ourcing is a part of the global economy and it is intended to fulfill demand in a specific country. There are problems associated with global sourcing and they may affect companies that single-handedly manage all the sourcing processes and requirements. The following are challenges and hardships that often affect unassisted companies in a global sourcing effort:
- Higher than expected total costs: During a sourcing effort, companies often prioritize on obtaining products with the lowest unit costs. They may assume that it is the best way to go. However, unit cost is often only one of the components in the total cost equations. Other unexpected cost factors may include insurance, banking fees, duties, customs and transportations. What if furniture fumigation is required in the destination country? More charges.
- Inadequate product quality: Lower product quality has significant ramifications over and above the more obvious components, including unit costs. Quality could be inappropriately defined, while buyers and suppliers are not always in agreement with one another. So, if there are problems with the delivered products, it will be much harder to address them.
- Logistics glitches: All the best products in the world would mean nothing if we can’t deliver them to customers. There are concerns to consider, such as the type of available transportation, both internationally and domestically. There should be adequate transportations infrastructure in both the originating and destination country. Seasonal fluctuations may also overwhelm large ports and airports, while extreme weather often disrupts the global transportation lines.
- Restrictive trade regulations: Governmental regulations may make it difficult for companies to do business. Quota restrictions may cause unexpected problems during global sourcing. Unassisted companies could be unaware about latest changes in trade regulations. Before sourcing decisions are made, these companies may not carefully evaluate latest changes in restrictions and trade incentives. Importers need to be informed and educated about legal requirements of global trade.
- Lack of responsiveness: Responsiveness is a critical factor in any sourcing decision. Poor responsiveness of suppliers could result in lost market share and lost revenue. Suppliers should accommodate changes and be receptive to recent market demands. Products may need to be slightly tweaked and they may even need to exceed expectations.
- Limited values: Sourced products may be delivered in their basic forms, without extra values. Manufacturers in the originating country may try to reduce costs by cutting corners and delivering bare-bones products. Such a situation isn’t fictitious and often happens in real-life sourcing transactions.
China Assured is a US-based company that effectively eliminates these issues when sourcing products in China for its clients.