The primary goal of companies when employing strategies is to reduce cost. Sourcing companies will take charge of identifying and screening of suppliers, management of supplier relationships and other important tasks. But before you make use of global sourcing companies or services, there are some important factors to consider. sourcing
While importing products from other countries may help cut costs, you also have to consider the lead time for global purchases. Global purchases generally have longer lead time compared to domestic purchases. You have to consider sea freight, air freight, and not to mention the time it takes to get clearance from customs. This is why using local sourcing services familiar with the nation’s customs and regulations will be essential to reduce the risk of unnecessary delays.
Related to lead time is transportation. Global sourcing will most likely require you to use different modes of transportation. You may have to combine air, water and land transportation to get the goods from the supplier to your delivery points at the quickest possible time. In this aspect, it is best to consult with experts in the supply chain to find the best solution.
In using global sourcing strategy, you need to decide on the body of law to apply on your contract, whether the law of the buyer’s country, or the law of the supplier’s country, or an applicable treaty between both countries. You have to be clear in your contract to avoid complications in the future.
Language and Culture
Implementation of global sourcing strategies may be hindered because of differences in culture and language. Misunderstandings may arise if this problem is not addressed, and it may be detrimental for your company. Before you hire sourcing services, make sure to ask if their staff understands your language.
You also need to decide on the currency to be used for the transactions. There are certain risks involved in this so you will want to be extra careful. Ask the advice of experts if you are unsure.
Other than the factors mentioned you also have to look into quality and packaging considerations. If you will be using sourcing services in China, make sure they have a defined global sourcing process that will meet your requirements.