As your company begins to grow, you may soon find that domestic sourcing is simply not sufficient. Sourcing resources from across the globe can include everything from raw materials to packaging materials.
However, as much as there are benefits, there are many barriers to successfully source internationally. This article explores how international sourcing will impact your supply chain, discusses the pros and cons of sourcing internationally, and provides a few tips on how to successfully source from the global market.
One of the main reasons companies begin to look at sourcing internationally is because sourcing the same items locally can often come with a significant price increase. Since there is more competition on an international level, items are sold at cheaper prices than they might be in your local community.
If you are a growing company looking to reduce costs, this may an effective method for you to do so. However, you should take into account transportation charges, which are typically greater than domestic transportation costs.
Variety and Options
By sourcing materials on an international scale, you will open your business up to many new opportunities. For instance, there will usually be a much larger range of options to choose from overseas than there would be in your local community.
While the business might experience reduced costs from sourcing internationally, there are a few negatives to this method that business owners should consider before going down the global route.
Sourcing internationally may not be the right choice for your company in terms of your brand image and reputation with your local community. By keeping your sourcing local, you are giving back to the domestic economy. This positioning can be something that customers really value, especially if you have a good standing in the community already.
For this reason, be aware that your existing customer base may see your turn toward international sourcing in a negative light. Decide whether or not the financial benefits of sourcing internationally outweigh these types of concerns.
Keeping Your Supply Chain in Check
One of the biggest risks of sourcing internationally is that you will no longer have the same level of control and oversight over your supply chain. Whereas local sourcing means that you can easily check-in at your various facilities to make sure everything is running smoothly. If your facilities are overseas this will become increasingly difficult.
The best option here is to make sure that if you decide to turn toward international sourcing, you have systems in place so that your oversight over the supply chain is less drastically inhibited. A great way to do so is to have a representative in the countries from which you are sourcing so that they can regularly check up on the logistics of the business. Your representatives can then liaise with the local suppliers and your business to keep you up to date and alert you of any changes necessary.