Global sourcing expands the circle of suppliers. However, international procurement involves risks that inexperienced buyers can easily overlook. That can lead to mistakes. Here are five examples and how to avoid such mistakes.
Mistakes in purchasing are often made in the contract . The danger is particularly great on the international stage because various legal regulations come into play. And it is not always clear under which circumstances which national rules apply. There are basically three options:
Particular attention should be paid to this in the case of contracts with partners in non-EU countries. This applies, for example, to the following aspects:
Securing patents and trademarks is of fundamental importance. If they are lost, this also means financial losses for the innovators. That is why it makes sense to register trademarks correctly and in good time with international procurement.
Take China , for example, where the principle of “placing on the market” applies with regard to property rights. This means that a resident producer can register a patent for himself just because he manufactures the corresponding product in China. Once that has happened, it is difficult to enforce the client's property rights retrospectively. It is therefore advisable to apply for patents also (and first) in your home country.
The quality of production companies abroad is not always easy to assess from a distance. If, for example, defects only emerge afterwards, this may fall back on the procurer. This applies, for example, to poor working conditions or a dubious origin or processing of raw materials.
Clients should therefore request relevant basic information from potential business partners. These include:
In the event of concerns, procurers should commission special local credit bureaus to determine the location and thus gain a deeper insight into the situation.
In order not to endanger an order that has already been placed, producers could withhold problems or certain practices. They may employ subcontractors contrary to agreements, use other factories, or breach compliance rules. This can lead to poor quality and extended delivery times - and thus to dissatisfied customers of the client.
For this reason, with global sourcing, it is advisable to check business partners regularly. For example, visits to the factories are suitable for this. Companies can also rely on local service providers for this.
In the context of international procurement, there are generally financial burdens that go beyond the pure production costs. They must not be overlooked, but must be included in the calculation in order to assess the total effort and thus profitability.
Examples of additional risks are:
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