© 2005 alpha technologies, inc. all rights reserved. · © 2005 alpha technologies, inc. all...


Sourcing from Asia since 1998



The Alpha Group represents an alliance of independent companies who share a common philosophy - to create world

class powering solutions.


Worldwide Sales and Manufacturing


Alpha USABellingham, Washington

172,000 square feet

Corporate offices

R & D labs

AC production

Circuit board design and prototypes

Custom and final assembly


Alpha USAArlington, Washington

Alpha USAAtlanta, Georgia

80,000 square feet

Transformer production

Enclosure manufacturing

95,000 square feet

Manufacturing

Sales

Technical support


Alpha EuropeUnited Kingdom Germany

United Kingdom Germany

10,000 square feet

Corporate offices and warehouse

Sales

Configuration and assembly

Technical support

10,000 square feet


Sales


Technical support


Alpha Energy (Altair)Bellingham, Washington

Argus MexicoMexico City, Mexico

5,400 square feet


Product design, engineering, and integration

Sales offices

Product installation and maintenance


Argus CanadaBurnaby, British Columbia

Alpha CanadaBurnaby, British Columbia

65000 square feet

Corporate offices and warehouses

DC design and production

Sales, technical support


70,000 square feet

AC/UPS production

Sales


Technical support


Balancing the Need to go Offshore• We need to understand globalization. The world has

changed, have you?

• As manufacturers move offshore and critical mass is created in areas like Mexico, China, India, and Eastern Europe, we need to continue to support local suppliers and production. This keeps our local economy healthy and vibrant by working smarter and more creatively.


Balancing the Need to go Offshore

• By reducing waste and increasing productivity we may compete with offshore manufacturers.

• In many industries, speed and flexibility are essential to competitive advantage.

• Some products are better suited to move offshore: • High volume, low product mix• Labour intensive products


Balancing the Need to go Offshore

Consider overall cost:

• Freight, duty, NAFTA, customs• Travel cost (face-to-face meetings)• Cost of carrying inventory/cycle time• Communication cost • Payment terms (wire transfer, cash in

advance, letter of credit)• Product quality


The sky is the limit but…


How to Source Your Product Offshore

• Identify your goal and define your priorities.

• You need local expertise familiar with culture and local business practices.


How to Source Your Product Offshore

• Be cautious of your intellectual property.

• Establish a product transition team and consider additional resource requirements.

• Identify what type of factory you are looking for: High, medium or low volume


High Volume Factory 10k+/Month

A typical high volume factory:

• Is highly automated, well capitalized• Is highly organized, excellent process control• Wants high volume, low product mix• Is less flexible• Has low gross margins


High Volume Factory 10k+/Month


Medium Volume Factory1k-2.5k/Month

A typical medium volume factory:

• Has lower volume, higher gross margin• Is more focused on product mix, more flexible • Requires more communication and expects

more training


Low Volume Factory100-1k/month

A typical low volume factory:• Is more flexible• Has less savings and more surcharges• Has higher logistics cost• Has limited local purchasing power

- You may need to set up a local control center- Savings could be minimal


Offshore Factory Characteristics

• North American companies are focused on sales, engineering and manufacturing, but Asian factories are 100% focused on manufacturing.

• Asian supplier’s goal is to grow their business by Manufacturing Excellence.


Communication

• Language barriers and time zone differences can make the process very difficult (phone calls late at night...)

• Have someone on your team who is familiar with the culture and language

• Communicate directly with the factory• Document discussion after verbal conversations• Encourage your supplier to ask questions


Communication

• Limit use of slang and abbreviations• Use simple and clear instructions so they

know what to do (especially in e-mail)• Arrange regularly scheduled conference calls• You are relied upon to make decisions and

provide training


Quality

• Typical stereotypical image of “poor quality at a good price” is no longer true, but you must select a high quality supplier

• Quality function is often more structured than North American companies

• China has the critical mass


Quality

• ATL produced product for one year while at the same time ramping up manufacturing offshore. After one year, the Chinese factory had better in-process yields than ATL!


Logistics/Transportation

• Partnering with the right logistics provider is critical to your company's success.

• Knowledge is power: The more you know, the better you can negotiate contracts.



• Road infrastructure, slow inland transit time and extra transportation charges

• Truckers have limited entry barriers

• There are few nationwide trucking companies that can offer integrated, one-stop shopping for inland truck services



•It is more economical to ship full container loads


Environmental / Social

• Define ethical practices with your supplier and their supply chain.

• Increase the level of conscience of your offshore supplier. Be aware of the cost associated with this.


Flexibility/Forecast Changes

• Sales forecasting is an important function and is a key contributor to corporate success. The effect on the bottom line of accurate forecasting can be profound.

• Identify unstable demands and manage them closely.

• Plan, plan, plan…


Flexibility/Forecast Changes

• Raw materials can be purchased much more cost-effectively when last minute spot market purchases are avoided.

• Logistics services can be obtained at a much lower cost when you plan ahead.

• Plan, plan, plan…


Preparedness

• Typhoons• Energy shortages, power shut downs• Fires, equipment breakage • Bird flu, SARS, Longhorn beetle• Vancouver Port strike• Holidays (Chinese New Year, Christmas holidays…)

Currency fluctuations can pose significant challengesReview your margins more often


Questions and Answers

© 2005 alpha technologies, inc. all rights reserved. · © 2005 alpha technologies, inc. all...

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