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Posted: May 18, 2013

Sourcing Overseas

Weighing The Possibilities Before You Jump In

By John Tiger

Over the past several years, sourcing from Asia has become a popular activity for both manufacturers and distributors alike. At first, with the huge pricing advantage Asian steel and Asian manufacturers could offer, it may seem like a lucrative opportunity. While overseas sourcing may seem attractive it carries many potential risks that many manufacturers and distributors don’t weigh against the allure of cost savings.

Generally, the sourcing process takes a long time; from the time the purchase order is cut to the time the boat lands and the inventory is in your hands is typically at least 60 days, and many times it’s a lot more. Also there are many issues that should be raised and adressed within your own company and with overseas manufacturers, prior to signing any agreement. Some of these should include:

1) The possibility of ordering the wrong inventory?

2) What if, during the time it took to get to your warehouse, the items you ordered were replaced in the market by newer items?

3) Shipping delays. Your inventory was supposed to show up in April, for example, but the boat is delayed and finally arrives in July? You miss the selling season.

4) Damaged inventory and/or packaging.  What is your recourse?

5) What happens if you order 5000 items and take delivery of 3900? Again, what is your recourse?

6) Make a plan of action in case your product arrive inoperative, not built to specification, or even with defects.

7) Liability of sold items that turn out to be defective and possibly cause injury.

In general, when considering the potential cost savings of sourcing and buying in bulk, be sure to weigh all the possibilities. The costs of ordering, stocking and paying for bulk loads of imported product may, in the end, not even come close to the risks you must shoulder in the quest to save a few bucks. 

Readers Respond

Regarding #1, #5 & #6 don't even consider purchasing from Asia without planning to personally inspect what is being produced, how it's produced, verify testing compliance and personally watch the container get loaded, sealed and leave the factory. Then and only then release the funds. Re:#7 Caveat Emptor,= buyer beware. In most cases the buyer has virtually no recourse after the container is closed and the wire transfers are complete. By Terry Hanrahan on 2013 05 21

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