Does your business buy from suppliers in an international supply chain?
In the face of competition and economic pressures, global supply chains are under more and more pressure to deliver their products at a greater value, on-time and at a lower cost. But if one link in the supply chain is broken, (for example, a delayed payment or late shipment), the consequences to your small business can be problematic.
So what can you do to better manage this process and reduce the downstream strain on your business?
Tips for Managing Your Global Supply Chain
Find Someone with Expertise to Help Oversee Foreign Suppliers
Whether your supplier is in Asia, South America or Europe, small businesses can benefit enormously from the services of an in-country representative. There are many global supply chain management consultants who offer these types of services, which include vetting international suppliers and navigating export regulations, taxes and logistics in that location.
Try to find one who has expertise in that country and who spends a good amount of time there. Although you’ll incur some costs, the payoffs in reduced liabilities, taxes and shipping will be well worth it.
A licensed customs broker can also help navigate laws and regulations and help you prepare the documents needed to import goods, as well as facilitate communication between the importer and the U.S. government. You can search for certified customs brokers at the National Customs Brokers and Forwarders Association of America.
Explain Your Buying Patterns and Schedules
Be sure to set clear expectations in regards to your anticipated annual buying scale and schedule. To do this, you’ll need a good handle on your sales forecasting. If you are sourcing goods overseas, shipping those goods will take time, so you need to have a good picture of current demands for your inventory and how these are forecasted to shift in the future.
Also, be sure to ask your supplier for regular updates on their inventory data.
Don’t Rely on Just One Supplier
When it comes to effective supply chain and inventory management, redundancy is everything. Have a back-up supplier (one is good—you don’t want to manage too many suppliers).
Not only will they prove invaluable in the event of production or logistical issues, they can also give you some competitive leverage and help ensure you maintain the best cost base across your suppliers.
Building good relationships with your suppliers can lead to mutual benefits such as better terms at the negotiation table and improved production and delivery schedules. Try to treat your suppliers as partners, and look for ways that encourage them to view you in the same light. You can do this by paying them on time, cutting some slack on one-off mistakes and being flexible.
For example, are there things you can do to help them cut costs or better fulfill your order such as being flexible about certain delivery schedules, order volume or ordering alternative product lines?
Don’t forget communication. If you are able, try to meet directly with your suppliers. Get to know and respect their cultural and business backgrounds and train your entire team to be aware of and sensitive to any differences should they arise.
Save Costs and Reduce Risk by Sourcing “Made in the USA” Products
If you do find that global supply chains are simply too risky for your business or you find that you can’t make the minimum orders for importing inventory or goods, consider options for sourcing more from domestic suppliers.
Turnaround time from overseas factories can be substantially slower than domestic suppliers. Sourcing domestic goods can help you meet demand more quickly and react on the fly to market demands.
For many small business owners, it’s a common truth—investing in a domestic supply chain rather than trying to cut costs from the onset by sourcing overseas can save money in the long run.
Supply Chain Photo via Shutterstock
Great tips. It’s important to build goodwill and trust with your customers when shipping globally. Thanks for sharing your tips with us.
6. Encourage your suppliers to collect environmental data about their business activities e.g. energy, transport, water, waste. The costs for these are likely to go up and will be passed on throughout the supply chain. By collecting (and sharing) this environmental data businesses can learn from one another in terms of making efficiency gains.
UK-based amee has built a model to estimate the environmental performance of every business in the country. We are constantly updating the directory with real performance data to make our individual company scores more accurate.
A great article with some very helpful tips. I really like the point about finding someone with expertise who can help. That’s the tricky side of being part of the global supply chain and it would be incredibly helpful to have someone tangibly there. How much are the costs roughly? Setting clear goals and expectations is always a good idea but not completely full-proof because you can only be prepared to an extent. As for strong foundations and relationships; that’s a must in all sectors of business.