As global trade dynamics evolve, global sourcing and procurement from India present both incredible opportunities and unique challenges for businesses. Rising costs, inflation, and changing tariffs compel companies to explore cost-effective supply chain alternatives. India has emerged as a compelling sourcing destination due to its low labour costs, diverse industries, and improving manufacturing capabilities. However, for businesses considering offshoring their supply chain to India, several hurdles must be addressed to unlock the full potential of global sourcing.
The three most common challenges that companies face when sourcing products from India:
- Quality control
- Communication barriers
- Logistical complexities
Global and Indian sourcing offers significant cost benefits but also comes with unique challenges that businesses need to overcome. As a Global Sourcing company with offices in Delhi we hear many questions about how to start sourcing from India. From companies who want to move part of their supply chain offshore for the first time or
Reducing exposure to China or simply to shorten supply routes. The questions and challenges to resolve are similar.
Biggest challenges to be addressed in sourcing products and components from India
In researching questions posed on Google together with our experience of working with our clients these are the three biggest challenges or questions companies have when exploring global sourcing opportunities from India.
1. Inconsistent Quality Control
One of the most common challenges and questions companies face when sourcing from India is managing product quality. While there are many suppliers capable of producing goods that meet World class quality standards, in other factories quality can fluctuate. Factories with the right compliance and accreditations can be difficult to find.
Without stringent quality control measures, businesses can end up with products that do not meet their required specifications. This not only leads to delays and increased costs but can also damage a company’s reputation if subpar products reach the market. Many businesses have faced issues such as defects in materials, poor workmanship, or inconsistent quality between batches. This inconsistency is particularly prevalent in industries like textiles, leather goods, and low-tech manufacturing.
How to Overcome This Challenge: To mitigate this issue, companies should establish robust quality control mechanisms. This could include:
- Partnering with third-party quality control firms to conduct audits and inspections before shipment.
- Developing clear product specifications and regularly communicating these expectations with suppliers. Ensuring their supply partners are aware and understand all market quality and compliance issues.
- Building long-term relationships with reliable suppliers who have a proven track record of meeting quality standards.
ET2C International Global Sourcing Specialists
ET2C International are a UK owned Global Sourcing company who have been trading for 23 years. Our 200 colleagues are based in 7 offices across all major Asian Supply markets including Delhi.
Our daily mission is to make Sourcing Simple for our clients to rapidly deliver margin growth whilst mitigating all the risk of operating in a market which could have language, time zone and business practice differences to your headquarters of procurement tea.
Our colleagues as as your bridge to your Asian supply partners ensuring you always have rapid access and communication from your supply base. To learn more about the benefits of sourcing from India or to organise a sourcing strategy review drop us a line at contact@et2cint.com
2. Potential Communication Barriers and Delays in Asian Supply Chains
Communication is one of the cornerstones of successful sourcing and procurement, yet it can become a bottleneck when sourcing from India. Cultural and language differences can create misunderstandings, leading to incorrect orders or errors in product specifications. Additionally, the significant time zone differences between India and Western countries can result in delayed responses, making it challenging to address urgent issues in a timely manner.
Language is a significant factor, particularly when suppliers’ teams are less proficient in English, which can lead to miscommunications. Indian cultural nuances, such as indirect communication or the reluctance to say “no,” can also contribute to challenges in setting realistic expectations or identifying problems early in the process.
How to Overcome This Challenge: Overcoming communication barriers requires a proactive approach:
- Hiring local sourcing agents or establishing a local buying office with staff fluent in both English and regional languages.
- Investing in communication tools that enable real-time updates and interactions, such as instant messaging platforms or video conferencing.
Working with an Global Sourcing Specialist such as ET2C with offices in Delhi can help bridge the communication gap and streamline the entire procurement process, ensuring suppliers understand the company’s needs and expectations.
3.Supply Chain and Logistics Issues Sourcing from India
Although India’s manufacturing sector has seen significant growth, supply chain and logistical challenges continue to affect many industries. The country’s infrastructure, whilst rapidly improving, still faces bottlenecks, particularly around transportation and warehousing.
India’s regulatory framework for logistics is often complex, with varying requirements across different states. Customs clearance procedures can also be time-consuming, which may lead to unexpected delays at ports. These challenges add layers of complexity that can affect overall reliability and increase operational costs for companies sourcing from India.
How to Overcome This Challenge:
- Establishing partnerships with reliable logistics providers with local expertise can help alleviate transportation-related issues.
- Companies should have contingency plans in place, such as working with multiple transport providers to ensure flexibility and resilience in the supply chain.
- Understanding customs regulations, perhaps through a specialized broker, and investing in compliance training can streamline the export process and minimize clearance delays.
The Benefits of Sourcing from India
Despite these challenges, sourcing from India also offers distinct advantages that have driven its popularity as a procurement hub. Labor costs in India are relatively low compared to many other countries, and the availability of skilled workers allows for a diverse range of product categories, from textiles and jewellery to machinery and industrial goods. Additionally, the Indian government has made efforts to promote manufacturing through initiatives like “Make in India,” which have led to improvements in infrastructure and production capabilities.
Establishing a buying office can address all these issues and move your Sourcing and Procurement strategy to the next level. ET2C’s Fixed fee Buying Office Model in India can help address many of these challenges and amplify the benefits of sourcing. Whilst mitigating all the potential risks of sourcing from India.
A buying office or dedicated team with experienced local professionals can ensure better supplier selection, quality control, and smoother logistical processes. This fixed-fee model provides an efficient way for companies to gain the advantages of local knowledge and expertise without directly managing the complexities of a foreign market.
Sourcing products from India, building competitive advantage and reducing risk
Sourcing products from India presents its fair share of challenges, such as quality inconsistency, communication issues, and logistical bottlenecks. However, these challenges can be mitigated through strategic approaches like robust quality control mechanisms, improving communication channels, and leveraging local expertise. By taking these steps, companies can successfully source from India and derive the significant cost advantages and other benefits it offers.
A combination of risk management strategies and the right sourcing model can transform India from a challenging procurement location into an asset for companies seeking to strengthen their supply chains and maintain competitive advantage globally.
To learn more about the opportunities in India drop us a line to talk to one of our colleagues contact@et2cint.com
