Traffic Report: Are Your Offshore Suppliers Moving and Shaking?

The global economic crisis has led to at least a few types of stampedes. At first, individual investors headed for the exits, pulling heaps of money out of stocks and mutual funds.

Then a few months ago, some supply-chain industry analysts and software marketers began beating the drum about "supplier viability." As procurement executives caught wind of this, they sent their organizations into a tizzy: peppering suppliers to attest to their financial health, credit worthiness and viability. Dun & Bradstreet has probably enjoyed a nice pick up in demand for its supplier information reports.

But there may be another stampede underway. As manufacturers in Eastern China grapple with declining demand for exports, look for ways to reduce their cost structure and seek out new domestic markets, they are turning their eyes westward. Not to Europe, the Middle East or Africa, but to Western China.

Cities like Chengdu have already established themselves as key manufacturing bases for companies such as Intel and Motorola. Now they are preparing to benefit from the Chinese government's significant investment in infrastructure in the country's inland regions (to rebuild from the 2008 Sichuan earthquake and as part of China's economic-recovery spending). The closing of thousands of factories in Eastern China has led workers to return to their homes in Sichuan and other western provinces (read: a sizable pool of experienced and workers already accustomed to working in a factory environment).

Does your organization have a good beat on how your China-based suppliers are adapting to the changing economic conditions on the ground?

Do you have any sense for what new risks or costs a move to Western China from the country's east coast by one of your key components suppliers will introduce to your supply chain? (think geography subject to potentially-significant seismic activity and 7 days of additional lead time by boat--nevermind the traffic jams on China's roads.)

More importantly, do you expect to learn of such a move before it happens? Can you be so sure?

If you cannot answer these questions with confidence, then it may be time for you to put down those D&B reports and begin thinking about solutions that can offer you some supplier visibility rather than supplier viability.