A Strategic Guide to Global Online Sourcing in B2B Market Space

global-online-sourcing
22nd Sep, 2017

For global online sourcing, it is really important to form a strategy. The reason is, a lot more work is necessary than just managing the concept of “purchasing”. In case of global online sourcing, it is important to make the product ‘happen’ on time, within budget and also maintain the quality which your clients expect. Global online sourcing includes signing international sourcing agreements and this is what puts the brand name and the name of executives on the line. During global online sourcing, the buyer and supplier can be of significantly different backgrounds.

The foreign management may also have different business objectives where the employee ethics can be questionable. Considering all these, it can be said that the global online sourcing for B2B market space needs a lot of effort for a successful execution. Sourcing is a good way of saving cost. With the evolution of online marketplaces, it has become easy for the buyers to contact the global manufacturers. And in this process, there are lots of risks involved in online transactions. A lot of buyers don’t know how to look and from where to begin. A global online sourcing guide for B2B market space is an organized way of opening up the process of procurement to all worldwide suppliers.

How Does Global Online Sourcing Work?

Implementing a global online sourcing strategy means forming a plan to efficiently source the necessary goods and services from a certain country which can manufacture the goods more economically. This will help you in getting the best services and products at the best value in such way which will reduce the operational costs. Global online sourcing is an essential business process which reduces the expenditure on third parties and ensures that the procurement resources are spent wisely where they are needed the most. If a company wants to stay in business for a long period of time, then it is imperative to opt for a global online sourcing strategy. More than 90% of the fortune 1000 companies have an overseas supply chain management system. One of the most important factors for growth of the global economy is the use of global online sourcing.

The targeted countries for global online sourcing are those countries where English is a preferred language, where there are a huge number of qualified employees at all levels and the productivity is high. Three major industries have already adopted global online sourcing strategies successfully. These three industries include I.T. services, telephone call centers, and manufacturing. The professional services firms are partnering with the lower cost countries for IT consulting, purchasing and engineering. The primary reason why low-cost countries are the target for strategic global online sourcing is that the cost of transport, material, and labor is low in developing countries. This is why to start a global online sourcing strategy; you need to choose the low-cost countries. You will be able to make a huge amount of savings in pays and employee benefit costs. Apart from this, there are also lesser government restrictions. Now, you know from where you should start your global online sourcing.

Success Elements for a Global Online Sourcing Manager

As a global online sourcing manager of an organization, there are certain things you have to know. They are as follows:

  • You have to understand the people you are dealing with. There is no other way. Language, behavioral norms and culture will vary from one region to another even within the countries. If you are doing business in a foreign land, then there are high chances that there will be contractual errors and misunderstandings. The first thing about being a successful global online sourcing manager is researching the background of the suppliers and knowing their work history before you commit or sign any agreements.

  • Your organization must have a strong reason to go global. A global online sourcing manager needs to have a fully dependable and researched database of current costs. This will ensure that the cost savings attained through global online sourcing are defensible.

  • You have to be realistic about the time frame from sourcing to marketing the products. The closeness of suppliers from the markets will influence the transportation time. It is important for the global sourcing manager to have a contingency plan and time while giving any confirmation about the delivery dates. The managers have to remember that there can be any natural or political events which might hamper the delivery. As a manager, if you are aware of the real-time frames, then it will have a positive effect on the cost of both the logistics and inventory.

  • As a manager, you have to be aware of the physical hazards which might cause a disruption in the supply chain. Some of the physical hazards include accidents, fire, boiler explosions, and ships sinking. The natural disasters like wildfires, earthquakes, hurricanes, tornados and strong storms can become a cause of concern.

  • If you plan for global online sourcing, then it is good to have a working knowledge of contracts. You have to be able to negotiate not only the price but also the terms and conditions of return, repair compensation, the payment terms, safety and the buffer inventories.

  • Beware of the sales tours. A lot of suppliers from the low-cost countries will offer pre-determined and well-tuned customer tours. But they only offer a tour of a “part” of their facility. You have to make an effort to get into the additional areas, other buildings, and try to even check the place where the scrap is sorted. This will help you know what exactly is happening. A lot of suppliers will only take you to the high-tech areas of the factories which are not at all related to the manufacturing process.

  • Be careful about the local sourcing agents. If you decide to opt for the local sourcing agents, then you have to be careful because quality issues can occur. The documents might be forged or ‘forgotten’ to get the shipment out. If the shipment is coming by sea, you might find one or two months worth of marginal products already on the high seas but you would know nothing about it. So it is very important to know about each and every step of the local sourcing agents.

  • The global sourcing managers need to have a broad access to different functional disciplines. They should have access to the corporate resources. It will be a foolish step to proceed without any international sourcing activity or any outsourcing program.

Factors to Keep in Mind While Sourcing from B2B Marketplaces

Here are certain things that you need to know while sourcing from the B2B marketplace.

  • Narrowing the search field: A lot of buyers, who work on the idea of global online sourcing, also make random searches looking for the global suppliers. These random searches might offer you the desired results but the credibility of these searches is not assured. This is why it is recommended to use the reputed online B2B directory like ECpages which will offer you a wide range of genuine choice for products and suppliers.

  • Negotiating a fair deal is another important factor to keep in mind. Know that the business deals are not always a win-win situation. The buyer focuses on making sure that they get a good value for money. Since the sourced products will be resold, the buyer always has a tendency to get a value for money. The genuine B2B online directories like ECpages and marketplaces will make it easier for you to find exporters who will meet your needs. The online B2B market spaces will also enable you to communicate, negotiate and close deals faster.

  • Keeping the fraudsters at bay is another important thing to keep in mind during global online sourcing. It is risky to work with an exporter who is thousands of miles away. You are always worried about the quality of the product and its timely delivery. A lot of times, the exporters will also ask for the partial payment. In case of a small order, it is mandatory to make a full payment. So how can you make sure that the investment is secure? Genuine online B2B marketplace directories like ECpages help you in identifying the fraudsters. Thus, the buyers will get a good deal with only the verified suppliers.

Global online sourcing is not really a new fad. It has been a strategy for the multinational organizations for more than 30 years. Once a global online sourcing strategy is developed, it will help a business to build relationships and infrastructure to ease the projects and get a greater control over the future of the organization. The use of global online sourcing is increasing day by day. The small and medium-sized organizations need to embrace it to stay competitive in the market. Yes, there are certain risks associated with it, but clearly, the benefits of global online sourcing outweigh the risks associated with it. The rewards of having such a strategy are very high for any organization.

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