Pursuing global sourcing can be a time-consuming process with numerous challenges to overcome. There is no uniform compass for pursuing global sourcing in this challenging circumstance.
Inexperienced Chinese manufacturers must deal with each issue in order to establish global sourcing of advanced level and meet the challenges posed by logistics capabilities, foreign source selection, protectionism, regulations, and other factors.
Worldwide Sourcing is a procuring method used by businesses to reach the best efficiencies possible by sourcing goods and services globally. Global Sourcing aims to reduce production costs and maintain the high-quality standards expected of products and services.
One more important factor to assess is whether the quality, value pricing, and delivery are long-term viable.
China has dominated the world, particularly in manufacturing for many years. China has much-reduced labour costs while maintaining extraordinarily high production quality. For many top US-based organizations, global sourcing in China still continues to be the very popular option to have parts and components manufactured.
There are 5 levels of any global sourcing:
- Domestic purchases only
- Global procurement made on a requirement basis
- Global purchases included also in the purchasing
- Centrally coordinated purchasing all across global locations
- Global coordination and also integration with a few other functional groups
Let us look at the scenario so far as global sourcing in China will be concerned in this post.
- Opportunities and hurdles
Certainly, China offers a great opportunity to source many different consumable and industrial products at an unbelievable price, however, the cultural difference and language barriers can totally derail your project. Unless you have a local agent on your side, for first-time buyers, it can be a daunting task.
- Inertia at headquarters
Middle managers, who frequently have a narrow vision, are one of the most significant obstacles to any Chinese sourcing program. They may be concerned that distant and unstable supply lines may force them to keep larger inventories, increasing prices and decreasing turn times.
Similarly, logistics managers, judged on their capability to save money, warn that employing suppliers from far away will raise expenses.
- Building capabilities
For sourcing from China, a corporation must master a set of fundamental skills. These consist of:
· Ensuring quality
· Ensuring supplier’s capability to meet requirements
· Testing pre-production prototypes
· Assessing packing procedures
· Satisfying customs regulations
· Arranging shipments.
- Attention to detail
Mostly, direct sourcing can be a complex set of activities that involves several detailed decisions, ranging from supplier selection to manufacturing, quality, inventory, and also logistics management.
As corporations increase their sourcing alternatives around the world, executives are aware that any of these actions can cause problems.
- Logistics
Given the difficulties of Chinese manufacturing, logistics should be a top emphasis in any strategy for the global supply chain. Because things may go wrong, ensure that your supplier has backup procedures in place in case of delays or impediments.
For global sourcing, partnering with a solid product sourcing service agent is the best way to handle logistics.
- Risks of any global sourcing
Lower cost of production and improved product quality comes with significant dangers when it comes to global product sourcing, particularly during global sourcing in China. Any successful strategy for global sourcing must include risk mitigation.
- Time differences
If your supplier sits in the other part of the world, then you may waste valuable time waiting for answers. It is critical to have a local presence in that country, workers, or representatives available who can connect with the supplier immediately.
- Language barriers
There will almost certainly be a major language barrier unless your supplier speaks your language fluently or your team speaks the supplier’s language fluently. All verbal contact should be confirmed in writing, and key documents should be translated, according to experts.
Another alternative is to hire someone who is bilingual or to work with a certain buying agent who has workers in a certain foreign country.
- Quality expectations
In any manufacturing environment, developing and also maintaining a quality strategy is essential. This is especially true in the context of any global sourcing strategy. Surely, it is not a good idea to rely only on foreign suppliers to ensure that quality standards are met.
Conducting quality inspections much before the product departs the nation of origin is the best choice during global sourcing in China. This can be accomplished by engaging quality inspectors for conducting manufacturing inspections.
Another alternative is to collaborate with any global product sourcing firm that offers onsite quality inspections as part of its product sourcing services.
- Production scheduling
Consistent on-time delivery is essential for a successful strategy for global sourcing, particularly during global sourcing in China. Late deliveries are quite costly, since you may be required to pay a certain penalty to your client or airship rather than by sea.
To maintain on-time delivery, a detailed grasp of various lead times and regular clear communication of manufacturing status is essential.
- Compliance issues
In other markets, China sourcing companies must adhere to a particular quality, social responsibility, safety, and environmental regulations. If they don’t, it could hurt your company’s client relationships. As a result, it is critical that your suppliers grasp the standards and what you expect from them in terms of compliance.
Audits of your international suppliers should be performed on a regular basis. Buying agents’ product sourcing services sometimes incorporate audits and other quality assurance measures.
- Delivery record required
Buying agents’ product sourcing services frequently include the creation and management of a manufacturing schedule. An experienced global sourcing firm will allow you to track the status of your order at any time, day or night.
Global sourcing in China could be a competitive advantage. Companies with strong links to Chinese suppliers should collaborate with them to implement best practices that reduce operational costs and shorten lead times.
Manufacturers will find this strategy easier to execute than merchants because they already know about running factories efficiently. Although merchants will need to acquire new skills, otherwise, they will not be unable to do so.
Companies might also use sophisticated procurement methods like clean-sheet costing to further reduce supply costs and set goals for future cost savings that could always be shared by both the supplier and the customer.
