Entrepreneur wires electronics in China

Marketplace Staff Mar 24, 2009

Entrepreneur wires electronics in China

Marketplace Staff Mar 24, 2009


Kai Ryssdal: Here’s a question that businesses big and small are trying to get their minds around in the middle of a worldwide recession — How much stuff should you keep on your shelves? It’s hard to know, right? Because if you have too much you’re paying for inventory nobody’s in the mood to buy. But if you don’t have enough, you’ll miss whatever consumers there are.

And so just like that, the not-so-sexy world of inventory management has become critical. A lot of big consumer electronics companies have turned to a global supply master. But he’s not in Silicon Valley or down in Austin, Texas. Marketplace’s Scott Tong reports from Shenzhen, China.

SCOTT TONG: Say you buy a new gadget online. You pick your digital toy, punch in your credit card number, hit enter. And 48 hours later, it’s there. Inside that 48 hours stands Liam Casey. He’s an Irish entrepreneur in China, who likes to quote American Tom Friedman on globalization.

LIAM Casey: The world is flat, but full of details. And we focus on that piece in the middle.

Casey came to this region without a job 13 years ago. He attended an export trade fair, made some contacts, and started to climb the ladder. Today, his company PCH works for big American electronics firms.

He’s not allowed to name them, but they make the music players and routers and GPS devices you know. These big brands think up the products. But they offload to Casey the dealing with the factories, the shipping, the quality checking. What folks in the trade call logistics.

Casey: We take all of that operations that they don’t want to do, and that’s what we manage for them. And we do that very well.

Here’s how: when you the shopper order, say a custom laptop, within minutes Casey’s folks in China get to work.

CASEY: Then it’s tested. And at the top of the line here you’ll see it’s going to be packed out with the customized accessories.

I.e., they load the software you asked for.

Casey: So it comes in vanilla and then we flavor it through the process.

Then his workers pack it in a box, and your custom-built machine is on the way. It’s all hyper-computerized.

Casey: This one here, Farmington Hills, Michigan.

Casey pulls up one order on the screen.

Casey: That was at 8:36, so four hours ago.

Tong: OK, so four hours ago, and it says shipped. It’s already shipped?

Casey: Already on its way to Hong Kong. It’s going to be on a plane this afternoon to the U.S.

China is just one piece of this picture: Taiwan and Korea make the computer chips and the other electronic innards. Ireland does customer service. And geeks in South Africa write the software to make it go.

By the way, the American brand whose logo is on the thing, it keeps most of the profit.

Throughout this supply chain, no opportunity to trim costs is missed. There are no slumbering warehouses, no long pipelines of inventory.

Casey: Which creates excess. This probably is one of the leanest supply chains in the whole consumer-electronics world.

Now Liam Casey didn’t invent lean manufacturing, but he’s thriving in this recession. Calls are up, outsourcing is up.

Casey: Companies in the past would have wanted to do it themselves. Now they have a head count freeze, or headcount reduction, whatever, and they say to us, “Look, can you do the whole product for us?”

Casey’s story is a bit like China’s story in general. He started as a factory supplier at the bottom of the food chain. And eventually multinationals gave him more responsibility.

Now, they also want his ideas. They love him for his brain. Increasingly, Casey and his staff help design products.

Casey: Here’s leather, wool, natural canvas, buffalo leather, suede.

Like this new phone pouch for a big American cellphone company. Liam Casey is versatile; his business model evolves as rapidly as global business does. That way, even in the middle of a vicious economic downturn, he’s one middleman you can’t cut out.

In Shenzhen, southern China, I’m Scott Tong for Marketplace.

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