Global sourcing is part of the worldwide supply chain process. Global sourcing is when a company purchases parts, products, services, or other things through an international company.
Global sourcing continues to be a viable part of the international business supply chain. There are many reasons a company would need to manufacture or produce their products overseas versus in their own countries, such as raw materials, labor, quality, product development requirements, the quantity they need to purchase, and the price. These reasons can help explain why a company will buy its products overseas.
Table of Contents
- Reasons Why A Company Globally Sources Products
- Frequently Asked Questions
- Related Content
Reasons Why A Company Globally Sources Products
Global sourcing is a growing trend in the business world. Companies now have access to different markets and manufacturer’s from around the world,.
Here are some of our top reasons a company may source products globally.
Global Sourcing Give Access to Specific Raw Materials
A company may decide to buy its products overseas because the raw materials they want to purchase are unavailable in its home country. Many raw materials may be available in other parts of the world, or their own countries may restrict those raw materials, so they must purchase them overseas.
Some companies may buy raw materials such as minerals, oil, and gas; others may purchase the materials already processed to produce an end product. Some raw materials may be cheaper to import than to buy locally. The company has decided that its best business model is to buy the raw materials overseas.
Global Sourcing Gives Competitive Prices
Many companies purchase their products overseas because they can obtain them at a more competitive price than if manufactured in their home country. Specific tasks are cheaper overseas than if they did them in their own country.
An example of this would be handmade baskets. To produce a handmade basket in the United States would be prohibitive due to the labor costs for hand weaving. Companies usually buy handmade baskets from overseas sources.
Skilled Workmanship Overseas
Some products have skills needed overseas and do not have the skills in their own country.
An example of this may also be handwoven carpets. Very few people in the United States or Europe know how to hand weave a carpet; this skill they maybe once had in some parts of the United States or Europe, but with time has become lost.
In other parts of the world, such as Nepal, they have these handweaving carpet skills. Handweaving is an example of a skill in one part of the world and not another part of the world, so companies who want to produce those kinds of products must buy them from an overseas source.
Production Capacity Available Globally
Many companies need a considerable production capacity and cannot find it in their own countries. Overseas, particularly in China, have many factories with a significant production capacity that no one else has.
When you see those know a place like China factories, you can see how they are a mini-city as they may have 10,000 or more workers. Factories of those sizes have a huge production capacity and can produce large volumes of products quickly, efficiently, and with the needed quality.
Listen To Our Podcast What Are The Reasons For Global Sourcing? below or by clicking here.
Streamlined Business Model
By importing products, many companies can operate with a streamlined business model. The companies can run a relatively large-scale business with relatively few staff because they use the latest technology.
In areas where labor may be difficult to obtain, this may be the only business model the companies can have to operate their business efficiently and effectively.
Product Development Overseas Is Easier
Many global factories are also product development experts. Developing a product is a skill that usually requires a highly skilled team to implement product development.
A company that is looking to import a product can send the qualified supplier the design, and the supplier will obtain the drawing, molds, and other things, so the end product is what the customer is looking for.
Product development is a skill it requires a lot of technical know-how and the right team.
Excellent Quality Control
Most exporters and manufacturers emphasize quality control and have a rigorous quality control protocol. The manufacturers have invested in quality control systems as they understand that quality is essential for their business model.
A company’s competitors are importing high-quality products at a reasonable price, so to stay competitive and relevant, they must also be able to do the same thing. Manufacturers in places like Asia can do this because they have systems to help them ensure that they produce high-quality products.
Business Necessity To Source Overseas
To remain relevant within their industry, many companies must import products. Their competitors are importing products and offering their customers fresh designs, new techniques, new colors, and finishes at a competitive price; they need to do the same for companies to remain relevant.
It does not make sense to produce many types of products, especially in the home decor and home furnishing industry, in the United States or Europe. The Asian manufacturers have the skills, the price, the quality, the designs, and everything else needed to give an excellent product at a fair price.
Countries like the United States have been putting some protection measures, especially against China. Even though the United States has placed a lot of high tariffs on China on most Chinese-made products, it has not shifted the manufacturing or the industry back to the United States.
Instead, many industries have shifted to Vietnam, the Philippines, Indonesia, and India.
In the United States, obtaining workers in stores or restaurants continues to be challenging. In many cases, it would almost be impossible to find the labor to work in other industries such as manufacturing furniture, lamps, or other home decor products.
There are many challenges that many people in the United States and Europe have, and this is why global sourcing continues to be an essential part of any company’s business model.
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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Frequently Asked Questions
What is global sourcing?
Global sourcing is the practice of purchasing goods or services from suppliers around the world to take advantage of lower costs, higher quality, and other benefits.
What are some reasons for global sourcing?
Some reasons for global sourcing include access to cheaper labor, lower production costs, access to specialized suppliers, better quality, and increased efficiency
What are the benefits of global sourcing?
The benefits of global sourcing include cost savings, increased efficiency, access to specialized suppliers, improved quality, and increased flexibility.
How do you choose suppliers for global sourcing?
When choosing suppliers for global sourcing, you should consider factors such as their location, reputation, quality, pricing, and production capacity. Mondoro is happy to talk to you about how we help you with your global supply chain needs.
What are the five reasons for global sourcing?
The basic five reasons for global sourcing are cost savings, access to specialized suppliers, increased efficiency, improved quality, and increased flexibility.
What types of goods or services are commonly sourced globally?
Goods and services commonly sourced globally include electronics, clothing and textiles, home decor and homr furniture, automotive parts, and raw materials such as metals and minerals.
How does global sourcing impact the environment?
Global sourcing can have both positive and negative impacts on the environment, depending on factors such as transportation emissions and the use of sustainable materials.
How can companies ensure quality control when sourcing globally?
Companies can ensure quality control when sourcing globally by establishing clear quality standards and inspection procedures, and by working closely with suppliers to monitor performance. check our Mondoro and how we will perform both a DUPRO and Final Detaield Inspection for every shipment.
How can companies evaluate the effectiveness of their global sourcing strategy?
Companies can evaluate the effectiveness of their global sourcing strategy by monitoring costs, quality, delivery times, and supplier performance, and by continuously reviewing and updating their strategy as needed.
Related Content
Top 9 Benefits of Global Sourcing
Companies have many benefits to sourcing 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.
You can discover more by reading Tips Top 9 Benefits of Global Sourcing by clicking here.
Why Is Product Development Important In Marketing?
A company needs to produce, manufacture or sell what people want to buy. Product development is the one driver that can help a company to be able to ensure that they continue to develop in the products and services are resources that people want to purchase.
Click this link to learn more about Product Sourcing and Strategic Sourcing Explained.
