If you have been resisting the idea of developing a global sourcing strategy, then maybe you should reconsider the goals you have established for your company. Every day you put off integrating global sourcing into your business plan is another day that you are flushing money down the drain instead of putting it in your bank account where it belongs. A global sourcing strategy is not created over night and could potentially take years to fully implement. It is important to keep this in mind if your business is facing extinction sooner rather than later. Furthermore, once you do establish your global sourcing strategy, it requires diligent management and upkeep in order to serve your company well.
Do you think that your company is ready to take on global product sourcing and exponentially boost your growth potential? Take a look at these top 5 signs that your company can benefit from global sourcing and see where you stack up.
1. Sales are up, profits are down
When this unfortunate situation strikes, you need to take a close look at every aspect of your business to determine where you are allocating too many funds and not realizing a large enough return on your investment. There is a very good chance that you are spending way too much on sourcing and those high costs are cutting into your margin. By incorporating a global sourcing strategy into your purchasing plan, you can significantly reduce your sourcing budget while expanding your product line at the same time. Global sourcing is the best way to approach the situation of overspending. While sourcing locally is good for your local economy, it doesn’t always make the best business sense.
2. Your growth has reached a plateau
If your company has stopped growing at a steady pace, you will have to take a step back and reassess your inventory, your sales methods, markets, essentially every aspect of your business. Maybe your customers are not drawn to your products anymore because you haven’t really offered anything new to get their attention. If you need a way to add to your product offerings, but can’t afford to invest a whole lot of money into product research and development, global sourcing can provide you with a cost effective way to beef up your inventory without breaking the bank.
3. Local sourcing is becoming increasingly more difficult
When you started your business, you might have put in your business plan that you would source locally whenever possible, but as your business grew, you needed a manufacturer that had the capacity to grow along with you. Unfortunately, domestic manufacturers have not been able to compete with the advanced technologies that are driving Chinese factories and global product sourcing in general. If you continue to try to source locally you will inevitably run into a couple of different issues. The first problem you will encounter will be in your supply chain. If your business is growing exponentially, you cannot afford for your inventory to be backlogged. If there is demand, you need to meet it; otherwise your customers will go elsewhere. In order to keep your business growing, you need to have a solid global sourcing strategy in place so that you can import large amounts of product at a time so that fulfilling orders is never an issue. The second problem you might come across is a lack of diversity in your product line. Whether you want to admit it or not, sourcing locally comes with limitations. When you think about global sourcing, you open yourself up to so many opportunities to introduce new products to your customers.
4. You once dominated your market, but competitors are outpacing you at an alarming rate
You can remember the days when your competition could not even come close to providing the same quality products as you for the same low price. Now, your competitors are blowing you away with their broad range of products and their seemingly endless inventory. What happened? It is safe to assume that your competitors started developing their global sourcing strategy a long time ago and implemented it before you even made your first phone call to a global sourcing company. While you were too busy filling orders for your regulars, your competitors had hired consultants who introduced them to the possibilities of global product sourcing. Now, they are experiencing growth in emerging markets while you are struggling to stay afloat in your tired old market. If you want to stay competitive and relevant to your customers, global product sourcing is the only way to achieve that.
5. The farthest product you source is 1,000 miles away
If you haven’t even considered sourcing from anywhere outside your borders, you are missing out on an entire world of potential sales. Global product sourcing gives you more options, increases your visibility, and allows you to take some risks. Global sourcing is becoming more common because it is cost effective and extremely beneficial to your profit margin. In order to succeed in business, you have to think outside the box and think bigger than you. It might be difficult to imagine your business operating on a global scale, but there comes a point where you really do have to decide to go big or go home. If you haven’t developed a global sourcing strategy, you aren’t taking your business seriously enough.
The mere thought of adapting a global sourcing strategy is daunting and somewhat intimidating, but don’t let fear stop you from exploring the lucrative option of global product sourcing. This is a smart strategy that will significantly reduce your costs and improve your position in the market. If you don’t even know where to begin when it comes to global sourcing, there are a lot of resources that you can take advantage of to help you develop your plan and slowly implement the strategy into your business operations. The bottom line is that unless you are considering global sourcing, your business will not continue to grow.