When asked about they use global sourcing as a strategy to procure materials, most business owners and managers will tell you that it saves costs through price breaks and logistics management expenditures. That is certainly true but there are larger benefits to the company than a per unit price. Utilizing a global sourcing company brings intangibles to the table that not only equate to savings now, but it also equates to broader benefits for the client company in the future; here are a few of those benefits.
Global sourcing provides benefits to the buyer, through savings is in price negotiations for high-volume procurement, which reduces the per unit price of goods, bringing more money into the company and allowing a company to price their products competitively. It also opens up new potential supplier markets to allow for greater price breaks or to leverage those potential business arrangements for tangible savings per unit today.
Additionally, because pricing is negotiated long before delivery and often on a regular interval, it allows for more accurate costing estimates. Further, it lets buyers know when they are approaching a price point in terms of costs of goods, which then allows them to prepare for negotiations more effectively or to adjust their purchasing habits to accommodate the increased costs.
Supply and Delivery Stability
A global sourcing company does the procurement and delivery work for you so that your employees do not have to worry about inventory availability or logistics dependability. The sourcing company handles the supply chain management process, which allows them to work with the vendor to ensure quality, defect reductions and streamlined delivery. Once a sourcing relationship is established, it can also lead to a consolidation of services provided.
If you are the person managing a global sourcing agreement, you have to track the entire process from soup to nuts. Chances are you do not have the time to focus on issues like transportation delays, materials shrinkage or defects. A global sourcing company does have that time because that is what, in part, they do for a business. They also will have the time to develop contingencies should the normal supply chain become affected by external forces, such as a major storm that alters shipping channels or the aftermath of a severe weather event.
The ability to save costs per unit for materials is one major way a global sourcing company can help a client save money. There are, though many other benefits, all of which lead to a more streamlined, better-managed procurement process.