What do brand supply chain managers fear the most? They fear choosing the wrong supplier.

The saying goes, "Men fear choosing the wrong profession, while women fear marrying the wrong man."

What do brand supply chain managers fear the most? They fear choosing the wrong supplier. Some people may say, "What's the big deal about choosing the wrong supplier? Just replace them."

Let me give you an example. In S Corporation, there was a department where a person who used to work in technology was later transferred to procurement. After just a few days in the procurement department, he was poached by a headhunting company and went to work as a procurement manager for an American company. The procurement manager found a supplier who wasn't performing well and decided to cut ties with them. After doing so, he felt exhilarated, thinking, "Tech work has never felt this good (laughs)." That evening, he happily headed home, singing along with the setting sun.

However, as he reached the entrance of his residential area, he saw the supplier waiting for him. Upon seeing him, the supplier bowed deeply and said, "Manager Tony, you terminated our supply contract, causing over a hundred people in our company to lose their jobs. I'm here today as their representative. Initially, over a hundred of us wanted to come, but I didn't allow them. Anyway, I know where you live..." Some might say this is a threat, should we call the police? How can we call the police? They didn't directly threaten him, and none of those over a hundred people showed up.

But at that moment, the procurement manager faced immense pressure. You can try putting yourself in his shoes and imagine the situation. This example is extreme, but it demonstrates that suppliers cannot be terminated so casually; it involves many factors. We shouldn't be overly theoretical because, in the business world, if you don't understand the principles of being human while doing procurement, you'll find it very difficult. Because every procurement decision involves a trade-off in interests, and when faced with interests, people's true nature will reveal itself. If you threaten someone's livelihood, they will surely show their most desperate side.

Therefore, when selecting suppliers, the first step is crucial. Should you choose big or small ones? New or old? Domestic or foreign?

Each has its advantages, and different companies have different considerations.

Let's consider a real case, that of a company manufacturing axles,

when planning its supply chain. This company originally had its entire supply chain in the United States, from design to raw material procurement, from rough machining to finishing, and assembly, all done in the U.S. Now, a portion of the design has been moved to China, with operations being conducted simultaneously in China and the United States.

What are the benefits? It allows for 24-hour parallel development; while the Chinese are asleep, the Americans are working, and vice versa. Both rough machining and finishing have been moved to China due to lower costs there. Assembly is conducted separately in the United States and China. Why? It ensures quality because different regions have different customer requirements and technical standards, so local production can better meet local customer demands.

Furthermore, it helps avoid quality issues during the logistics process. Finally, testing and logistics are also conducted separately in the United States and China. This company, in planning its supply chain, takes a global perspective and considers it comprehensively. When Professor Gong was a global procurement manager, there was once a need to purchase a pen, with the pen body and cap being plastic parts. These two parts together formed a pen.

Typically, one might consider finding a supplier in China to produce both parts together, but that wouldn't work. Foreigners chose to have the pen body manufactured in China and the cap in India. Initially, Professor Gong didn't quite understand because the costs would surely be lower in China, and it's easier to manage when everything is produced together, reducing logistics costs. So why separate them?

After some time, it became clear. The decision to split production was due to the strong reverse engineering capabilities of the Chinese. If everything was produced in China, competitors would quickly figure out how it worked. By separating production, they wouldn't even know what the product was for; they would only receive technical specifications for individual parts, and after testing, they would be informed if they were qualified, thus avoiding this problem. Therefore, selecting suppliers requires careful consideration; it's a strategic issue.