Skillful labors and low-priced raw materials are primarily why companies opt for global sourcing. With these factors achieved, it becomes more cost-effective and favorable for the company. Nevertheless, global sourcing can also provide you with several challenges. Here are some tips to achieve excellence in global sourcing.
When choosing global sourcing, you must balance the impact on the company’s competitive advantages. For instance, one of the most essential aspects of this factor is the protection of product quality and intellectual property. If you think your company believes that its intellectual property is entirely important, then you should be very selective about your global suppliers. The more you depend on your proprietary information on other companies, especially when it comes to the specifications of your products, the greater the risk of losing it.Moreso, if your competitive advantages are focused on achieving lower costs, it is critical to guarantee there are no hidden charges. Thus, you need to make sure there is no hidden cost so you can dispose of any realized cost advantage.
While the use of global sourcing can lower the cost because of the proximity of raw materials and lower labor costs, there are still monetary risks that can affect it. These risks include the expenses related to time zone differences, costs of transactions, and unanticipated increase in shipping costs. However, there are several financing tools available to global sourcing companies to offset these monetary risks such as forfeiting, factoring, and hedging against currency fluctuations.
Several aspects of the premeditated procurement process are distressed and overwhelmed by the characteristics of raw materials and other components. You will have to consider whether the modifications be made before or after the materials are sold, limitations of the supply of raw materials, and if goods are imported as components for manufacturing or simply in raw materials.
Ferroalloy Inc. is a global sourcing company that understands what its competitive advantages are and all other factors. If you want to enhance, protect, and utilize your company’s best interest, contact us today!
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