Offshore Sourcing in the Global Supply Chain

Estimated reading time: 10 minutes

Brittany Martin, I-Connect007, speaks with Bob Duke, president of the Global Sourcing Division at American Standard Circuits, discussing the challenges and benefits of navigating the global supply chain, including the value of strong supplier relationships, rigorous quality control, and strategic sourcing from regions including China, Vietnam, and India.

Brittany Martin: Bob, can you share your background and how you ultimately moved into global sourcing?  

Bob Duke: I’ve been involved in the electronics industry since the mid-1970s. I worked for various PCB manufacturers in the early days of my career and migrated to electronic component distribution prior to co-owning a PCB assembly company that had operations in the U.S. and China. My focus during that period was operations and supply chain. Prior to joining ASC, I served as vice president/managing partner of M-Wave Controls, LLC based in Aurora, Illinois, where I was responsible for global sourcing of critical electronic components and other custom parts. MWC designs and manufactures custom controls for food service equipment and various other industries requiring these services. Many years back, I was general manager at Hamilton Hallmark (a division of Avnet Electronics) in Chicago, where I gained a great deal of experience in electronic component distribution. My career in electronics has positioned me very nicely to lead this new Global Sourcing Division of American Standard Circuits.

Martin: Tell me more about that business.

Duke: We had the opportunity to develop a supply base for all these other materials that were of comparable quality to what’s available in the United States at a third of the cost, with a factory already in China. We provided a higher-level assembly at a very competitive price. We would wrap that up into a box build and show our domestic customers our price. It was far better than what they could do domestically by getting somebody to do the circuit board and then bringing these other components in from domestic suppliers and putting it together themselves. 

Martin: It sounds like you have a background in establishing a network of suppliers.

Duke: The 90 suppliers I work with today come from our suppliers I’ve worked with for over 15 years. They encompass plastic injection molding, all types of metal fabrications, magnetics (transformers, coils) and wire and cable harnesses. Once you've established a supply base in Asia and have been doing business there so long, you understand where to go and who will help you find other suppliers for things that haven't come up before. Our business cards say, "If you don't see it, ask about it.”

Martin: How does that translate into the work you’re doing today? 

Duke: One of our largest customers at ASC Global Sourcing is in the automotive industry. They cater to automotive repair or body shops that do the repair on your vehicle. When you’re taking a car apart to repair it, you need a very large rack with baskets to organize the parts that are being taken off your vehicle in order to get at the area that needs repair. The racks they design and we supply help keep them keep organized and from misplacing materials.  

We had the opportunity to compete with both a local supplier and the customer’s current supplier in Asia that make the baskets today. In a comparison with their current suppliers and our offshore supplier, the customer chose our products over the incumbent. As a result of this success, ASC Global Sourcing was given an opportunity to quote and supply numerous other products for this customer. It has become one of our very large customers. We have expanded into a 12,000-square-foot warehouse, and anticipate the need for additional space in the near future. 

Customers still want good-quality products, and we can source them at a lower price than they can buy domestically. Our customers should feel comfortable with where the products are coming from. Our customers can offer their customers lower overall costs or decide to enhance their own margins and make a very low profit job more profitable with what we offer in the way of cost savings and service.

Martin: What do your customers think about this type of global sourcing?

Duke: We started our printed circuit board operations in 1988, and have established ourselves as an industry leader in printed circuit board manufacturing American Standard Circuits’ focus is on all types of high tech printed circuit boards. The new Global Sourcing Division was established to give our customers the option of going overseas for other custom products they might need help finding a source for. Many companies don’t know where to begin when sourcing overseas and need help rather than doing it themselves. It takes a good long while to establish trusted sources yourself vs. coming to ASC’s Global Sourcing Division where you can start immediately with an established mature supply base.

We have three people in Asia who coordinate the sourcing, quality, and our supplier development efforts. Our most important strength is to have a stable supply base. I've been going to China for over 25 years and am now broadening to Vietnam and India. Most of the suppliers we are working with today I brought  over from companies I’ve owned or worked with previously which is why I’m so confident in the new division. 

I feel good about our focus on low- to medium-volume, high mix. Large Tier 1 companies with high volume requirements do a good job developing suppliers on their own and don’t need our services. Our business is designed to serve Tier 2 and 3 companies. Many of these smaller companies don't know where to start in terms of finding a supplier. They might say, “We don't speak the language when it comes to sourcing in China. However we would be interested in a lower price if we can get comfortable with the process and can get the same quality overseas we are accustom to from our domestic suppliers. ASC’s local warehousing is an added bonus we don’t get from our current suppliers. 

Martin: Can you share an example of one of the successes you’ve had? 

Duke: Global Sourcing earlier this year quoted and won a plastic injection molding opportunity. We found out after submitting our initial quote that there were 25 additional parts available to us provided we delivered on the promise of quality, on-time delivery and service on the initial part. The first part we quoted was the housing of a new product that is very visible to the consumer who uses the product, so it not only had look good but also had to meet some fairly difficult specifications. If we did well on this part, we would be given a look at the other 25 additional plastic parts that make up the finished assembly. Of course, I’m happy to report that First Articles passed the customers inspection and production was delivered on time. Not only was ASC Global Sourcing given an opportunity to quote the additional business promised, but we were also awarded that business as well. You don’t always know what’s behind a first order with a new customer. Perform and see what happens.

Initial Order Product Information

• Product Type: Plastic Injection Molding
• Industry: Consumer Product
• Annual Usage: 5,000
• Overall Customer Savings: $66,700

We’ve also had great success in the area of magnetics (transformers and coils). The Chicago area is home of the gaming industry which uses a lot of magnetics in their products. Our  product often performs better than product from the domestic  suppliers.  So, that's worked out very well. We also work with all types of batteries, wire harnesses and cable assemblies, membrane switches, and graphic overlays. 

Martin: What message are you trying to get out to these Tier 2 and 3 customers?

Duke:  It can be difficult to get the first opportunity because, the purchasing community is pretty happy with the suppliers they've been doing business with and often don’t have the time for supplier development. ASC wants to be a full-service supplier—not only to supply printed circuit boards to our customers, but also help source other custom products they might need. Generally speaking, a procurement department has the responsibility to save money for the company along with  other departmental goals. Indentifying and approving new suppliers is not easy and is time-consuming, which often forces you to use the supplier already approved than developing a new lower cost option.

ASC Global Sourcing takes the time you don’t have and does that work for you. We have no problem sharing our ideas and making recommendations on products that we quote for our customers. In some cases if our recommendations are followed, we can quote at a lesser cost. We both win. ASC Global Sourcing has a warehouse in West Chicago and in Hong Kong. Which warehouse we use depends on what works best for our customer. In many cases, we can also ship direct. 

Martin: How do you go about choosing a supplier?

Duke: There are many aspects of choosing and approving a new supplier. One of many items on my list when I evaluate a new supplier is that I want to meet the owner of the company. Sometimes things can go wrong, and you have to get ahead of that. Talking to customer service organizations doesn’t necessarily solve that problem. At the end of the day, it’s the company's owner who may  need to get involved to get something corrected and back on track quickly. If we are important to the supplier, they will take the time to know us as well. Those relationships have proven to be a very successful resource for us. 

We do source inspection overseas and can do inspection stateside when the product arrives. You don't want a container of product getting here only to find out that you've got a quality problem, especially when you now have a lot of money invested in freight and lead time if something has to be corrected. Doing source inspection overseas just makes sense. 

Martin: How prevalent are quality issues? 

Duke: They are very rare when you pick the right supplier. To avoid quality issues we have learned to supply a sample of what the customer is getting from their current source, along with their documentation. We often find that the incumbent supplier isn't necessarily meeting the customer's specifications, yet that's the product they've been using, and the customer hasn’t noticed the non-conformance. The customer is usually unaware of the issue and is grateful that is was found and being pointed out. At this point, the customer has a choice: Do we make the product per the sample, change the dimensions on the drawing, or have the product produced based on the drawings? 

We have found that they appreciate the thoroughness of what we do. The customer gets a pretty good idea of what we're capable of by going through the quoting process. While customers like cost savings, if the product doesn't meet the quality standards, then saving costs doesn’t help anybody. To date, we’ve yet to have any serious rejections.

Martin: What are you looking forward to in the new year?

Duke: We look forward to what 2025 will bring. We are focused on adding many new customers in the new year but also adding to our supply base with new suppliers in both Vietnam and India. We are closing watching the relationship between the U.S. and China but still have confidence that even with a new administration in place there will be room to negotiate on both sides. I'm confident that things will work out for all of us and that we can continue getting products from China.

Martin: It sounds like very interesting work. Bob, thank you for your time.

Duke: It really is, Brittany. Nice to chat with you.