The reason for global sourcing is that diverse parts of the world are quite at different phases of development and so possess diverse cost arrangements; it may also be due to the fact that other countries may possess raw materials which are not readily available in your country or inadequate. Considering all this, it is therefore pertinent that you employ some strategic means in global sourcing to get what you need, and to this here are seven (7) tips that you should consider:
Easy Accessibility to Raw Materials
Let say you have a company that uses raw materials, and to an extent they are not in abundance in your own country, what is then needed to do is to lower supply risk by sourcing globally if the raw materials are abundant elsewhere. The fact that you employ the use of economy of scale in extraction has reduced the price despite the extra cost of transportation and duty factors.
When You Need Inexpensive Wages
When searching for manufacturing processes that warrant labour-intensive but cheap wage, you can easily source for such in countries where wages are lower than in your own part of the world, this is even good if the technology used has a life cycle. The moment technology reaches its peak, high wage cost producers will want to venture into to a new technology as the features and the benefits it brings may be a substitute for premium price charge that offset the high labour cost.
Countries with low cost, incline themselves to the older technology to manufacture products for the “late majority” of users who purchase based on price, even outside this technological effect, some services can be operated at lower cost abroad because of the lower wage rates; which can be seen in the case of Eastern Europe and India, where numbers of call centre and developers are now located.
Global sourcing is vice versa, in the sense that it involves both the seller’s organization and buyer’s organization. Let’s take for instance; your organization sells it goods to a country than can also provide goods that matters to your company, then this will avail you with the opportunity to perform a transaction that offset your company sales and purchases to provide you with desirable economic gains.
Global Sourcing Allows You to Learn Foreign Business
Knowing the culture and customs of other countries can have a significant effect on your selling of goods to them, and also buying from those countries can be another better way of learning about how to exchange trade with same country before starting any sales and marketing effort to gain ground in the country, business-wise.
Global Sourcing Helps Stimulate Domestic Competition
The complacency suppliers enjoy in your country may be due to their perception on the major share they have in the local market, and when you source for alternatives abroad will help create influx of new entrants and destabilize the local market.
It Raises Your Supply Capacity
If there is current or potential deficiency of core material or probably a component for your company’s production operation then, your company may experience a serious supply risk, therefore sourcing for alternatives abroad will help bolster or increase available capacity which in turn reduces any intending risk.
It Gives You The Advantage of Making Your Organization Global
Peradventure your company or organization is globally acclaimed then sourcing through your subsidiaries can be a wonderful way to gain access to other parts of the world for your resources that on normality may be hard to get in your country. After reading this article it is hopeful that you will consider these seven (7) reasons when sourcing globally.