Considerations of Global Sourcing

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Global sourcing is a viable option for securing materials, components, products or even services for your business. Looking outside of your domestic market can yield a variety of benefits not available through local sourcing avenues.

Usually with global sourcing it’s easy to think about manufactured products being produced overseas and transported back to the domestic business. However, global sourcing also entails outsourcing services. For example, this can come in the shape of call centres, telemarketing teams and help desk services overseas.

There are many things to consider when seeking out global sourcing options. Indeed, there are many benefits, but there are also a few risks and barriers involved in the process. With the right information, many of the risks can be mitigated.

Consider the Time

Time differences can pose an interesting issue. With suppliers spread all over the world, it is likely that they will be operating during times when your business is closed or even when you are asleep! Waiting on answers through email can become an issue if you are working on tight deadlines. Some buyers put one of their employees in the supplier’s country. This is because time differences can put a burden on supplier and buyer relationships. Messages can be delivered faster and decisions can be made if the buyer’s employee is on the ground. This can enhance communications and relationships when sourcing globally.

Consider the Distance

Even though it is unrealistic for you to be there frequently, it is important to travel to the supplier’s country at important stages in production. Sourcing globally is a viable option for many reasons, however, being too far away from your supplier can make things difficult. When you source overseas, it helps to take into account plane rides and the cost of getting there. If it is easy to catch a few plane rides that are reasonably priced, you will be more inclined to go and check on the facility more often.

Consider Communication

Another difference can be the language of the buyer’s company and the language of the supplier. Since the market is competitive across a number of countries, your chosen supplier might not speak your language fluently. Having a translator is one option to help with very specific and technical communications. Putting important communication in writing is fundamental. This allows suppliers to refer back to the document and translate the writing if necessary. Keeping written communications in a template format is a good way to standardise communication. For example, key messages, requests, and deliverables can always be located on the same part of the template so suppliers know where to look.

Consider Delays

Delays in production schedules occur with both domestic and global suppliers. However, when delays occur with an overseas supplier, it can have a huge impact on delivery and the overall ordering cost of a shipment. If you have a time sensitive deadline that needs to be met, shipping by ocean will not work after a supplier delay. When a buyer budgets for an ordering cost, they include the cost of production and shipping. Consequently, if you need the shipment urgently, you’ll need to pay for air shipping. This is significantly more expensive and as a result, it can push the overall ordering cost up and over budget.

Being prepared for differences and taking into considerations the changes involved in sourcing globally will keep you prepared for the experience.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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