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Global Sourcing Spotlight: More Than Just Saving Money

Last year, I was talking with a potential customer about how I could help her business save money by getting a better value from one of my sources on products she needed to purchase. She was extremely skeptical and only agreed to talk to me because of one of my resourceful salespeople.

As we toured her facility, I saw several ways to help her company. She was not an easy sell, and as a true professional, she put me through the proverbial wringer. She tested me not only on why she should buy globally but also on why she should use my company. Eventually, we did business together.

Once I got back to the office and had the time to think about how things had gone, I decided that it would be helpful to write down what we had talked about.

She asked about saving money, which is always the first question asked because it’s the number one concern. While I believe it’s an essential question, it’s not always the most important factor when going global.

Global sourcing is primarily driven by cost reduction. Different countries have varying cost structures because of differences in labor costs, raw material availability, and economic conditions. By sourcing from countries where production costs are lower, companies can achieve significant savings. For instance, producing electronic components in Southeast Asia may be more cost-effective because of lower labor costs and established manufacturing infrastructure. These savings can then be passed on to customers or reinvested into the business for further growth. Yes, I can usually get a better price, but it’s not always about the best price.

By going global, our customers can get better products. They can gain access to superior quality and innovation. Different regions have developed specialized expertise in certain areas. For example, Germany is renowned for its engineering precision, while Japan is famous for its electronic advancements. By tapping into these global centers of excellence, companies can access superior quality products and innovative technologies that might not be available domestically. This access to worldwide talent and innovation can significantly enhance the quality of the final product and give companies a competitive edge.

Another factor is developing a sturdier supply chain. Relying on a single geographic location for sourcing can expose a company to significant risks. Natural disasters, political instability, economic fluctuations, and other unforeseen events can disrupt supply chains and halt production. Global sourcing allows companies to diversify their supply base, reducing the impact of regional disruptions. By having multiple suppliers in different parts of the world, businesses can ensure continuity and resilience in their supply chains. Let’s not forget how during COVID we could not even make respirators in this country. Keeping several options open in your supply chain allows my customers to sleep at night.

By going global, we can access the best technology and specialized expertise not available domestically. This is important when trying to build the best products in the world. As I previously noted, global sourcing is not just about the price. Certain regions are hubs for specific technologies and expertise. For instance, America’s Silicon Valley is known for its cutting-edge technology companies, while China’s Shenzhen city is famous for its electronics manufacturing prowess. Sourcing globally can lead to innovative product development and improved production processes.

Finally, global sourcing allows my customers to scale as needed. Whether they need 500 pieces of something one month and 5,000 the next, we can make that work. In times of increased demand, companies can leverage multiple suppliers to ramp up production. Conversely, during periods of low demand, they can reduce orders without severely impacting any single supplier. This flexibility is crucial for maintaining operational efficiency and effectively meeting market demands.

The value of global sourcing cannot be overstated. In an era where businesses must constantly innovate and optimize to stay competitive, leveraging the global marketplace for sourcing offers unparalleled advantages. From cost savings and access to superior quality products to risk diversification and competitive advantages, the benefits are extensive. By working with expert global sourcing suppliers, businesses can navigate the complexities of international procurement and unlock the full potential of a global supply chain. Being limited to domestic borders is no longer a viable option when there is a wealth of opportunities to be tapped globally.

Today, that woman’s company is one of my top three customers. She is happy enough with how things are going that today we can have a good laugh about the hard time she gave me when I first visited her facility. It’s a story with a happy ending.

Bob Duke is president of the Global Sourcing Division at American Standard Circuits.