Global sourcing is when a company purchases products from overseas. Many companies enjoy the benefits of buying and sourcing their products globally.
There are many benefits for companies to source their products and even services globally. Sourcing their products globally usually allows them to buy a product with the design, price, quality, and quantity they need. It also allows companies to reduce costs while having a streamlined business model.
Here are our Top 9 Benefits of Globally Sourcing Your Products.
Value of Products
No matter how cheap your production is, there are many products that you will never be able to compete with products coming in from overseas entirely. Of course, one of the main aspects of the tariffs that the Trump administration put on many goods coming into the United States from China was trying to make American manufactured products more competitive.
The truth is that those tariffs did not bring back that many jobs to America, but instead, countries like India, Vietnam, Indonesia, and the Philippines became the recipients of the benefit from those tariffs.
Companies that globally source the product understand that its value would be better through their purchasing overseas than trying to manufacture it locally in a place like the United States.
One of the benefits of global sourcing is for many products, your source will have a better value than if you try to manufacture the product locally in your own country.
Workmanship and Skills
They are also many skills which a country overseas may be better than your own country; this, of course, would give that country a competitive advantage in producing the product.
This is especially true in the Home Decor and Home furnishing industry. For example, Vietnam has a lot of handicraft villages that have manufactured items as lacquer or hand weaving for hundreds of years. It also means a highly-skilled workforce understands how to produce or manufacture these products.
Areas with a highly skilled workforce usually have a fully integrated supply chain where the raw materials are being manufactured. In other words, the materials they need to find are also being manufactured nearby where the products are being produced; this also becomes their manufacturing advantage.
An Effectively Managed Process
Many of the overseas factories are also set up to have a highly effective management manufacturing process. They have been doing this production for a long time, and they understand precisely how to manufacture your product most efficiently and effectively as possible.
This is why in Asia, many factories do not produce or manufacture their brand names but instead produce and manufacture the designs the customer gives to them. In other words, they are specialized only in the manufacturing process and not in the design or creation process.
You will find many significant companies such as Nike and Reebok that do not own any manufacturing but instead have design teams that go out and work with factories producing their designs.
The factories have the advantage that they’re able to produce their designs at a cheaper cost than these companies could, while at the same time offering the highest quality.
Many of the overseas factories are set up to have a considerable production capacity. I have been to factories in China that have thousands of workers. These factories are almost like a mini-city.
For large US companies, they may need to have the production capacity that these overseas suppliers have. Especially now as countries like the United States and Europe have problems with many companies finding lower-skilled workers. Many restaurants are even having a hard time finding workers.
Even if a company wanted to set up a factory in the United States, they might have a hard time finding the actual workers to help them produce the products they need at the price they need.
One reason why many companies go overseas to find their products is they have few other options. Those companies need to work with factories that can offer them the capacity to produce the volume they need and at the price they require.
Most global suppliers also have an intricate quality control system in place. They have this because they understand that they will have to pay for a problem if there is an issue.
Many importers find that they can receive a better quality overseas than they would if they tried to produce it at home or produce it themselves. This is because the quality for most exporters is at the forefront of what is important to them.
Ability To Move Sources
When the US instituted high tariffs on most goods from China, we have all seen that many US importers started to look to where they could move to a new country or an unknown source. The companies that owned manufacturing in China were not so lucky, and most of them either had to downgrade their manufacturing, figure out how to produce it cheaper or close down their factory.
Those importers who did not have overseas factories could look to move to a new country or location. Even though we fully understand that moving a supply chain is not easy, they have that option.
Product development is an expensive process. Most manufacturers will charge extra for product development. It costs a lot of money and usually requires a highly sophisticated team to develop the products you need.
Many of the overseas manufacturers fully understand product development. They will have an entire department set up to help with the product development. In some cases, factories will even have a production line set up only for product development.
That is why product development is usually a significant advantage of globally sourcing your products.
Many importers purchase their products globally as it also allows them to be able to defer some costs. Whether it is terms of when they pay for the actual product or the price, if there is a complaint, they usually make the manufacture pay for that complaint.
The ability to defer some of these costs is one reason why many companies look to source and buy their products globally.
Streamlined Business Model Is Possible
Buying your products globally allows you also to have a streamlined business model. People can work from home and outsource everything they need to sell things online via wholesale or an e-commerce site.
Today you can find someone to manufacture the products for you, another company to import the products, a company to warehouse the products, and ship them out for you. You can even find people online to help you do your e-commerce and other types of work. In other words by global sourcing products allows you to have a streamlined business model.
Despite the global supply chain issues, I do not see all the production suddenly moving back to the United States or another location. The reason is that there are many advantages for companies to source their products globally. These advantages and benefits will continue to be important in years to come.
If you are interested in seeing how Mondoro can help you with your home decor and home furnishing sourcing needs – we would love to talk to you to see how we can help you.
Find out more about how Mondoro can help you create, develop, and manufacture excellent home decor and home furniture products – don’t hesitate to contact me, Anita. Check out my email by clicking here or become a part of our community and join our newsletter by clicking here.
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