Cut the fat from your Chinese takeaway
In recent months, I have been reading a significant number of media articles concerning rising costs in China, and how this will result in higher prices being passed on to US and European retailers and consumers.
From our Shanghai office’s experience on the ground, I am happy to say that statements such as “every single retailer has and is paying more for the items they sell” or “Americans, Europeans and other buyers will have to pay more for those goods or seek lower-cost suppliers elsewhere” can be proven inaccurate by improved execution in upstream supply chain operations. The reality is, there are greater cost savings in China to be achieved.
Cost pressures are undoubtedly rising in China. I would note areas such as raw material prices, logistics freight rates, salaries and currency exchange risk. My question is, how many companies sourcing from China are considering alternative material selection, exchange rate risk balancing, and operational opportunities to eliminate unnecessary layers that contribute limited added value?
With increasingly volatile sales and realised margins, it is key that the retail industry become more engaged in supply chain operations beyond traditional sourcing and shipping. To achieve significant cost savings, retailers must actively look at strategies that identify waste in the value chain.
Major inefficiencies exist in areas such as logistics and distribution planning, as the majority of retail models do not utilise consolidation effectively. Optimised packaging methods are rarely used, which can cut both direct and indirect costs.
At the bare minimum, there still exists a lack of knowledge concerning the market price of materials and products.
With smarter business practices, every purchase order does not have to equal higher spend. By implementing innovative techniques to reduce operational inefficiencies, retail companies can maintain current pricing or lower costs.
I’ve seen this proven, as we set internal targets of sustainable or reduced pricing over a period of time for our retail partners that exceed the industry average. In some examples, we have identified cost reductions of over 25 per cent for both retail merchandising fixtures and products.
Here’s to a year that goes against the “market” trends.
☛ Bradley A. Feuling is CEO of Kong and Allan (Shanghai) Consulting
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Hi, I also live in China, and of course we look at all these matters mentioned,in order to reduce waste but the bottom line is prices are rising, across the board, and there’s not really many opportunities to escape it. Many of the inflationary factors are caused by deliberate Government policy, and by the inevitable demographic changes in the country as it gets richer, and it’s population thus has more freedom of choice. I think the biggest concern is that as China gets more wealthy it will inevitably soak up more of the world’s resources, and thus continue to drive up commodity prices that affect every nation’s inflationary impact. This is not a short term trend, this is about a major shift in the current world order.There are no easy answer how to minimise the impact of the current inflationary trends ???
I agree with Mr Bradley – now is the time to be a player not a spectator – for to long we have let a culture of minimilisim in terms of proactive management prevail and inflation and a feeling of helplessness is the result – we just took the profit and did not reinvest in the next inevitable stage of any expansion – consolidation
In this Generation The People are becoming lazy to Prepare food and mostly not protein food thats why our child are not Active and Strong.Please Avoid Junk Foods U Go Authentic Chinese Food. Its Good for Health and automatically reduce the Weight with in a 2Months………………………..