Special thanks to Source One Management Services for this guest post
For companies large and small, there’s no doubt international sourcing boasts major benefits. Market expansion, reduced costs, exposure to new technologies and work forces are just a few of the benefits. Whether you source for a niche provider or a major global player, the beginning steps to expanding supply chain operations are the same. The name of the game is due diligence – assessing costs, regulations, resources, quality, various capabilities, and location and engaging the suppliers through initial conversations.
In any sourcing event, it’s crucial to know what you are looking for – not only in a product or material, but also in a supplier. Of course when we source, we are in search of high-quality products. However, we should also be in pursuit of locating a high-quality, strategic business partner when researching and identifying appropriate suppliers to potentially bring into our supply chain. In international sourcing, supplier identification may take more time and effort than it would in your company’s home country due to varying cultural considerations, business standards, core competencies, flexibility, and pricing.
Depending on the items that are being sourced, you may be fortunate enough to narrow your extensive research efforts into specific geographical regions or a “hot spot” for that particular commodity. For example, when sourcing raw materials such as textiles internationally, China (and other Asian countries) are traditionally notorious for being a “hot spot” for low cost textiles. Though it can be helpful to be able to narrow the search for a suitable supplier, a challenge that comes with supplier identification involves the extensive amount of time that you must allocate to performing research in order to find a supplier that can meet your company’s needs.
In addition to the importance of performing in-depth research of international companies that may be a good fit for your company’s needs, it is also crucial to develop and maintain a list of these suppliers. This list should include the supplier’s name, company address, phone number, company websites, and any other pertinent information that might come in handy when it comes time to reach out to those suppliers. The more suppliers you add to the list, the better chance you will have at locating your next international business partner. A large part of the research phase comes from studying the supplier’s website or reviews to get a better understanding for their capabilities and overall business. After the research is complete and the long list of suppliers is developed, it is time to begin engaging with these companies.
One of the first challenges of international sourcing that comes to mind is the high probability of encountering a language barrier. One way to test the waters with a language barrier is to simply give the supplier a phone call and ask if a representative speaks your language. If you are able to locate someone who you can speak to, continue the phone conversation! If not, it might be worth the effort to attempt to obtain a representative’s email address.
With an email address, you can at least send the supplier an email to introduce yourself and give an overview of the products or services you are seeking, and they will be able to translate the email to better understand the purpose of your inquiry. Depending on the geographical region, some suppliers are more responsive via email than they are over the phone when a language barrier is present. If you find yourself emailing the supplier as the first engagement, be cautious with regards to how you phrase the message so you avoid offending the supplier or leaving them uninterested in your business opportunity. As a best practice, it is important to engage the supplier over the phone so that messages are not misunderstood and so that the relationship is off to a positive and effective start.
Another concern with contacting international suppliers involves supplier responsiveness and differences in time zones. For companies located in the United States calling suppliers in Europe or Asia, it is safe to assume a minimum of a five hour time difference. Due to being in different time zones, it is important – and sometimes challenging – to manage slower response rates as well as receiving calls and emails at all hours of the day. If you are very interested in getting in touch with a supplier, be sure to follow up with them consistently until you are able to connect with a representative. When you are connected with a representative, be sure to have a list of questions to ask them about their company as it relates to the product or material you are sourcing.
In addition to thoroughly researching the area in which you are sourcing, it is important to assess the quality standards in that region. This can be done during the initial research phase, or by asking the supplier when you get them on the phone. Standards of quality is not actually as uniform across the globe as we might think. Dependent on the economy and resources in the country you are sourcing products or materials in, the quality may be very different from what you would find in your company’s home country. With sourcing internationally, it is much more difficult to keep an eye on a supplier’s quality management practices, work conditions and perceptions of quality. Establishing and maintaining great communication and clearly defined quality and service expectations with a supplier is going to be crucial in order to maintain an agreed upon standard of quality. Keep in mind, though, that determining if the potential supplier’s perception of quality matches what you are looking for is something you want to do during the early, researching stages of the sourcing process.
International sourcing can certainly be intimidating, especially for a company new to it. Researching suppliers everywhere and anywhere can aid in not only personal knowledge, but also in establishing a long list of suppliers that could potentially handle the job. Once the long list is built, you will steadily shorten it as you engage in conversations with these suppliers. Whether it be language barriers, varying opinions of quality standards, price competitiveness, or any of the other various challenges of international sourcing, many companies are open to taking the risk in order to enhance their competitiveness in the market.