6 Common Global Sourcing Mistakes Businesses Often Make

Sourcing products or services from all over the world can seem like an attractive idea at first, but it’s important to take time to consider your options before you start purchasing things from overseas. For example, just because something says it’s made in China doesn’t mean it was actually made in China. Many companies today will make their products in China and simply label them made in China when in reality they could have been produced anywhere in the world.

1) If you are new to global sourcing

Before you put pen to paper (or finger to keyboard) when it comes to sourcing overseas, keep in mind that mistakes are easy to make. In fact, they’re almost inevitable. To get an idea of just how common these slip-ups are, take a look at our post on global sourcing mistakes that most businesses make. Then consider some ways that you can avoid making them yourself.

2) Not doing your homework

One of the most common mistakes that businesses make when sourcing goods from foreign suppliers is not doing their homework. Before you sign a contract, check out your supplier’s reputation. Don’t just go with one company, but search for at least three to five different companies who may be able to supply what you need. You should look at things like how long they’ve been in business, whether or not they’re reliable and how quickly they’ll be able to fulfill your order once you’ve placed it. Having an idea of their reputation can ensure that you choose a quality source for whatever it is that you’re looking for.

3) Not finding the right supplier

This is a huge mistake that many companies make when trying to choose a global supplier for their products. They assume that because there are plenty of suppliers out there, they just need to find one that can provide their product or service at a low cost. However, finding a qualified supplier is much more complex than simply asking them for price quotes and reviewing their proposals. The truth is, not all Chinese suppliers are created equal and not all of them can deliver high-quality goods at competitive prices without sacrificing quality. And if you’re looking into procurement companies in USA or another country, you want to make sure you’re dealing with a reputable company that takes its legal compliance seriously. In other words, you need to know what questions to ask before choosing your partner .

4) Underestimating quality

It’s a commonly accepted fact that quality matters. When a consumer is given a choice between two products—one of superior quality and one lacking in quality—the better product wins every time. However, too many companies forget to factor in just how big of an impact higher-quality products have on customer satisfaction and retention rates, despite their already high profit margins. Sure, initial costs for developing a new product or service can be high, but you should consider not only your profit margin (which isn’t that much higher than someone using cheap labor), but also customer lifetime value (CLV). By using cheap labor or ignoring product quality altogether, you’re ignoring CLV opportunities.

5) Losing time due to shipping costs

While there are benefits to importing from other countries, one major downside is that shipping costs can add up. If you’re purchasing an item from a company outside of your home country, make sure you know exactly how much it will cost to ship it from China to your warehouse before agreeing on a price. Otherwise, you might end up paying too much for an item that could have been purchased for less if it had been sourced locally. In addition, choosing a reputable company with reliable shipping methods can save headaches and heartaches down the road.

6) Lack of communication with supplier

Proper communication is crucial for a smooth global sourcing companies relationship. When international partners aren’t on the same page, a lot of things can go wrong, including shipping delays and product shortages. Having a solid communications plan in place will help prevent these problems from ever happening, while encouraging open dialogue between your business and supplier can help to iron out any issues that do arise. So make sure you schedule regular meetings to check in with suppliers and don’t hesitate to let them know if there are issues with deliveries or quality control. This helps keep everyone on track and leaves you less likely to end up stuck without enough inventory or having to change course at the last minute due to lack of planning.

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