Expanding the supplier network to source products from international markets provides a significant competitive advantage to any business. It lowers the input cost, offloads the difficult tasks to specialists, and provides the business with raw materials that are not readily available in the home country.
That said, working with foreign suppliers comes with its own unique challenges. There are language and cultural barriers, licensing and paperwork, payment methods, etc., that companies must navigate through to get their products to their customers. Since you, the business owner, or your designer is not present on the ground at all times, you also need to work with sourcing consultants to make sure that everything goes according to the plan.
Challenges of working with foreign suppliers
As stated earlier, working with overseas suppliers is a tad different from working with local suppliers. The difference primarily stems from having to deal with the norms in two different countries. So, there are legal constraints, paperwork, shipping procedures, payment methods, time difference, etc.
Meeting your suppliers personally is downright the best way to examine where they acquire the raw materials and lay down the quality control standards. Procurement consultants can help you get acquainted with the local customs while you can focus on sourcing the products to your customers. That said, disputes do arise from time to time, and you must be prepared for it.
One simple way to avoid any disputes over a deal is a well-drafted legal contract that states and formalises the arrangements. For instance, a contract can outline the quotations, technical standards, liability if the product causes loss or harm, intellectual copyright infringement, insurance costs during transit, etc.
Finding a manufacturer for your product idea
Finding the right supplier for your product idea requires meticulous research, whether you opt for domestic or overseas manufacturers. Take extra care when selecting a manufacturer, as a reliable supplier means you only need to spend time once in choosing one.
Essentially, your ideal supplier needs to provide a curated balance of value for money, familiarity, reliability, and technical advancements. In addition, they will have a fair idea about the target country, will be multilingual or have translators ready, and have trading experience in your home country.
Start by drafting a shortlist of potential suppliers, visiting the sites, or having your procurement consultants tour the facility, and comparing them based on your requirements. You can find a list of suppliers from the trade association, service departments, exhibitions, embassies, and other importers in your sector.
Building solid relationships with your supplier
It takes time to build a meaningful relationship with a supplier. A strong client-supplier relationship means there is a higher chance of high-volume trade. Eventually, you can also negotiate more favourable terms.
Usually, your first few contracts with a new manufacturer are on a shipment basis, so you should leave nothing to chance. Instead, learn how things work in the supplier country and overcome obstacles like social and cultural differences and how deals are conducted.
Since communication can end up being one of the biggest obstacles, it is vital to figure out ways to overcome the language barrier. Plan face-to-face meetings with you or your representative, keeping the time zones in mind over a high-quality phone connection.
Schedule progress review meetings with the suppliers and provide detailed feedback on the shipments already received. If things are going smoothly, you can increase the amount of business you are doing. In case of issues, discuss how to resolve them at the earliest to minimise losses.
- Check out this infographic on how to build a positive relationship with suppliers
Emphasise quality control
When looking for a new supplier, inquire how they handle quality control and ask if they have any contingency plans laid out. Ideally, they should be able to provide you with a resolution timeline. If they avoid answering about quality control, either visit the facility or move on to a new manufacturer.
When you do not plan on visiting or cannot travel to the overseas production facility, it is crucial to have a good relationship with sourcing consultants who will inspect the production lines. Ensure that they know the quality requirements and the inspection procedures to ensure that only high-quality products make it to the customer. Do not simply rely on the manufacturing facility for quality control.
Although your supplier is bound to confirm that they can produce the goods to the exact specifications and technical standards, you should have your QC/CM perform an inventory-level quality inspection of every batch.
In case something goes wrong, prepare the documentation, and call the customer service representative at the manufacturing facility. Take photos of the damaged goods and send them to the supplier with the purchase order number and defective units.