These days, every company is looking for a certain global sourcing strategy so that they can increase their profit margin to become more competitive in the market.
As far as procurement is concerned, there are many manufacturers from Asian countries, who have started offering their products at a much cheaper price as compared to what is available in domestic markets.
The lower labour cost and also government policy support are now enabling a few countries like India and China to manufacture their products at much more competitive rates.
Besides that, globally recognized standards of quality that are being followed by these Asian country manufacturers help in maintaining very high product quality.
Certainly, lower procurement costs will enable most western companies to enhance their profitability. These days, most global companies prefer to procure their products from China.
The supplier of any product is now going to be a major stakeholder in global sourcing activity. Your product quality and its on-time delivery will now depend on your supplier.
If you are going for bulk production, then you may have to engage with more number of suppliers. This is also another very crucial activity while procuring different types of product categories.
Only with proper coordination with several suppliers and having consolidated sourcing solutions, it will be possible to streamline your manufacturing activities.
While dealing with any supplier from China, one major issue is the language barrier. Varying delivery slots, as well as variations in their quality standards, can always be a challenge for any business.
Therefore, proper consolidated sourcing solutions and strategies can always help companies overcome all these hurdles. So, in this article, we shall talk about this consolidation strategy.
What a supplier consolidation is?
Nowadays, price and quality are the 2 major factors, which will guide your procurement process. However, if you have decided to source from China, then you must engage with several vendors for meeting your bulk requirement.
To manage different vendors having multiple manufacturing units can always be too cumbersome. Supplier consolidation is nothing, but a smart strategy to manage the supply chain to minimise complexity in your procurement process.
Here, your approach should be reducing the vendor numbers to depend on. While consolidating choose only those who are the best vendors, who can add value to your business.
A few benefits of consolidation of suppliers
The various benefits of adopting a consolidated option for sourcing are as follows:
Economies of scale
Volume procurement can always enable you to get a competitive price. When you will order in a bulk quantity your vendor will also offer you maximum attention.
Vendor consolidation by having a few vendors can help your consolidated sourcing solutions,as reducing to a few vendors will suit your price requirement.
Better adherence to quality and specifications
Quality is the biggest issue to consider while procuring from any foreign suppliers. Huge variations in quality can be found when moving from any urban clusters to certain rural manufacturing clusters.
Therefore, it is better to work only with a few suppliers. Your procurement team can also effectively collaborate with all these vendors and chart out the exact specifications and also quality requirements.
Shipping cost reduction
Your logistics and shipping will be major factors to decide the final cost of your product. For smaller quantities, this can translate into higher shipping cost.
By doing vendor consolidation, it can enable you to order only a few vendors in bulk quantities. Thus, with your proper consolidatedsourcing strategies, it will be possible to reduce your shipping costs.
Stronger company-supplier relationship
By limiting your number of vendors, you can always maintain a much better relationship with all of them. Proper vendor management will be very useful to obtain the best product quality as per your needs.
Better collaboration and communication
Often lack of effective communication becomes one of the most common reasons for your product failures, particularly while global sourcing.
If you are dealing with several vendors then it can be a very difficult task for your procurement team members. Therefore, consolidated sourcing solutionsby adopting a certain vendor consolidation strategy can help your team to bring out the best outcomes.
Sourcing services that help reduce cost and also increase profit
There is another important strategy that you can consider as your part of the consolidated sourcing solutions,that is hiring a suitable sourcing service in China.
At the beginning of this post, we have mentioned that while dealing with Chinese vendors, the language barrier remains a major problem. Therefore, hiring a local sourcing agent, who is familiar with both English and Chinese language will be of immense help to you.
The following are a few good reasons, why you must seek this service while sourcing any products from China:
You can identify the right source
The local representative in China will have full information about Chinese industries in various locations. Hence, with their support, you can locate your vendor with much less effort.
Helps in negotiating price
When a local representative is available with you, then you will have correct idea about pricing, which will be very helpful to you while negotiating the price.
Help to maintain quality
You must select a local representative who has the technical knowledge and understands well about the products that you are looking for. Then your agent will be very helpful to monitor the quality of supply during the production stage.
Help timely shipping of consignments
A local representative can give you advanced information about shipping or if any possible delay is anticipated. They can also coordinate the shipping activities from China.
Avoid your visit to China
When you have a trustworthy local representative available in China, then you need not visit China more frequently for any problems in your supply chain.
There are many such sourcing agents available and there is tough competition among them too. Therefore, it will not be too difficult to find a suitable sourcing agent in China at a reasonable cost.