Global sourcing involves several aspects of management to ensure that the right products reach us at the right time and at the right price. Quality is one of the biggest areas were procurement teams tend to pay the most attention while sourcing from countries like China, India and other nations that provide low cost products. One should never be fooled into believing that sourcing on a global scale is as simple as purchasing from a local source, it requires more strategy, time and involvement until the process has been set up to a standard required by the company.
Cultural backgrounds and local business practices and ethics are one of the key areas to be careful about whenever we choose a country from where we choose to get new suppliers. There are several instances were unless exclusive contracts are given suppliers feel that companies don’t find them reliable enough. While some companies might feel uncomfortable sharing away large portions of the intellectual property with a supplier sitting half way around the world, one must also remember that in the grand scheme of things it is actions like these that demonstrate to suppliers that we trust them. It also says that we would like them to part of manufacturing process as partners and not mere low cost options for supplies.
Before embarking on a global sourcing mission it is important that procurement manager consider a few important guidelines.
1. Learn to appreciate the cultural differences and also make the effort to understand how differently these nations do business. Being unfamiliar with this might just delay the process and possibly result in losing a good supplier. Especially in the Middle East, Asia and a few African nations it is vital to be aware of their culture in order to any scale of business. It is likely that at this stage you will encounter several sourcing agents so it is essential to beware of these agents and agencies. Look for trusted websites that connect up suppliers and buyers from around the world as they will have more information and would be able to get you in touch with the best line of suppliers.
2. Initially look for suppliers in near proximity to your country. There are several low cost regions in the world and each one has established its line of expertise. So it is best to do your research because you best fit might just be in your backyard.
3. If your company is stringent on procedures and standards of quality ensure that you make this clear to suppliers’ right at the beginning. Finding a supplier and then having him being rejected by your top management is just a waste of quality time.
4. When you are in the process of searching for new suppliers always budget for the costs of the exercise. Factor in costs such as travel, stay and other incidentals. This will help establish a clear plan and the top level executives will also be more cooperative towards your efforts.
5. When a sourcing team is sent out to the market to look for suppliers it is vitally important that it includes people who are familiar with the technical specifications of the product to be sourced. Also it is important that they have a working knowledge of contracts so that they can negotiate with suppliers effectively.
6. Always do a thorough primary inspection of all suppliers on your list. Don’t rush through the process as you might miss an aspect that is vital for your future relationship. Also when suppliers seem over-friendly or offer up the all too eye catching factory tour, then certainly make the effort to check things twice over. Overzealous suppliers will definitely prove to be problematic in future transactions as they are more interested in snagging the contract than proving their prowess.
7. Request for prototypes and work out delivery schedules way ahead and familiarize your supplier with the ways things work on your supply chain. This will help them and you establish a proper work guideline and you can always anticipate problems better when you communicate.
While cost cutting might be the primary agenda of looking for suppliers in low cost nations one should also remember that for certain products they may not have the expertise to execute your requests. So while planning the whole cost of supply chain it is important to identify which particular products can be procured from an LCC nation and which should be done by expert suppliers in your region itself.