On the basis of a plethora of benefits of global sourcing services and global sourcing companies, many people engaged in adopting the perfect procurement strategy for their business. But wait, have you thought of various challenges that you can face and probably how to mitigate against these types of challenges? You need to know this because the challenges of global sourcing services are rife and if you overlook them, all these challenges can negatively impact your business and RoI. Some of these challenges are as follows:
1. Quality Control
The quality of the product is largely seen by the quality of the raw materials that are being used in manufacturing the product. It means that your suppliers have a hand in what you provide your patrons. Therefore, there is a need to routinely evaluate the performance of your supplier in terms of time, quality, quantity, and even price. While dealing with global suppliers, it becomes a challenge so as to evaluate their performance, especially the product quality, until the materials are delivered actually to your headquarters.
In order to overcome this challenge, you have to take measures like:
- Be pretty careful while writing your specifications
- Use international standardization and get the benefit of it
- Request to provide samples before bulk delivery
- Conduct inspection before shipment, either by personal means or by taking the help of a third party inspection agency.
2. Foreign currency fluctuations
Due to many economic factors, most of the currencies of the world remain volatile. As a result of this, you can avail of a contract today and by the time of delivery you want to pay, the currency has changed dramatically, resulting in huge losses of yours. You should protect yourself from such unforeseen accidents by taking various pre-mitigating measures. Some of the measures are as follows:
Negotiation & inclusion of conditions for the currency adjustment in the contract.
Using a neutral currency could be a hard currency that does not fluctuate much like the US dollar, but not yours or the currency of supplier.
3. Compliance with existing regulations and laws
It is crucial to deal with suppliers who comply with various established laws like labor laws, environments, safety standards, and fair compensation, among others.
In addition to this, while buyers all across the world are striving to embrace green purchases for their business, you also need to make sure your purchases are completely environmentally friendly. It includes resources from suppliers using various green production processes. Ensuring that the global supplier uses various green processes is a major challenge. However, you can seek to see if they have certificates of international standards, such as ISO 14000.
4. Communication Barriers
Language and time differences barriers can make communication a real challenge in identifying global sourcing procurement. Different time zones mean different operation hours for the suppliers. You can imagine waiting for several hours for an urgent change to any particular order that you made, or look for a correction for the delivery that was made!
Also, take an example you work in a Christian country and your supplier works in a Muslim country or vice versa. The weekend in Christian countries is Sunday and Saturday, while the weekend in Islamic countries is Saturday and Friday. This literally leaves you with only 4 working days in a week, which could interfere with your overall work productivity. The only way to overcome this type of challenge is to use electronic methods of communication such as emails. There is no doubt that the challenges of procurement outsourcing exist and can spoil your business for a great time if you lose sight of it. Luckily, it can be controlled completely if measures are taken appropriately. There is no reason Not to source globally because every endeavor has its own challenges, you only need to take preventive measures for this.
