Common concerns About Sourcing

Building products overseas is hard work. Project Asia is here to help you realize your savings, lower your risks, and minimize your investment into the work-at-hand.

We have heard common concerns and questions that arise during our discussions with business owners and procurement managers. We hope the details below will address the concerns you may have yourself.

What is the percentage you charge for your cost-down services?

Our unique business model allows Project Asia to lower your risk and investment during the execution of your cost-down project. We take on all the cost and risk exposure on the front-end for you. In exchange, we will take our payment on the back-end, by charging you a percentage of your net savings as the materials arrive in your warehouse.

The actual percentage charged is based on the total savings, number of components, purchase history, sales forecasts, and your product life-cycle. This percentage is calculated and presented to you during our Analysis Phase 1 effort.

The Project Asia business model is based on us BOTH making money, so at no time will our percentage payment negate the savings benefit to you. It needs to benefit both of us, and the Analysis Phase will dictate if the opportunity exists or not.

Is there really no investment or No risk until you deliver?

There is no such thing as a "no-cost no-risk" offer. Project Asia works very hard to minimize your risk and investment on entry into the international sourcing market.

To be successful, you will need to commit your time and resources to assist us in the analysis and approval of the target components. Reviewing purchase history, first article inspection, and production cross-over will all require input from you and your team.

Are you here to shut down my factory and send our jobs overseas?

No! We are actually helping you keep you factory open. Paying less for components allows you to spend more money on your people, your infrastucture, or add to your profit.

Your ability to keep a domestic workforce will be based on the economics and efficiency of your factory. Costing down components and materials is a great way to be competitive, retain jobs, and grow your factory.

It is estimated that 30% of all production materials and sub-assemblies used domestically are already coming from China. That number will quickly grow to 50% in the next few years. That means that many of your local suppliers are simply reselling components to you. You can realize significant saving by going factory direct on select components.

Can I just do this myself? What value are you adding?

Yes, you can do it yourself... And you should.

Building an internal sourcing department can easily pay for itself in a few years, but it will require that you invest in hiring new resources, building the right team, identifying the right suppliers, and executing the right projects. If you are willing to invest the time and money, then your should not hesitate.

If you are considering contacting a few factories overseas and "just getting quotes", then please be aware that there is a significant amount of work required to deliver quality components for the right price and on the right terms. Plan on spending time traveling, auditing factories, late night phone calls, a few mistakes, and some lessons learned. The work is not impossible, but it really is hard work. Do not underestimate the effort and be prepared.

The advantage Project Asia offers is the ability to benefit from cost-savings without an investment in infrastructure or climbing the learning curve.

We are not making mass-production quantities. Does this offer really apply to me?

In the past, manufacturing in places like China were focused on high-volume mass-production manufacturing. Widgets and low-precision parts were the norm. Things have changed...

There has been a significant investment in the infrastructure of China manufacturing capabilities in the last 5 years. All the latest tools and equipment are in place and waiting to be utilized. Their work is precise, their quality systems are world-class, and factories are seeking new contracts to fill capacity.

High-mix/low-volume overseas manufacturing is now a viable and profitable solution for you. Connecting you with the right partner is the key to success. Project Asia can help you achieve your cost and quality goals.

What about my Intellectual Property? Is my design safe in China?

Copy-cat products can be a real threat to your business, and great care should be taken when going overseas. The first step is to understand what your risks are, and then take positive actions to prevent (or slow-down) these competitive threats.

IP concerns can usually be addressed by holding-back key components or software modules from the overseas factory, basically disabling the technology until final assembly. Many times our customers are sourcing only "generic" components such as cables, harnesses, and metal stampings, which have no value until product final assembly is performed back home.

As part of the Analysis Phase, Project Asia will create a risk-benefit report for you to review, which will include any IP concerns discovered. You will have full control over the decision of which parts are sourced overseas, and which ones will not.

What does "transparent operations" mean?

Simply stated, once we begin working on a project for you, we work directly for you. You will have full visibility on all quotations, all costing information, and all partners being considered.

Project Asia is not a trading company or a middle-man. We do not buy and resell components. Instead we add value by handling all the project management and logistics details for you, so you do not have to.

What about quality, warrantee, and support over the long-term?

Identifying, sourcing, and delivering quality first article components is hard work, but most products will be manufactured for years after the material production cross-over.

Project Asia has a vested interest in your success over the long-term, since our compensation is tied directly to you receiving quality components at your warehouse. You will also have a direct relationship with the overseas suppliers, so you can take direct positive actions to resolve any issues as they arise.

Project Asia is committed to delivering the best cost/performance components over the long-haul, since we only get paid for results.

How does Asia-based sourcing compare to Mexico? What about GSA Compliance?

The short answer is labor costs in Asia is much lower than in Mexico. Many Mexico facilities are now sourcing their components in China, and then reselling them to you. According to McKinsey report "Beyond Cheap Labor" 2005, the hourly compensation for manufacturing is as follows:

For some components, however, a Mexico-based supplier may be more cost-effective due to landing-costs and delivery time-frames. Project Asia will consider all factors and trade-offs during the Analysis Phase of the project, and you will be presented with the details so you can make an educated decision.

GSA compliance is a reality for many US-based manufacturing organizations. Project Asia can help you source the right mix of domestic and overseas components to meet you requirements.

What about lead-time, forecasting, and shipment adjustments from overseas suppliers?

As your forecast turns into actual sales, you will need to make adjustments to your material flow. Project Asia will help you negotiate the use of a local warehouse to hold overstock and safety stock close by. By having a few week/months of inventory available, you can adjust your material flows without incurring a delay or paying expensive expedite shipping.

All of our overseas partners are large, multi-facetted organizations with local offices to service your needs. You will always have local office to contact, as well as a Project Asia team member nearby to assist you.

Phone: +1-949-887-7045     |     email: info@projectasia.com     |     Skype: mweiss.projectasia.com