One of the toughest and most complex decisions for any international brand is outsourcing. Thousands of companies have gained much success from this, while others have struggled and, unfortunately, seen it backfire in their case. Whether you’re outsourcing a small section of your product manufacturing or the entire process from start to finish, you likely have many companies to choose from.
However, with outsourcing comes tons of research and thinking through decisions from various angles about aspects of your business. If you’re considering international trade and outsourcing, we’re here with a detailed article on the best ways to go about it. In this article, we tackle how to research outsourcing, weigh your options concerning the supply chain, and make the best decision for the success of your business.
Employ a sourcing company for assistance.
Yes, it’s your company, and you want to outsource some services. The truth is, you can’t handle everything on your own. To manage your overseas relationship, you’ll need to employ eyes and ears in your selected location. This is what an international product sourcing team is for.
Sourcing companies are intermediaries employed to negotiate with all potential manufacturers and choose manufacturers based on criteria you set, including pricing, location, design capabilities, and quality assurance practices. They can also identify a favorable option and manage the relationship once a contract has been agreed upon. That being said, before choosing a manufacturer, you need to be certain that outsourcing makes sense for you and your business.
References are vital.
If your business is well established and is recognized globally as a sustainable business model, chances are many manufacturers will fight and compete to be in business with you. The more established you are, the higher quantities you can order. When outsourcing, the first step you must take is to research all potential manufacturers. You can do this by asking for their customers and inquiring about their experience working with them. If any manufacturer is hesitant to share their clientele with you or claims not to have any references, you should be wary.
Make at least one trip yourself.
Create a team specifically for this. Equip them with all the knowledge needed to study your chosen location and manufacturer. This team should be done before manufacturing begins, as it might make or break the relationship. If you wish to have high-quality products in large quantities, you need to set up their visiting time such that it falls in line with your product’s production line.
A physical visit is essential because it allows representatives from your company to meet the overseas manufacturer’s team in person, walk down production lines and see exactly how things are being done. There’s only so much one can see during Skype video calls; thus, a physical meeting helps firm up the partnership.
Review your final decision.
The key to successful outsourcing lies within the efficiency of the global supply chain system. It would be best to undertake a thorough analysis and review of any work conducted n the first month. You can create a clause in the contract that details h the review will work, which ensures you can drop out if the work isn’t satisfactory. The review will also reveal how much profit you gain with outsourcing or the losses you might contract. You might decide after the analysis to further review all existing and proposed supply chains and their alternatives.
All in all, the low prices of labor and many other factors tend to make overseas manufacturing more profitable for product-based companies. To outsource your manufacturing or any other service, you need to be careful during the selection process to ensure that relationships are built with the right people to keep your business at a competitive advantage.