The increasing emergence of globalization, relatively low cost of shipping and the ability to source products at significantly lower costs from overseas suppliers have made overseas sourcing highly attractive to businesses that want to remain competitive and protect their profit margins. In order to overseas sourcing successfully keep the following in mind:
• Define your product – having a clear and detailed specification of the product you want to buy is half the battle in achieving efficiency and profitability. Make sure that there is a market for your product and clearly specify the quality and other attributes that you expect from potential suppliers to meet market demand.
• Identify the source country – do research to find the country that is best able to produce the product you are looking to source. Not all countries have expertise in producing specific types of items. Checking guides that provide information on which countries are the best suppliers for specific types of products can save a lot of time and effort and will pay dividends in the long run.
• Find the right supplier – locating the supplier that will best meet your needs can be a time-consuming process but ensuring that they can meet your quality, price and other requirements on an agreed schedule will be critical. Once you find the right supplier you should seek to build a relationship with them to ensure you both achieve your objectives.
• Request product samples – before you enter into any agreement with a supplier ask them for samples of the product you are buying to ensure that you can review its quality and that the supplier fully understands your needs. You can also use samples to show prospective customers to confirm that the product will meet their needs.
• Finalize an agreement – this is an important, and sometimes risky, part of the process. Language barriers and cultural differences may mean that what you consider an iron-clad contract does not necessarily mean the same to the supplier. You should find experienced professionals for the country you are operating in to facilitate this part of the process so that both you and the supplier fully understand what is expected and what avenues of recourse are available if things go wrong. Some countries’ legal systems are not as robust as the ones you are used to and ensuring you are covered in the event of a dispute can be critical. Also ensure that your financing takes into account any possible currency fluctuations that could occur and use hedging as a means to avoid any cost blowouts.
