Advice for CEOs

Few subjects are as important - or as controversial - as whether there is a return to the U.S. of manufacturing jobs from China and other offshore markets (and that jobs are staying here in the first place). It’s a controversial subject that, for one thing, politicians like to talk about and take credit for. CEO Tim Cook was in the gallery of the Congress for the State of the Union address last January, when President Obama hailed Apple’s then-recent decision to situate (at least a little more of) of its manufacturing/assembly in the U.S.

In the first part of this article I discussed several principles of doing business in China: working through cultural differences and getting all your key people involved. I would like to mention several other lessons I have learned over years of doing international business in China.

My 15 years of hands-on experience sourcing products from China - including home furnishings, giftware toys and sporting goods - have taught me some lessons about how to operate in this unique market. The most important lesson: there is no shortcut to success in working with Chinese business partners. China is a country where anything is possible - but nothing is easy. Understanding the business culture; getting all your business disciplines intimately involved in your manufacturing operations there and mastering the details are the prongs of a winning approach.

In the first and second parts of this article, I discussed aspects of a successful strategy to improve profitability for a consumer products company: a strategic approach that integrates sourcing, distribution and retail, combined with intensive collaboration across your departments and with retailers. In this final part, I discuss the next step in building a successful strategy: finding the right balance between the retail and on-line channel.

In the first part of this article, I described the first step to implementing a successful strategy to improve profitability for a consumer products company, whether generic or branded: an approach that integrates sourcing, distribution and retail. In this part, I discuss the step two for improving profitability: coordinating between the different departments of your company and with your supply chain partners, especially retailers.

The rate of change in today’s business environment is faster than it has ever been - and getting faster. Years of experience as a CEO of consumer product companies selling to retailers and consumers have taught me that even very strong demand for your product is not nearly enough. The pressures of today’s market mean that, no matter how good a product or service you are selling, a strategy to improve profitability in customer package goods must have three components: a well-defined product strategy; a highly coordinated process across the supply chain that optimizes the product’s value and attractiveness to the end consumer; and the right balance between bricks and mortar and on-line retailing.