Global Sourcing Risk Mitigation
Global sourcing is considerably more risky compared to local procurement with a very high rate of return. Without the right know-how one can put the capital assets and overall business strategy at risk very easily. Agile's third foundation is based on risk mitigation through years of experience and a wide network of factories and experts on the ground.
It is highly possible to pick a supplier that is either not the source manufacturer but also not a legitimate business at all. It is possible that the party you are procuring from might just be a scammer or rather a business that is not capable of the delivery of the goods on time.
Quality is not an absolute instance in time, it is a continuous flow. Quality needs to sustain itself through various shipments over time.
Logistics is a very crucial element inside of the source country as well as air/ship and rail shipments.Without proper knowledge the time frame it takes the goods will be greatly increased leaving the sourcing company at great risk of missing crucial deadlines.
Documentation and Paperwork:
Proper documentation not only provides a timely shipment it also avoids the risk of the goods being detained at ports. Lack of proper documentation will alert port authorities and cause unnecessary delay and even detainment at ports.
Another aspect of the proper documentation is using correct duty and tariff designations. If the wrong designation is used there is a big penalty with back fees that a company would need to pay.
Even the best vendor might degrade quality over time or entirely go away. Risk can and should be eliminated by having thoroughly researched backup vendors who are ready to perform at a given moment's notice.
Price fluctuations could be a huge risk on a price sensitive item. Price should not only be negotiated for short term but with a long term strategy in mind as well.
At Agile, we are experts on how to reduce risk. Our risk mitigation policy will not eliminate all the risk but will greatly enhance the chances of a high return sourcing operation to help improve your business goals.