Looking to source and procure products beyond China? Explore the potential of Southeast Asia’s emerging sourcing markets by establishing buying offices in market for a more effective, agile and resilient supply chain.
The winds of change are blowing through global supply chains. The once-dominant position of China as the world’s manufacturing hub is facing increasing scrutiny. Companies are re-evaluating their global sourcing strategies, with a growing emphasis on diversification, risk mitigation, reduced shipping times and environmental impacts.
This blog post delves into the reasons behind this shift and explores how buying offices can navigate the complexities of spreading their sourcing base across different countries.
ET2C International Unique Buying Office Model
ET2C International have over 23 years’ experience as Global Sourcing Experts. Our 200 colleagues are based in 7 offices across developed and emerging Asian sourcing markets to be your feet on the round. Creating your bridge to your Asian supply partners.
Many of our clients have developed their dedicated Asian buying offices with us. Taking advantage of our unique model that mitigates all the risk of establishing a dedicated team whilst releasing all the benefits of a team on the ground and direct supply relationships. Removing the challenges of office space, recruitment, staff isolation, HR, Payroll and Legal in a simple solution. Our teams can rapidly establish dedicated teams in China, India, Vietnam and Turkey to rapidly take your Global Sourcing to the next level. Buying Office Model
To find our more about our unique Asian Buying office model drop us a line at contact@et2cint.com
Why Diversification is Becoming the New Mantra for Global Sourcing and Procurement teams
Beyond Cost:
While China has historically offered significant cost advantages, factors like rising labour costs, trade tensions including tariff wars and WTO disputes are prompting companies to look beyond the bottom line.
Supply Chain Resilience: The COVID-19 pandemic exposed the vulnerabilities of over-reliance on a single source and Just in time supply chains. Companies are now prioritizing supply chain resilience, seeking to spread their sourcing risk across multiple countries. Reducing shipping times and building closer partnerships between company and supplier.
Geopolitical Instability: Rising geopolitical tensions and potential trade wars are influencing global sourcing strategies. Companies are seeking to mitigate risks associated with dependence on a single region. Post Pandemic disputes lodged with WTO have increased dramatically creating further pressures on the previously smooth-running global trade network
Consumer Preferences: Consumers are increasingly concerned about ethical sourcing practices, environmental sustainability, and product quality. Diversification can help companies address these concerns by sourcing from countries with strong ethical and environmental regulations. Reducing corporate and product risk and measuring and reporting on environmental impacts.
Benefits for Sourcing and Procurement teams of Diversifying Sourcing Locations
Reduced Risk: Spreading your sourcing base minimizes the disruption caused by unforeseen events in a single country. Natural disasters, labour strikes, or political instability can have a lesser impact on your overall supply chain.
Improved Negotiation Power: By sourcing from multiple countries, you gain leverage in negotiations with suppliers. Increased competition among suppliers can translate to better pricing and contract terms.
Access to New Markets: Diversifying can open doors to new markets with specific skillsets or resources. This allows you to tap into a wider range of supplier expertise and potentially source unique products.
Enhanced Innovation: Exposure to diverse manufacturing environments and cultural perspectives can foster innovation. Close collaboration with suppliers in different countries through a dedicated local team can develop new ideas and product development opportunities.
Improved Brand Perception: Demonstrating a commitment to responsible sourcing by diversifying across countries with strong ethical and environmental standards can positively impact your brand image whilst reducing the potential for corporate reputational risk.
Challenges of rapidly establishing a dedicated sourcing and procurement team in new markets
Increased Complexity: Managing a geographically dispersed supply chain requires more complex logistics, communication, and quality control measures.
Hidden Costs: Setting up operations in new countries may involve initial costs for establishing relationships with suppliers, navigating regulations, and adapting to different business cultures.
Quality Control Challenges: Maintaining consistent quality across multiple suppliers in different countries requires robust quality control processes and a strong local presence.
Longer Lead Times: Managing logistics across different countries can potentially lead to longer lead times, requiring careful planning and inventory management.
Cultural Differences: Communication and collaboration can be more challenging due to cultural differences, language barriers, and varying business practices across countries.
How Buying Offices Can Facilitate Diversification: Whilst delivering Commercial Competitive advantage benefits
- Market Research and Supplier Identification:
Buying offices can conduct in-depth research to identify potential sourcing locations that align with your company’s needs and values. They can leverage their local expertise to source reliable and ethical suppliers in different countries.
- Supplier Qualification and Negotiation:
Experienced buying offices can evaluate potential suppliers based on factors like quality, capacity, pricing, and adherence to your ethical sourcing standards. They can negotiate competitive contracts and manage supplier relationships in the local language.
- Quality Control and Compliance:
Maintaining consistent quality is crucial. Buying offices can conduct on-site inspections at your suppliers’ facilities, ensuring adherence to your quality standards and relevant regulations. They can also assist with navigating customs procedures and import/export regulations.
- Logistics Management:
Efficient logistics are essential for a diversified supply chain. Buying offices can manage freight forwarding, customs clearance, and ensure timely delivery of goods from various countries.
- Cultural Bridge and Communication:
Cultural sensitivity is key. Buying offices can bridge the cultural gap between your company and your suppliers in different countries, facilitating smooth communication and fostering productive working relationships.
Strategies for Effective Diversification: Buying Dedicated Sourcing and Procurement resource in new Markets
- Clear Strategy:Begin by clearly articulating your Strategic Sourcing requirements both from a product and Supply perspective. This will allow better focus on selecting potential new markets to explore.
- Focus on Proximity:Consider sourcing from countries geographically closer to your target markets to optimize transportation costs and lead times.
- Phased Approach:Implement diversification in a phased manner, identifying a few key sourcing countries to focus on initially.
- Develop Partnerships:Build strong partnerships with reliable local or Global Sourcing and Procurement companies who can lead and advice you on the benfits and agents in your chosen countries for better market intelligence and supplier management.
ET2C International Unique Buying Office Model-What are the Benefits
- Local Expertise & Knowledge:Setting up a buying office team requires navigating complex legal, cultural, and business environments. Companies often lack the in-depth knowledge and experience to navigate these challenges effectively. Our 23 years experience and teams on the ground in China and other Asian Sourcing markets enable us to rapidly deliver:
- Office space:Our modern office facilities ensure great working environment and the ability for your teams to network with other Buying teams within the same building. Sharing knowledge and building Insights
- Recruiting & HR:We manage all your recruitment with you to find qualified local staff, managing payroll, and adhering to labour regulations.
- Supplier Identification & Negotiation:Identifying reliable suppliers, negotiating competitive pricing, and managing vendor relationships.
- Quality Control & Inspection:Providing quality control support and overseeing production processes.
- Faster Start-Up Time:Companies can leverage our existing infrastructure and resources, leading to the quicker establishment of their dedicated buying team and streamlined operations.
Conclusion: The benefits of setting up your Asian Buying Office
Moving your Global Sourcing Strategy to one with buying Teams on the ground in sourcing markets moves your commercial delivery to the next level. Improving operating margins, developing faster innovation, improving quality and supplier relationships. When establishing your new team mitigating risk is crucial to ensure rapid margin and trading improvements.
ET2C’s unique Buying Office Model has been delivering benefits to our clients for over 10 years. Mitigating all the risk of setting up a team in Asian to allow them to focus completely on delivering the benefits to operating margins. To find out more about how this could elevate your Global Sourcing drop us a line contact@et2cint.com
