Benefits of Sourcing for Businesses Worldwide

Today’s marketplace is dynamic and ever-changing and offers a wealth or variety and opportunity for companies. This is especially true when looking at how overseas trade has opened up, through mechanisms such as the European Union, ASEAN and the rise of new trading powers such as India and China, all giving reason and room for companies to eye expansion and
new trading opportunities.

The other side to this is that the marketplace has become increasingly competitive, and many smaller businesses particularly will wonder just how to get the very best prices, as well as how they can source the best possible products and materials with which to do their business. It is also the case that each country has its different areas of expertise related to certain industries, and this can make it a daunting task to answer the above questions-especially when a company is dealing in multiple marketplaces simultaneously. In such instances, there are resources available to such companies in order to assist with the laborious and painstaking sourcing process. Your company can choose to hire the services of either a global sourcing company, or an overseas sourcing agent. Many business people go with the formula that, in order to make it  worthwhile engaging such services, you should ensure that your company can save at least 20% of its current purchasing costs. This will make such a partnership mutually beneficial.

Be sure that you fully understand all of the costs involved, included the standard and hidden costs. Standard costs can include the quoted price, shipping, cargo insurance and import duties, whilst hidden charges often include site visits to suppliers, contract development fees (with new suppliers) and shipping fees generated by delays clearing customs. A good  domestic global sourcing company should help to minimize these costs and ensure that things go as smoothly as possible.

Global sourcing companies can also ensure that the buying process is as quick as easy as if you had done it domestically. Companies also tend to notice cost savings in the reduction of the aforementioned hidden charges. You should ,however, expect to pay a decent sourcing company anywhere between 10-20% on top of the base price.

Remember also that a sourcing company represents you, and not the supplier, so is working on costing and distribution very much from your perspective. They can also ensure that you get rapid access to established and trustworthy suppliers whilst also giving price comparisons between various suppliers. This can save your company incalculable legwork and time.

You might decide to use a sourcing agent, and this can work well, as such a person knows the culture and the various customs and regulations of the your target country, and can handle tricky negotiations on your behalf, enabling you to get established in the market. They can also make payments on your behalf, as well as being able to source smaller and perhaps more specialized manufacturers, depending on your needs. All of this can be useful, but may be more beneficial to smaller-scale projects. A good agent will generally charge between 5-15% on top of the base price.

Whichever option you go with, it can certainly help to speed up your processes and enable direct contact with foreign suppliers. Sourcing is, however, very much an industry-specific activity, and much research is required to ensure that your business takes the correct steps with regard to the successful sourcing of products.

Written by Alexander Grimes

Written by Alexander