Supply Chain is said to be the very heart of the business operations. Owing to globalization and lightning-fast internet connections; international sourcing has now become easy, fast, and efficient. This new industrial revolution has created unlimited new opportunities, particularly for businesses as they now have much greater access to products and resources at significantly lower prices. Web portals and online resources have also helped businesses to diversify and add value to their supply chains by spotting new sourcing opportunities as they now have access to vendors that were once out of reach.
However, opportunities always come with certain potential risks. In international sourcing, these potential risks include legal compliance, shipment delays, payment methods and language differences.
For someone who is new to the process, sourcing products overseas may seem like a daunting task. However, with a little research and planning, you can certainly overcome these challenges. In this article, we are outlining some tips and traps of overseas sourcing that you must know about.
Determine Your Product Needs
A well-defined product is key to customer satisfaction and probability. The most frustrating thing for a vendor is receiving unspecified or constantly changing specifications. Therefore, the first and foremost thing is to be clear about your needs and expectations.
Requesting a change in the middle of the manufacturing process can be costly and time-consuming. This can result in trust issues and in the worst case, you might have to find a different vendor. So it’s important that you research and be specific about your requirements before you get a vendor onboard.
Consider Comparative Advantage
Not all countries are good at producing every type of product. Certain countries have an advantage by disposition that not only keeps the costs to a minimum, but the product quality is also parallel to none. For instance, America is really good at making products such as automobiles and medicines whereas the cost of producing clothing products is extremely higher and cannot meet the cost-effectiveness and standards of products produced by countries such as Pakistan and Bangladesh. Therefore, it is important that you do research and find countries that specialize in the products that you are trying to source.
Find the Right Supplier
Once you have identified the best manufacturing country of your product, the next step is to find the right supplier. A simple Google query will bring you a long list of overseas suppliers. It’s also important to research the vendors on your list. Check for ratings and reviews, detailed information, as well as the problems related to this supplier. Suppliers also have certain rules and requirements like minimum quantity and advance payment. Be an informed consumer and ask important questions like shipping time frame and shipping charges as well as legal requirements such as taxes and duties.
Request Product Samples
One wise thing to do before purchasing anything from an overseas supplier is to get a product sample. Most of the vendors will agree to this and will let you inspect the quality of the product. This will also help you analyze if the product can meet your customers’ expectations.
Finalize Your Agreement
Once you have found a reliable sourcing partner and are satisfied with product samples, it’s important to finalize everything in writing. Language can be a potential barrier, so make sure you also have a translated copy of the agreement. Include all the key points in the contract such as pricing, payment terms, shipping terms, and delivery.