I guess this must be happening to several salesreps, and is likely to gather pace. You’re supplying someone that all of a sudden, decides to take what you’ve been faithfully selling from a far flung land instead.
One of my customers told me today about a famous story within the label-printing industry, about a printer in Northern England that for years had supplied the labels to Heinz for possibly Britain’s most renowned FMCG food, their baked beans. The price was 11 pence per thousand. Then a quote came in from a Chinese-powered source at just 3 pence per thousand. Wow. A quarter of the price, and the business was switched.
Then another customer of mine told me he recently won an order for an engineering consumable, where the prospect had been taking them direct from China. The snag for him though, was that he had to buy in larger quantities than he really wanted to, creating storage issues, and that there was a bit too much hassle in arranging every shipment.
In this latter case, the buyer was actually prepared to pay a touch more for local supply, with no hassle, and smaller (more instant) delivery sizes.
And it seems that UK printers are adopting a similar approach too. To compete against outrageous price undercutting, they are moving towards selling smaller run sizes, the ease of making changes and modifications for the next delivery and one particular belter that worked for a Plymouth-based printer; playing the environmental card so that customers can be happy knowing something isn’t being shipped half-way round the world and keeps their carbon footprint lower.
I know a little something about offshoring from my own experiences. When I investigated setting up a software factory in Bangalore, you could get a graduate for the eye-rubbing annual salary of $4k. In London at the time, entry-level coders (youngsters without a degree) set you back around $27k. Seven-times more. And yet everyone I spoke to that had gone down the Indian route urged serious caution. Apparently, once you factor in the management costs, impact of delays through having to explain instructions in intricate detail and the amount of re-work required due to a lack of job-imbued initiative, it was actually better to stay in London for most things. And amazingly, I gather the situation is about the same even now, as any improvement in staff calibre is negated by the increased salaries they currently command. (Which probably helps explain the trend, in England at any rate, to repatriate Indian operations) This experience mirrors that of the first two above; the minute you want something veering away from commodity, local remains better, and furthermore, as local suppliers are aware of the Eastern promise, you can probably get one helluva price too….