is sev­en hours ahead of Ger­many. A query in the after­noon from a Ger­man com­pa­ny does not reach the Chi­nese col­leagues until late in the evening. Their answer does not reach Europe until the next morn­ing. This makes dia­log dif­fi­cult. Tele­phone calls or web meet­ings are also prob­lem­at­ic because there is only a short win­dow of time in which the office hours of both com­pa­nies over­lap. 

In addi­tion, there are inter­cul­tur­al com­mu­ni­ca­tion prob­lems. The Ger­man way of com­mu­ni­cat­ing is per­ceived abroad as very direct. Cul­tures in South­east Asia, on the oth­er hand, tend to com­mu­ni­cate indi­rect­ly and avoid putting anoth­er per­son on the spot. Such dif­fer­ences some­times lead to mis­un­der­stand­ings. Dif­fer­ences in work­ing meth­ods can also be prob­lem­at­ic. The typ­i­cal Ger­man focus on details and pre­ci­sion is not shared by all coun­tries, which can lead to con­flicts. 

In addi­tion, one must not for­get the tech­ni­cal side. Com­pa­nies abroad some­times use dif­fer­ent soft­ware solu­tions or com­mu­ni­ca­tion stan­dards that are not always com­pat­i­ble with their Ger­man coun­ter­parts. CAD sys­tems are a good exam­ple of this. Elec­tron­ic design draw­ings from Ger­man com­pa­nies some­times can­not be opened by inter­na­tion­al part­ners, or they arrive dis­tort­ed. This cre­ates addi­tion­al coor­di­na­tion effort.

Glob­al sourc­ing always involves risks

In addi­tion to the pro­duc­tion-spe­cif­ic chal­lenges of glob­al sourc­ing, there are dis­ad­van­tages that every com­pa­ny that sources goods from over­seas accepts. In addi­tion to long basic deliv­ery times, these include the risk for unplanned events that delay on-time deliv­ery. These can be bad weath­er con­di­tions, but also con­ges­tion at bot­tle­necks or busy trans­ship­ment points. Polit­i­cal fac­tors also play a role. For exam­ple, in August 2021, Chi­nese author­i­ties closed the country’s sec­ond-largest con­tain­er port to com­bat a pan­dem­ic, affect­ing sup­ply chains around the world.

Flex­i­bil­i­ty also suf­fers when a com­pa­ny sources rub­ber and plas­tic mold­ed parts from over­seas. Peak demand is dif­fi­cult to meet when addi­tion­al sup­plies are trav­el­ing in con­tain­ers for sev­er­al weeks. Added to this are legal require­ments that pose chal­lenges to glob­al sup­ply chain man­age­ment, for exam­ple envi­ron­men­tal reg­u­la­tions or the EU’s Sup­ply Chain Act.

In sum­ma­ry

Glob­al sourc­ing is so wide­spread as a pro­cure­ment strat­e­gy that many com­pa­nies no longer even con­sid­er oth­er options. How­ev­er, such tun­nel vision is always risky. For all its strengths, glob­al sourc­ing of rub­ber and plas­tic mold­ed parts also has some dis­ad­van­tages that can have seri­ous con­se­quences depend­ing on the sit­u­a­tion. These include pro­nounced vari­a­tions in qual­i­ty, poten­tial com­mu­ni­ca­tion prob­lems with pro­duc­tion part­ners and long deliv­ery times. 

Of course, this does not mean that man­u­fac­tur­ing com­pa­nies should aban­don glob­al sourc­ing as a mat­ter of prin­ci­ple. How­ev­er, it is worth recon­sid­er­ing entrenched sourc­ing strate­gies and check­ing whether a rub­ber and plas­tics sup­pli­er in Ger­many might be the bet­ter choice. “Just go to Chi­na” is not always the best strategy.

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Author: Wern­er Kruckenberg

Wern­er Kruck­en­berg has been work­ing in sales at Jäger since 1980. The trained whole­sale and for­eign trade mer­chant has man­aged the Nuremberg/Fürth site since 2001. 
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