We’ve all been there. Remember the last time you went as a tourist to a foreign land where you didn’t speak the language, and you had to ask for directions? Unless you were lucky enough to run into someone who spoke your language, this may have been a slightly frustrating task.
Now, imagine this for your strategic sourcing process where you want to buy items from a foreign supplier who doesn’t speak your language, or may have different business norms. How would you do it?
But first, is it worth doing? In other words, why source internationally? Why not stay within your borders? Well, the fact of the matter is sourcing internationally allows you to tap into a much wider range of suppliers than is possible within your own borders. You may find competitive pricing or access to cutting-edge innovations. You may even learn a thing or two about the country you are sourcing from, potentially paving the way for you to sell there. All of which means that strategic sourcing across borders should be an integral part of your business.
But there are challenges.
Challenges in International Sourcing
1 – Language
The first challenge is obvious – not everyone speaks your language. This can be a severe hinderance in sending RFx documents to potential suppliers. You will have to find a way to send your questionnaires in the native language of the supplier. Then you will have to find a way to translate their response back into your language.
This is not as easy. I remember one time I visited Germany and contrary to popular belief, you actually do have to observe speed limits! And to my surprise after I returned home I received a one page letter in mail in German. While I could tell it had something to do with some traffic infraction, I really had no idea what it was about. My answer was to find a German speaking friend to translate it for me.
But now imagine this problem with one letter multiplied many fold as you send an RFP to a supplier.
2 – Cultural Differences
Another issue is that communication styles, business etiquette, and negotiation practices vary widely across cultures. Misunderstandings in these areas can strain supplier relationships and lead to delays or inefficiencies.
3 – Logistical Complexities
Transporting goods across borders involves intricate logistics, including longer lead times, shipping costs, and potential delays. Global events like pandemics or geopolitical tensions can also disrupt supply chains.
4 – Compliance and Regulations
Different countries have unique trade laws, tariffs, and import/export restrictions. Companies must stay informed to ensure compliance and avoid penalties or delays.
5 – Quality Assurance
Maintaining consistent quality standards can be challenging when sourcing internationally. Businesses need robust supplier evaluation and monitoring processes to uphold their reputation.
Given these challenges to international strategic sourcing, how do you address them?
Strategies for Successful International Sourcing
Use Translation Software
When I was in France, I remember trying to talk to someone and the way it went is that she would speak into her phone in French, Google would translate, and I would hear the English output. I would then speak into the phone in English and she would hear the French translation. It worked. We got to converse!
You can do the same sort of thing in strategic sourcing. Use an application like Gainfront Strategic Sourcing that automatically translates your documents from one language into another and back.
Thorough Supplier Vetting
Conduct in-depth research on potential suppliers. Verify their certifications, inspect facilities if possible, and assess their capacity to meet your business needs. Here again Gainfront can help by giving you access to our deep global supplier database.
Invest in Relationships
Building strong partnerships with international suppliers fosters trust and collaboration. Regular communication and visits (virtual or in-person) can go a long way in strengthening these bonds.
Leverage Supply Chain Management Technology
Use supply chain management tools to streamline operations, track shipments, and ensure transparency throughout the sourcing process.
Understand Local Markets and Laws
Collaborate with local consultants or legal experts to navigate trade laws and cultural nuances effectively. Embed these as compliance documents using Gainfront’s
Compliance module, and you will be able to make sure your international suppliers are following all applicable laws and requirements.
Understand the Risk Profile of Each Supplier
Use software such as Gainfront’s Risk Management capabilities to calibrate the risk of each international supplier. This way if you select them you have an idea of the risk you are taking on in your supply chain. Additionally, spread your sourcing efforts across multiple regions to minimize disruption.
Summary
Strategic sourcing across international borders offers immense opportunities for businesses to optimize costs, enhance product quality, and expand their market presence. However, success requires careful planning, a deep understanding of potential risks, and a commitment to fostering strong supplier relationships. But there is a right way to do strategic sourcing across borders – and using software such as Gainfront is a big part of it.
Rahul Asthana has a PhD in Operations Management from the Anderson School at UCLA. He has 25 years of experience in supply chain management, starting his career in IBM working in supply chain operations. He then moved into product management and product marketing of supply chain software while at SAP and Oracle. He manages product strategy and product management at Gainfront. In terms of hobbies outside of work, he really enjoys tennis. Follow Rahul Asthana on Linkedin!
