In a sourcing trip for fuel filters and oil filters back in Dec 2013, our team visited two factories making the same product. One of them makes the product fully automatically whereas the other manually.We seemed to have entered different worlds on the same day. How different can they be?
At a fully automatic factory, for making one of the core components, the complete process is done by a computer controlled equipment running 24 hours unattended.
At the other factory, for making the same component, it is a completely manual process.
Such difference among factories for making the same product has important implications for buyers finding their business partners in China.
Pricing:Pricing at factories using manual process tends to be more competitive given their smaller investment in equipment and their scale of facility, especially in areas with redundant labour resources.
Quality by more automatic factories tends to be higher and more stable.
In weighing between pricing and non pricing factories, it is important that buyers should carefully consider how much value they allocate to supply continuity. Automatic factories, who use less labour, is less subject to labour resource fluctuation.