Today’s electronics OEMs are dealing with an inherently complex global market. The first step to excelling in such an environment: identify and partner with a global sourcing partner. Here are some things to consider first.
In order to succeed in the competitive global marketplace, electronics manufacturers need more from their distributor than just the right amount of the right product at the right price. Navigating a global supply chain demands a global sourcing partner that understands the complexities of what it takes to be competitive.
Along with long lead times and the difficulty of assuring the designated product quality, many variables come into play when sourcing parts from another country. Global sourcing solves this problem.
Defining the terms
Global sourcing, on the surface, means exactly what it sounds like. Saylor Academy defines it this way in its International Business course: “Global sourcing refers to buying the raw materials or components that go into a company’s products from around the world, not just from the headquarters’ country.”
Often organizations consider the question of global sourcing in terms of whether they should sole-source or multisource the components that they need. Saylor outlines the pros and cons this way:
- Price discounts based on higher volume
- Rewards for loyalty during tough times
- Exclusivity brings differentiation
- Greater influence with a supplier
- Higher risk of disruption
- Supplier has more negotiating power on price
- More flexibility in times of disruption
- Negotiating lower rates by pitting one supplier against another
- Quality across suppliers may be less uniform
- Less influence with each supplier
- Higher coordination and management costs
Identifying and partnering with a global sourcing partner with a strong network of suppliers across the globe mitigates many of the risks of trying to monitor multiple suppliers alone while delivering desirable benefits.
Checklist for success
Choosing a strong partner with a global presence is smart for a variety of reasons, especially for OEMs with a global manufacturing footprint. Here are five things that a global sourcing partner can help with:
- Supply chain optimization: A global supply chain faces inherent risks, including delayed shipping times, added costs, and logistical challenges. The right partner can help avoid costly and unexpected mishaps.
- A global footprint: A global partner is likely to have representatives near the manufacturing hubs used by the organizations they serve. Local representation offers benefits ranging from cultural and language competence and local advocacy to an understanding of regional rules and requirements.
- Experience with tariffs: Mistakes around shifting customs and tariff processes can be costly in terms of both time and money. The right partner can help make sure required paperwork is filled out and accurate.
- Quality control: Especially in global manufacturing, quality control is paramount. The right partner will have identified and become familiar with potential sources and the quality standard and protocols they have in place.
- Logistics expertise: Manufacturing in global locations inherently increases the complexity of getting parts from the supplier to manufacturing. A strong global partner will have expertise in ensuring that products don’t get waylaid getting from point A to point B.
To summarize: Identifying and partnering with a strong global sourcing partner can streamline and simplify the challenges of working in a global marketplace, while offering a number of measurable benefits.
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