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Sourcing in China

Results and Outcomes of

Results and Outcomes of the Survey – Suppliers and Quality Degree of Change in Lead Time Almost half of the companies report no change in lead time of their Chinese suppliers over the past three years (Figure 14). Only 9 percent achieved a positive change and managed to decrease their timings. Consequentially, more than 90 percent of surveyed companies observe that lead times have not been changing or that there is an increase in lead time. To a significant level the change was even stated to have largely increased to over a month. Claim-free goods The percentage of defects has either increased since companies have moved their sourcing activities to China or has remained unchanged (Figure 15). Improvement seems to be the exception. Moving sourcing activities to China had an increasing effect on defective products for almost half of the companies. Only a small share of companies stated that they felt their products arrived in a better quality compared to conditions before moving into China. This very well explains why the KPIs focusing on quality have also been ranked so highly. Quality in China still remains a significant focus of attention and its current level allows a great enough range for improvement. Lead times have decreased 9% We experience more default in our goods than before. 45% Unchanged Moderate increase in lead time (up to 30 days) 30% 48% We have the same percentage of default as before. 41% Large increase in lead time (more than 30 days) 13% We have more claim-free goods since moving our sourcing activities to China. 14% 0% 10% 20% 30% 40% 50% 60% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 14 | Lead Time Statistics 15 | Percentage of Claim-free Goods since Sourcing from China Compared to the Time before Sourcing from China 20

Results and Outcomes of the Survey – Suppliers and Quality Since moving into China the condition of products has either not been changing at all or has improved. Only a minority of companies state a decrease in quality as observed in Figure 16. While sourcing from China the situation did not change in most cases. One third of the companies experience more claimfree products, implying that they were successful in managing their suppliers’ quality. Nature of Quality Related Issues 95 percent of companies that are sourcing from China face some kind of quality issue. The majority of that is related to production which accounts for almost half of the problems (Figure 17). This implies that the majority of issues are directly connected to the product quality and shows that it is crucial to manage quality closely at an early stage before and during production. Nevertheless, there is also a cluster of three non-production topics that have an impact on quality. Most dominant are thereby quality problems being caused by raw material and / or transportation. Especially transportation related issues, counting for over a quarter of all issues, show a great potential for improvement as this is an area that can be influenced directly by the company and should hence not be ignored. In general, KPIs focusing on quality have been widely installed already and provide a first beneficial step to improve and further control product quality issues. We experience more defect in our goods today than when we started sourcing from China. 15% Quality issues related to production Quality of raw materials 20% 44% We have the same percentage of defect all along. 50% Quality issues related to transport Quality issues related to the number of units 12% 17% We have more claim-free products today than when we started sourcing from China. 35% No quality issues Other 2% 5% 0% 10% 20% 30% 40% 50% 60% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 16 | Percentage of Claim-free Delivered Goods while Sourcing from China 17 | Quality Issues Categorization 21

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msg ist eine unabhängige, international agierende Unternehmensgruppe mit weltweit mehr als 6.000 Mitarbeitern. Sie bietet ein ganzheitliches Leistungsspektrum aus einfallsreicher strategischer Beratung und intelligenten, nachhaltig wertschöpfenden IT-Lösungen für die Branchen Automotive, Banking, Food, Insurance, Life Science & Healthcare, Public Sector, Telecommunications, Travel & Logistics sowie Utilities und hat in über 35 Jahren einen ausgezeichneten Ruf als Branchenspezialist erworben.

Die Bandbreite unterschiedlicher Branchen- und Themenschwerpunkte decken im Unternehmensverbund eigenständige Gesellschaften ab: Dabei bildet die msg systems ag den zentralen Kern der Unternehmensgruppe und arbeitet mit den Gesellschaften fachlich und organisatorisch eng zusammen. So werden die Kompetenzen, Erfahrungen und das Know-how aller Mitglieder zu einem ganzheitlichen Lösungsportfolio mit messbarem Mehrwert für die Kunden gebündelt. msg nimmt im Ranking der IT-Beratungs- und Systemintegrationsunternehmen in Deutschland Platz 7 ein.


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