6 Tips for streamlining your international supply chain
Most business owners face a constant struggle to get everything done in the course of their working week, while looking for ways to keep costs low and sales high. Optimising your supply chain is a must for achieving this goal, and it requires careful management of your suppliers or manufacturers. But that’s no easy task when they’re also busy and can’t always respond to your requests as quickly as you’d like.
These problems are amplified when you’re dealing with overseas businesses whose time zones and operating environments don’t match yours. If you don’t plan it right, you’ll wind up listening to their phone ring out on a Friday afternoon (evening, for them) and waiting until Monday to resolve your issue.
So how can you avoid the headache and get the most out of your international suppliers or manufacturers? Start with our handy list of tips for managing your store’s international supply chain.
1. Start with the right suppliers
It’s easier to maintain good relationships with other businesses if they’re a good fit for your requirements. Before you commit to any foreign supplier or manufacturer, check out their
· lead times and on-time delivery record
· pricing structure and payment terms
· QA processes
· policies for damaged or out-of-specification goods
· level of regulation and legal protection
· import and export restrictions, and tax obligations on cross-border trade
· availability of local representatives or staff who speak your language.
When you’re first working with a new supplier, it’s a good idea to start small, either by asking for a sample or placing a small order and seeing how well they can deliver on their promise. Once you’re satisfied, you can negotiate a service-level agreement (SLA) that sets out standard terms and service expectations.
2. Conduct business with cross-cultural courtesy
Standard business practices and “common courtesy” can vary from country to country, so take the time to learn about your suppliers’ economic and cultural environment to avoid causing any unintended offence. Learn how to respectfully address your international contacts using their correct titles and, if you slip up when pronouncing someone’s name, apologise and try again. Likewise, be forgiving of their gaffes.
A bit of knowledge tends to go a long way in face-to-face or phone conversations, when you get constant feedback from the other party. But it’s all too easy to fall into old habits when you’re sending an email across cultural boundaries, so pay particular attention to the tone, word selection, and length of your email. Avoid using jargon or slang that they may not be familiar with, steer clear of jokes that may be poorly received, and if in doubt, err on the side of formality.
3. Stay in touch
Any breakups in your supplier relationships can disrupt your entire supply chain, so it’s important to maintain frequent communication with the key players. This becomes more difficult when you’re operating in different time zones and only have a few overlapping business hours each day.
But putting in the effort to stay in touch can really pay off, even if it’s just to let them know you’re happy with how things are going and pass on your sales forecasts. If you’re in the habit of talking on a regular basis, you’re more likely to be kept in the loop about potential problems or opportunities that might arise. They’ll also appreciate early notice of any upcoming changes within your business that might affect their end.
4. Keep on top of your inventory
Avoid those awful rush orders that are stressful for you and put a strain on your supplier relationships. The better you manage your inventory, the better you’ll know your trading cycle and be able to predict the demand for your products. The latest inventory management systems integrate with point-of-sale and ecommerce platforms to keep track of stock in real time, which makes planning easier and more accurate for both you and your foreign manufacturers and suppliers. (This is equally important if you’re using drop-shipping or third-party logistics (3PL) providers.)
5. Integrate your ordering process
By minimising the number of manual steps, you’ll speed up your ordering process while reducing the chance of introducing errors. While most accounting systems include a basic feature to create purchase orders, good inventory management systems will include time-saving features like
· one-click purchase order creation based on your product lines
· automatic alerts or triggered ordering when stock hits a preset level
· automatic updates of inventory levels upon receipt of orders
· conversion of foreign currency amounts into your local currency.
You can take this integration one step further and ask your manufacturers and suppliers if they’d like your orders on a particular schedule. If everyone else orders during the first week of each month, you might be able to skip the queue and get faster service by ordering in the last week.
6. Diversify and avoid dependency
Working with multiple suppliers in different regions leads to more overlapping hours, better resilience to fluctuating exchange rates, and a back-up plan if something goes wrong with one supplier. But this approach is not for everyone, and if your main goal is to minimise the time you spend managing your supply chain, you might prefer to build a solid relationship with a single supplier or manufacturer who can offer you preferential treatment. Whichever path you choose, try to pre-empt any problems by keeping track of each supplier’s financial position, and any events that may affect their ability to deliver.
Neto is a leading ecommerce platform designed to help you sell products across multiple channels. With full inventory management and one-click purchase order creation, it gives you full control of your international supply chain, freeing up the time you’d rather be spending with customers. For more tips on streamlining your supply chain, check out Inventory Management 101: a guide for retailers.