Following initial sales calls made in 2015 and subsequent discussions, the project to develop a new spray tanning product line was on track for 2020 development. Then, of course, COVID hit! However, thanks to Source International’s full Operations team on the ground in Asia, we were 100% ready to proceed as soon as we got the green light.
Action Plan:
After several conference calls and sales visits, a team from Source including sales and senior leadership met with the customer’s management team on-site at their facility to dive into the project and develop the features, timelines, and expectations for their new spray tanning system.
A Source Customer Team was assembled in both the US and China office to review the customer’s existing products and to discuss how the ideas presented by the customer in preliminary meetings would be developed into the fully integrated spray tanning system with TUV certification. Budgets were created, timelines established, and the following list of desired features was developed:
HVLP Technology
Lightweight & Compact
Standard 100V Plug
Modern Appearance
Comfortable Hand Grip
Convenient Hanger on Sprayer
Adjustable Spray Pattern
Kink-free Hose
Ergonomic Carry Handle
Power Switch
Stable Foot Design
Stylish & Portable
Low Operating Noise
Removable Air Filter
Integrated Spray Gun Storage
Results:
After the initial product engineering was completed, Pre-Production Samples were made using various prototyping techniques and presented to the customer’s team where they were carefully reviewed by their senior management, sales, marketing, product management, engineering and supply chain teams to ensure they met the design and performance requirements. Once the Pre-Production Prototypes had been fully tested, design changes were made, and several rounds of additional sample prototyping took place. Following field testing of the final prototypes, customer approval of the M1000 Spray Tanning System was given, and the Source team began to build the tooling and set the final timing for production start-up.
After the multiple tooling was completed, Source engineers debugged them. It took several rounds of shots until the tooled Pre-Production sample was approved and the product was released into mass production for the first order. These units were delivered to the customer’s warehouse in 2021. After the second order, the company’s QA manager remarked, “Nice work! We inspected 10% of the second PO of 2000 ea. We found no leaks. Engineering is comfortable with the inspection and results.”
This project represented a true collaborative redesign effort involving the collective efforts of Source and the customer’s engineering, operations, factory, marketing, sales, operations, purchasing and executive teams all working together to accomplish this product development and offshore manufacturing success story. This initial success led to the next series of sample units being sent to the Source China office for review and re-development to add the portfolio of products we will be producing for this customer. See the product in action at this video link.
Source International’s dedicated professionals can achieve the same winning results for your OEM parts and products. For additional details regarding this success story, please contact our Midwest sales office at 440-546-0630 or our US Headquarters office at 502-589-7900. Contact us today to arrange a no obligation assessment of how we can supply a partnership which adds value to your OEM products.
Social media is buzzing these days with companies talking about all the reasons that they have for leaving China and moving their manufacturing supply chains back home or to other low cost countries. What with trade tariffs and now this crazy corona-virus, there are a lot of reasons to be concerned. We have seen a slow trend that began several years ago from companies either looking to make a move, testing the waters elsewhere, or going forward with a move.
One large Asia based inspection company reported that inspection demand in Asia was down 14% in 2019 vs. 2018, while China volumes decreased 3.4%. For the same period, Southeast Asia (Vietnam, Taiwan, Myanmar, most popular) volumes were up by 9.7% and in South Asia (Bangladesh, most popular) up by 37%. And, USA companies continued near-shoring in Latin America (Mexico, Peru, Guatemala, Haiti, most popular) with volumes there more than doubling. Meanwhile, volumes in North Africa and the Middle East (Turkey, Morocco,Tunisia, Egypt, most popular) more than tripled.
LOOK BEFORE YOU LEAP. LEAVING CHINA MAY COST YOU!
Companies must consider the total cost, complexities, and consequences of relocating which may potentially outweigh any savings that they are seeking. When contemplating such a move companies are well advised to be realistic about the pros and cons of leaving China. Instead, we recommend companies to re-assess total landed costs and the strengths and weaknesses of China relative to the products they are producing in other low-cost, offshore countries.
CHINA STILL HAS THE BEST MATERIALS AND INFRASTRUCTURE
Manufacturers rely on local suppliers for an array of materials, parts, and components, so relocating production requires an expensive and time-consuming effort finding new suppliers that meet quality standards and that have adequate capacity to take on more business on a specified timetable. Qualified suppliers may not always be available when and where you want them. Finding proper materials can also present a challenge since China produces many of the materials used in other Asian counties and has an extensive, developed infrastructure to deliver them efficiently. It will take years and years before the entire ecosystem of manufacturers and suppliers can shift out of China—if it ever does. We are betting that China will recover and come back stronger than ever and remain competitive despite some short term pain.
CHINA STILL HAS THE BEST LABOR FORCE AND TREMENDOUS CAPACITY
Source has been part of the development and training of the workforce as it has matured over the past 25 years. Source professionals are unparalleled anywhere thanks to our rigorous training programs. No country has a workforce that is as dedicated and productive as China. No country serves such a wide range of industry as China. And, no country supports it’s industries like China. According to China’s National Bureau of Statistics, 3.8 million manufacturing jobs were lost in urban areas last year. As a share of overall urban employment, it was the biggest annual drop in five years, at 1.5% and employment in factories has been declining every year since 2015, as a result of automation and productivity increases. And, now, with the “phase one” trade deal with China in place, the Trump administration has agreed to scrap planned tariffs on $160 billion of Chinese goods and to cut the tariff rate on another $120 billion of goods in half to 7.5%. ALL THIS LEADS TO MORE AVAILABLE CAPACITY AND MORE NEGOTIATING STRENGTH.
THERE WILL BE A NEW NORMAL IN CHINA ONCE THE VIRUS FEARS SUBSIDE
We definitely see a “New Normal” emerging from a tough 2019 and a slow start to 2020. Many things will have to change to protect the workers and the public at large. A greener, more organized country is likely to emerge in a new push for health and public welfare. China is used to change and is likely to find novel ways to adapt and continue to prosper.
We caution companies to consider all of the factors before leaving China and shifting manufacturing to other low-cost countries in Southeast and South Asia, Africa, Eastern Europe, or Latin America. As for Source International, we are NOT leaving China but, instead, see this as a great opportunity to serve our customers in new and different ways. We plan to double down our efforts to provide new answers to the new, pressing manufacturing and quality assurance questions that have emerged.
LEAVING CHINA IS NOT THE BEST OPTION IN SPITE OF THE CHALLENGES
Source International Xiamen Team held a fun summer party in the beautiful Ten Miles Blue Mountains of Fujian Province, which is famous for its sea of flowers and the air.
In the beautiful and fresh nature, the teams played three games. The first game was called kangaroo jump which need to put their feet into the bag. The second was “number convey game ” for testing everyone’s tacit understanding. The last and the most exciting game was “Rip the nametag off.
We feel the powerful force of energy, motivation, and teamwork. The championship team was awarded by Jeff.
The 2018 Ceramic Industry Supplier of the Year is Source International
By Susan Sutton, Editor-in-Chief
Manufacturers in the ceramic, glass, refractories, brick and related industries rely on the dedicated support of a multitude of suppliers in order to be successful. Ceramic Industry offers manufacturers the opportunity to acknowledge their valued suppliers by nominating them for our annual Supplier of the Year Award. Nominees are evaluated on a number of different qualities, including responsiveness, product options, reliability and overall performance (among others). I’m excited to share the news that the 2018 Ceramic Industry Supplier of the Year is Source International!
Source International (SI) was nominated by Mike Bunge, director of Global Resources for Libbey Inc. In his nomination, Bunge writes, “SI has helped us to remove multiple barriers in our supply chain through proprietary systems that provide far greater visibility into lead times, service levels, quality levels, and pricing.”
According to Bunge, who also nominated SI for last year’s Supplier of the Year Award, the company serves as Libbey’s agent in Asia providing bilingual personnel who are available to assist with operations, logistics and supply chain issues, including product development and engineering, the monitoring of manufacturing processes, and social responsibility and quality compliance.
“Source International helps us execute globally,” says Bunge. “It’s very difficult to have boots on the ground in many regions. It becomes quite expensive. But the Source International reps are knowledgeable regarding common processes and procedures, and are further trained on our specific products and processes.”
SI is a 30-year-old manufacturing and supply management company with about 80 employees. According to Jim Ullum, managing partner, the company has been working with Libbey for 10 years. A dedicated team, comprising merchandisers, engineers, quality technicians, among others, works directly with Libbey to ensure smooth operations that result in quality products.
“Our motto is, we create partnerships for our customers’ success,” says Ullum. “We become an extension of our customers. We don’t work for the suppliers; we work for Libbey. Everything we do is in concert with what they want to do and what their goals are. We feel like we’re Libbey employees, even though technically we aren’t.”
According to Bunge, SI’s size makes the company an ideal supplier for Libbey’s needs—large enough to provide the scope of support required while small enough to be flexible and adaptable when processes and procedures change. “I’m a big supporter of theirs because they’ve helped me, my team and our organization,” he says. “They’ve helped me and my team look good—internally to our organization—and they’ve helped our organization compete better on a global scale.”
Ceramic Industry publisher Tom Fowler presented Source International with the 2018 Supplier of the Year Award on May 1, 2018 live from the show floor at Ceramics Expo in Cleveland. Joe Simon, VP Finance, represented SI and Ryan Routhe, QA/Materials Engineer, Global Sourcing represented Libbey at the awards ceremony. Ryan commented that SI helps Libbey to deliver great products to our customers….they are our feet and eyes and ears in the factories and take projects from beginning to end…just a great asset. Joe thanked Libbey and Ceramic Industry on behalf of Source International for the award and gave special accolades to the SI team in Asia which are the “boots on the ground” and that helps Libbey deliver quality products, on time using the proprietary database operating system (SIS) where customers can monitor the status of its products in real time 24/7.
To view a video of the presentation, please follow this link:
For more information on Source International and the supply management services offerings please contact us to speak with one of our Operations Executives.
CONVERGENT CAPITAL CONGRATULATES SOURCE INTERNATIONAL
Convergent Capital of Minneapolis, Minnesota placed a congratulatory announcement in the Sunday, October 8 edition of the Louisville Courier-Journal as a thank you for a successful payoff by Source of the capital infusion made by Convergent in 2009. Source International, in return, thanks Convergent Capital for this awesome gesture and for the trust that they have shown in Source.
Convergent Capital congratulates Source International
ABOUT CONVERGENT CAPITAL
Convergent Capital is an investment company that provides unique, responsive, and flexibly structured capital to assist in the growth and/or acquisition of businesses committed to long-term, sustainable growth in a broad range of industries. Convergent is focused on providing debenture and equity capital investments in a variety of situations, structuring investments around recapitalizations, sponsored buyouts, management buyouts, consolidations and add-on financings to our existing portfolio companies for acquisitions or other special situations.
The firm’s new investment fund, Convergent Capital Partners, III, L.P., is licensed by the U.S. Small Business Administration as a Small Business Investment Company (SBIC). In operation since 1998, Convergent has over $225 million in capital under management.
Our philosophy is to be an outstanding provider of value-added financial services, investing the capital necessary for companies to overcome financial obstacles and secure opportunities created by growth and financial change. We differentiate ourselves by providing flexible financing solutions in a responsive manner.
Convergent is an active financial partner and a resource for management. Regular financial reporting, periodic discussions with management and board observation rights are required. Through a combination of internal experience and our network of limited partners, advisors and business colleagues, Convergent also offers strategic operating expertise and other resources companies need to execute their growth strategies.
Convergent considers financing in a broad range of industries and searches for companies exhibiting these characteristics:
Positioned within a strong industry
Expected to generate significant growth in cash flow and value
Proprietary technology, process and/or products
Motivated and insightful management team with an equity stake
Adequate liquidity and experienced equity backing
Multiple exit strategies
Annual revenues in excess of $10 million and positive cash flow from operations
As a licensed SBIC, Convergent invests in companies that meet the U.S. Small Business Administrations definition of a small business:
Net worth of $18 million or less, and
An average net income of $6 million or less over the past two years
Libbey held it’s 2016 Supplier Summit at the Source Int’l offices in Xiamen, Oct 27-29. Regional benchmarking of suppliers and opportunities for improvement were the focus. Following two days of meetings, the group took a bus tour to partner Porcelain & Flatware factories.
Source International Valued Client Libbey Glass to Expand Business
It was reported in the Toledo Blade on June 26, 2016 that one of Source International’s valued clients, world renowned glassware manufacturer/provider Libbey Glass, is set to expand their business via a new initiative to reposition its focus as a more consumer-oriented firm. The new initiative, headed up by new CEO Bill Foley, is looking to get in more in touch with the specific needs of everyday consumers in order to develop and provide new products which are more in line with customer preferences.
Libbey Glass, founded in 1818, is the largest provider of glassware products in the United States and is the leader in market share in both the food service and retail segments of their industry. By Libbey’s own estimations, they control approximately 60% of the US food service market.
In 2015, Libbey reported a $66 million USD profit on sales of $822 million USD—sales are expected to increase about 1 percent in 2016.
Source International is proud to have been named a Libbey Glass Outstanding Supplier in 2010,2011, and 2015. In addition, Source International was particularly honored to have the distinction of being named Libbey Vendor of the Year in 2014.
To read more about Libbey’s new business endeavors, please follow the link below to read the Toledo Blade article:
At Source International, our mission is to Supply Partnerships for Our Customer’s Success. Contact us today to learn more about how we can help you manage and optimize your Asian manufacturing and supply chain endeavors. We also welcome you to visit our offices in Louisville, USA and/or Xiamen, China to experience firsthand the scope of our operations.
