Sourcing products from a different country can be a great way to expand your business as it comes with many advantages. Like, you get a new market to explore business opportunities, you lower your production costs, get raw materials at a cheaper rate, increase your production capacity, the quality of your products also improves over time. And you will be in a better position to compete with other players in the market.
But you can enjoy these benefits of global sourcing only if you consider certain important factors. They include:
1. Financial Risks
Sourcing products from overseas cuts down on the costs of labour and raw materials but brings along with it a monetary risk which includes paying additional costs like:
Shipping and hidden costs
Cost of delay
Costs incurred due to loss of goods
Other costs like documentation fees, supplier fees, cost of transactions, etc.
2. Product Quality
Quality decides the level of acceptance of goods and so it should not be compromised at all. But when sourcing globally, you might face issues with product quality. So, it is important for both the buyer and supplier to understand the value of delivering quality products and focus on excellence. In case you have received a defective shipment or the quality is not up to the mark, it becomes difficult to coordinate with the supplier due to a difference in the time zone and location.
3. Transportation Facility
Before you decide to procure goods from a different country, you need to know some important things related to logistics:
a. Whether domestic and international transportation is available
b. Whether the country’s transportation infrastructure is dependable
c. How strong it is in case there is a seasonal fluctuation or a natural calamity
d. How flexible service providers are in implementing alternate plans to support on-time and safe delivery
The closer the country, the better it is for you as a buyer. You can do the business in the same or close time zones, language won’t be much of a problem, and there will be fewer restrictions on trading. So when you plan to go ahead with global product sourcing, keep in mind what the repercussions of sourcing from a different location will be and how they will affect your business.
5. Responsiveness of Global Sourcing Companies
Sourcing products from a different market or location is all about taking the right decision. These means choosing the best global sourcing companies that are open to accommodate changes as and when required and ensure on-time delivery. What if your competitor introduces new season’s collection before you? You might lose a market and face financial losses too. To avoid such scenarios, it is important to consider the factor of having a receptive and trustworthy supplier.