Sourcing VS. Internal management of international purchasing

Sourcing VS. Internal management of international purchasing

As sourcing experts we well know that many companies have serious doubts when it comes to outsourcing their international purchasing processes, even thinking that the role of the international purchasing agent is totally unnecessary.

 

The reasons that lead to this conclusion are diverse, but two clearly stand out. Firstly, many companies believe that having an internal international purchasing department is enough, and they dismiss the idea of ​​making an additional investment in sourcing. Secondly, there is the erroneous tendency to believe that lists of suppliers that facilitate importing from foreign countries can be easily obtained from the Internet and that, thanks to this, a sourcing expert is no longer needed.

 

Although we have already discussed the advantages of leaving imports in the hands of a specialized international purchasing agent  in the blog, we believe that it is appropriate to make a comparison that analyzes the most important factors in the management of international purchases, point by point.

Sourcing company

Internal international purchasing department

TIME DEDICATED

For a sourcing expert, the timescale of the sourcing process is significantly reduced as his extensive experience gives him greater control over the process.

A non-specialized internal international purchasing department has to dedicate a large amount of time in training and developing a vast number of topics, from negotiation to studying the customs of the importing country, administrative or fiscal matters, and so much more.

LANGUAGE

They are totally used to communicating with providers in their native language, which they master perfectly, as well as understanding their customs. Thanks to that, many conflicts generated by poor communication are avoided.

Although we all know that mastering English is essential, it is simply not enough when we look for suppliers in Asian countries, such as China. Business there must be conducted in their language; something that is neither easy nor within the scope of everyone. Problems in international purchasing management as a consequence of poor communication and comprehension, are common.

RESOURCES

Experience and resources, the result of many years of developing the same type of activities, allows him to avoid habitual problems and setbacks, which, in turn, minimizes indirect or unforeseen costs.

The resources required for the usual tasks of an international purchasing department are not the same when it comes to importing from Asian countries. The lack of specialized resources, and almost always experience, very often ends up generating unforeseen problems that increase the final cost of provisioning.

EFFECTIVENESS

The sourcing strategy is clear, so the effectiveness is very high. Although problems may arise in any importation process, a quick solution is guaranteed.

Although many international purchasing departments make great efforts in sourcing tasks and achieve fairly acceptable results, their effectiveness will always be improved as negotiating and dealing with supplier countries is not their usual task. This is often the reason that leads companies to consider outsourcing their sourcing.

SPEED OF PROCESS

For a professional sourcing company, the complete process of an import is much faster than the client company can imagine. Experience is a key factor in this regard since international purchasing agents are always clear about the steps to take and their priority.

Despite the goodwill and effort that the internal international purchasing teams often have, the supply process is inevitably prolonged by changes, setbacks, administrative problems or even shipments.

PROBLEM SOLVING

It is not true that outsourcing 100% of sourcing guarantees that there will be no problems during the management of international purchases, since any import process can cause setbacks. However, an international purchasing agent is used to dealing with all kinds of problems of this kind, so their problem solving will be agile and swift.

Everything is going well until it stops going well.” is a phrase we often hear. As much as companies are trained and prepared to manage international purchases internally, there are often setbacks that we did not anticipate, and that can often damage or even delay the importation process.

UNEXPECTED COSTS

Although it is logical that international purchasing agents must be paid for their work, the control that a specialized sourcing company has over the international purchasing process guarantees a smooth transaction free of additional costs.

An internal international purchasing department is on the staffing payroll, which may lead us to believe that this significantly reduces the cost of importing. However, companies are often unaware of the fact that, when the sourcing process is complicated, it generates a series of unforeseen additional costs that, very often, clearly exceed the cost of outsourcing the sourcing.

TRANSPORTATION

Delivery to the customer is an essential part of the international purchasing process and is managed with complete security, since it is often the same sourcing company that receives and then distributes the products.

Freight transport is often longer and more expensive than anticipated, and can also lead to additional problems, such as the receipt of defective orders (broken parts), or the arrival of partial orders.

As we have seen, our experience as a partner specialized in the manufacture and import of industrial products in Asian countries has led us to get to know both sides of the same process well. This is because many of our current clients initially attempted to manage imports themselves from their internal international purchasing department and the result was far from what they desired.

The advantages of outsourcing sourcing are more than considerable and ensure that our import process is successful. It is not a competition between external companies and internal departments. It is about making international purchasing management a success to help the client company achieve a series of competitive advantages that increase its market share compared to its competition.

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