Issues in Global Sourcing

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The same with any other methods of marketing, global sourcing also has several problems that everyone that want to use this method successfully has to be able to overcome. Fortunately, there is what are called as global sourcing advisors that can help make a better strategy for global sourcing so that such issues or problems can be avoided. There are partnerships that a company, for example, can make with a global sourcing advisor to work together in making the strategy like the Thomas D’Innocenzi global sourcing partnership .

The cheaper price is the main reason companies make purchases abroad. Today many life-cycle cost calculations are used to analyze purchasing decisions based on the productive life of purchased goods, including the added value of exchange or the estimated future value of the goods in the future.

Moreover, there are some additional fees in global sourcing. The following is a list of import fees, with an estimated percentage of the resulting price increase in the calculation of the price:
– International transport, insurance, and packaging (10-12%).
– Import duty (0-50%).
– Customs brokers salary (3-5%).
– Transit or pipeline supplies (5-15%).
– Letter of credit (1%).
– International travel and communication expenses (2-8%).
– Company import experts (5%).
– Reworking products that do not fit the specifications (0-15%).

Other than that, there are still some other losses that have to be avoided such as:
1. Price increase caused by declining value of a domestic currency due to exchange rate fluctuations.
2. The emergence of E-Procurement that should make it easier even causes new problems. The process of selecting suppliers still needs to be done in such a way as traditional purchases due to unknown supplier concerns are able to meet the needs of the company in terms of quality, delivery, pricing and others.
3. Security factors are also problem companies should be careful opening their business details including price, inventory design specifications especially to competitors.
4. There is the possibility of hacking and fake booking.
5. The existence of standards in each country is also a problem in implementing E-Procurement.