Companies are always seeking ways to improve their competitiveness, access new products, and achieve cost savings. By leveraging global markets, companies have access to a wide variety of quality products. In this post, we’ll explore how global product sourcing can help increase sales while decreasing costs significantly.
What is Global Product Sourcing?
Global product sourcing is a procurement strategy in which a business buys goods from international markets. Global sourcing can help businesses get products that might not be accessible and available in their home country for a variety of reasons: factories may not exist, domestic goods costs might run too high, or product quality may be below standard. Also known as global contract manufacturing, global sourcing helps a company outsource its production operations to low-cost countries like China, India, or Taiwan, and take advantage of low-cost skilled labor, raw materials, and other economic factors to achieve competitive cost savings. With good quality control processes in place, companies can achieve the desired outcome of cost savings without compromising quality.
ChipStack, a franchise chain of bakeries in the United States that specializes in baking a variety of cookies, goes through 5 million cookie boxes each year. Its current supplier charges ChipStack five cents per box. By working with a manufacturer in China, the company was able to reduce its costs to two cents per box, a savings of $150,000 annually.
Advantages of Global Product Sourcing
The biggest advantage of sourcing products outside US borders is the lower cost. By sourcing finished products or raw materials from countries with low material and production costs, companies can significantly increase profits without sacrificing quality.
Another significant advantage is the access to a wide range of products on the world market. By finding product sourcing manufacturers that provide products not available in a company’s home country, the company can expand its product offering and provide additional experiences or services to customers. Because a competitive global marketplace is being engaged in the search for these goods, companies often also find new technologies, resulting in higher-quality substitutes that they did not know existed.
Time-to-market advantages can also be a significant factor when considering global sourcing. . Utilizing sourcing partners across time zones can help speed up production cycles and get products to market quicker. As companies scale operations, being able to ramp up production without the need for additional capital expenditure can help them remain competitive.
Advantages of Global Product Sourcing
- Lower cost manpower
- Access to raw materials
- Increase in goods production
- Scalability
Challenges of Global Product Sourcing
The significant benefits of sourcing also come with a few challenges.
Finding a reliable company to help with international freight and customs clearance for imports is essential to achieving a cost advantage. Once the goods are in the destination country, they still need to be transported, stored, and distributed locally.
Quality control is another major concern for companies with products thousands of miles away. Without the ability to directly monitor factories onsite, quality control may need to be outsourced along with production.
Communication can also be challenging when working with a manufacturer on the other side of the world. Language barriers, time-zone differences, and other issues can lead to costly miscommunication mistakes.
One of the biggest challenges can be disruptions to the supply chain. This can include disruptions related to natural disasters, transportation issues, political instability, or other geopolitical issues. These disruptions can occur at any time without any warning. It’s important that a business has processes in place to mitigate these disruptions.
Expert Freight Service
It can be a challenge to transport good internally without a quality freight forwarder like Current International Freight. Current offers a deep set of competencies to help your business drive a better bottom line:
- On-site inspection and quality control in the country of origin
- Assistance in sourcing manufacturing
- Honest freight quotes for container shipping (full container shipping or half container shipping)
- Real-time tracking
- Premier communications and timing
- Compliance with all industry regulations
- Completion of documentation and reporting
- High-quality client care
Steps for Successful Global Product Sourcing
Once a company is ready to look for a partner for global sourcing, there are a few steps they should take to make sure their process is successful.
Step One: Research
After identifying a product you wish to acquire internationally, the first step is to conduct thorough research and due diligence on potential suppliers. This will include research on the supplier’s financial stability, production capabilities, and reputation from previous work. Building a strong relationship with a supplier is important to help mitigate risks due to global disruptions and other issues that may arise. You may also wish to develop a new custom product rather than sourcing an existing one.
Step Two: Quality Control
Implementing effective quality control measures for sourced products is critical to ensure product quality is up to company standards. Completing on-site inspections or working with a third-party quality control company help ensure your products are free of defects or other issues.
Step Three: Risk Management
A risk management plan helps mitigate many risks associated with sourcing products across international borders. Some options to help combat these risks include establishing contingency plans for disruptions in the supply chain or implementing measures to help protect intellectual property.
Following these three steps can help your business select the right global manufacturer to partner with. However, you’ll still need to consider how your company will transport products across country borders and where you’ll store them when they land.
Source Products Using the Nautical Team
Nautical Manufacturing & Fulfillment works with global sourcing partners to provide the highest quality goods at competitive prices. We also offer quality control checks on all our sourced products with boots on the ground at all our sourcing centers. At Nautical we are able to take out all of the stress when it comes to getting products for a better price.
We work with our sister company, Current International Freight, to offer competitive freight pricing and help us get a lower landed cost for internationally sourced products than other companies. As a global sourcing provider, Nautical has worked with some of the largest freight forwarders in the world, and we’ve spent millions of dollars on less-than-ideal freight service providers. We started Current International Freight to provide a better freight alternative, offering the best communication and service in the industry! Once your product arrives at port, we can also help with domestic freight, and provide warehousing and fulfillment services from our 465,000-square-foot center in Kansas City. We strive to give our clients the best, most cost-effective end-to-end supply chain solution.
