Global sourcing is when a company looks abroad to manufacture or purchase goods or services, taking advantage of global efficiencies not found domestically. Companies in countries like the UK and Germany are increasingly looking overseas to obtain the high-quality components needed in the engineering and manufacturing industries. Global sourcing has enabled many organisations to remain competitive and profitable, even in today’s challenging marketplace.
The UK is home to numerous sourcing companies that have subsidiaries and other forms of representation abroad. We believe that Choosing a UK Global Sourcing Company with an in-depth understanding of safety standards, labels, VAT and customs procedures can help you avoid consequences when importing goods. Our shortlist of UK-based global sourcing companies highlights the key locations, strengths and types of products sourced to help you decide which company best suits your needs and requirements.
If you’re ready to give your company an advantage over its competitors, you need to look further afield than local UK manufacturers of precision machined components. Maybe it’s time to adopt a comprehensive global sourcing strategy that will give you the competitive edge that you seek for your organisation? In this article, we help you to get started with finding reliable overseas suppliers of castings, forgings and other technically challenging components that you require for your industry.
The Benefits of Global Sourcing
Before we look at how to get started with global sourcing, we need to look at why it’s so important. For many companies today, it’s no longer just a question of whether they should look at the possibilities of global sourcing. It’s rather a question of how to launch and manage their global supply base so that benefits can be maximised and risks minimised. Global sourcing allows companies to access the latest technology and advances while also reducing costs significantly. With the right overseas suppliers who can be depended on to produce high-quality components, it becomes possible to achieve a competitive advantage over rivals in the marketplace. Read more on the benefits of global sourcing here.
‘Research reveals that successfully executed integrated global strategies can result in material cost savings of 15 to 25 percent compared with local or regional sourcing practices and agreements’ – Trent, R. and Monczska, R., 2002.
Countries such as China, Mexico and Vietnam have lower labour costs compared to the UK, which allows businesses to source cheaper products from these countries. Sourcing products from overseas saves money because the labour costs in the UK are higher, which result in goods being more expensive to make locally/domestically when compared to buying overseas and having them shipped. China has the world’s largest manufacturing workforce with over 112 million workers – this enables them to produce goods at a cheaper and more efficient rate compared to other countries, highlighting the cost benefits of global sourcing.
Key Global Sourcing Considerations
There are three key considerations for manufacturers looking for suppliers of pressings and stampings or other technically challenging parts:
If you’re wondering where to source quality forgings, global sourcing could be the ideal solution for your company. Global sourcing is becoming increasingly important for organisations of all sizes and types, and it’s an option that most companies should consider if they want to increase their profits dramatically.
In the modern world, technology is becoming increasingly advanced and workers around the globe are becoming more skilled. These two factors have combined to result in global competitiveness in the marketplace. For many corporations today, global sourcing isn’t just about choice, it’s about necessity.
For companies based in countries like the UK and Germany, the days of searching for reliable German or UK suppliers of castings, forgings and other components are long gone. Partnering instead with global suppliers is becoming the norm and is helping businesses to remain profitable even in a difficult economic climate. READ MORE: Top 10 Questions asked around Global Sourcing
Why global sourcing is important for businesses
- Reduced Costs
The first, and biggest reason to consider global sourcing for your organisation is the reduction in costs that it can bring, especially in terms of labour costs. Companies can save on average around 40-70% when sourcing from overseas when compared with domestic prices.
- Access to the latest Designs & Research
Especially when it comes to technically challenging components like laser cutting and fabrications, having access to the most recent research, designs and more specialised intellectual capital couldn’t be more important. Overseas companies often have greater capacity and also offer the most up to date technology that today’s organisations demand. Domestic suppliers, all too often, fail to make the required investments to remain competitive.
- Higher Quality Components
Although some companies still believe that UK suppliers of pressings and stampings, and other components are the best, time and again we see that this is no longer the case. In fact, many organisations now praise the high quality of products sourced from overseas when compared with domestic products. This is often due to higher investment overseas in capacity and technology to attract business from abroad. As you can see, there are a number of advantages associated with global sourcing, and clearer why so many companies are now looking overseas to acquire the components that they need to operate profitably.
When some engineering companies first think about the possibility of global sourcing, they often don’t have the greatest expectations. They feel that to benefit from extremely low prices they’ll have to compromise on quality. They often fail to imagine the many benefits which global outsourcing can bring to their business. As a result, many companies attempt to source products and components globally themselves which can lead to a host of issues. The language barrier is just one problem to be encountered along with differences in business cultures and the challenge of handling multiple currencies. Add to that the fact that it’s impossible to judge the quality of a product from the other side of the world until you have it in your possession and you can see that there are some major difficulties to be addressed in order to make sure that you’re really getting good value for money. Let’s take a look at some of the challenges which face companies when attempting to move into global sourcing independently.
The Challenge of Overseas Product Sourcing
Typically, companies find that trying to globally source products themselves is more complicated than buying products domestically. Many of the problems that companies face are highly unique in nature and can come as a surprise (or a shock) to businesses who simply thought they would be getting a great low-cost deal. Firstly, the same rules may not apply overseas as in the UK or Germany. Industrial or technical standards may not be the same as those in the UK and may fall below those required. There may also be export or import restrictions like quotas and tariffs to be dealt with. The documentation requirements when taking goods across borders can be complicated while the current exchange rates can fluctuate wildly, meaning that you may not be getting such a good value deal as you thought. Depending on where you are obtaining your components, you could find that an unstable political or economic climate causes you unforeseen problems and, should there be a dispute with the supplier, it can be very difficult to resolve. The language barrier can be prohibitive, especially when discussing technical issues, and can cause communication delays or confusion with orders. You can read more about the differences between local and global sourcing here.
Can Global Sourcing work for Engineering Companies?
Despite these potential pitfalls, it is still possible for engineering companies to make global sourcing work for them. The key is to use a reliable and trustworthy global sourcing company with years of experience in the industry. Darian has been sourcing high-quality, technically challenging engineering components for more than three decades and can be relied upon to use an accredited network of global partners to source components of consistently high quality and at the best value prices. By relying on Darian, engineering companies can reap all the benefits of global sourcing without any of the risks associated with going it alone. Even better, it all comes at no direct cost. Contact Darian today to discuss your global sourcing requirements.
Pros and Cons of Global Sourcing
Although global sourcing presents a host of advantages in terms of cost and competitiveness, it also raises a few problems. Finding a reliable supplier overseas can present a challenge, not to mention having to deal with language and cultural obstacles which present themselves. Choosing the right geographical location from which to source your components can be difficult and coordinating a strategy to ensure that products are received in a timely manner is just another issue. Learn about what to look for in a good global sourcing supplier here. With the right approach, sourcing products from elsewhere can benefit your business, allowing you to obtain quality parts at a better price. Despite these positives, however, there are risk factors to consider when sourcing from abroad.
Darian Global is committed to mitigating these risks so that you obtain the best components to help your business flourish.
Darian Global – Success Stories
Darian has been successfully supplying well known Original Equipment Manufacturers (OEM) clients for over 30 years. You can read below how we have helped some of our clients:
|Medium to High Volume Components||Multi-National Pump Company with Strong Export Markets|
|High Volume & High Precision Components||German White Goods Producer|
|Low Volume Components||SME Paper Converting Machine Manufacturer|
|Supply of Chair Components||International Office Furniture Manufacturer|
|Car Seat Manufacturer, High Volume Components||Global 2nd Tier Automotive Producer|
Supply Chain Risks
Businesses without contingency plans for supply chain disruptions are usually the hardest hit, especially when there’s an over-reliance on “just in time” manufacturing. Others because their supply chain is so fragile that the slightest disruption upsets things.
Tips for Global Sourcing Success
Here are 5 of our global sourcing tips to help you make your sourcing of parts from abroad successful. Talk to Darian for global sourcing advice tailored to your specific requirements.
- Select countries with good quality control in place
- Try to find a country with a similar language/customs
- What are the visa requirements for the country should you need to visit?
- Do you understand the local laws & rules?
- Only source parts from a country where you can trust the people you’re working with
For more insider information on making global sourcing work for you – download our tips booklet.
Global Sourcing Mistakes
Global sourcing has made trading easier for modern businesses because profits can increase as a result of cheaper products and labour. Exchange rates also work in your favour if you live in a country with a strong currency, meaning you get better value and quantities compared to sourcing domestically.
However, there are plenty of mistakes to be made when sourcing from abroad, which is why we have compiled this list of Top Global Sourcing Mistakes you need to avoid. When done carefully, global sourcing can help your business thrive by increasing profit margins, as well as finding the best quality products for your industry.
Global Sourcing – What are the pitfalls?
If you are considering venturing into global sourcing without the help of consultants such as Darian here are some things to bear in mind.
Like any business practice, global sourcing has its pitfalls and, if done badly, could actually damage your reliability and reputation. Before launching into the process as the answer to all your problems, take some time to consider what could go wrong. If you are prepared, you will be better equipped to handle any hiccups that occur along the way.
Why are Manufacturers missing out on Global Sourcing?
Global sourcing can offer huge benefits to manufacturing businesses, particularly when achieved in conjunction with an experienced global sourcing company like Darian. Production costs can be slashed whilst the quality of the products themselves remains high, which of course can have a very positive effect on a company’s bottom line. However, unfortunately, many manufacturing companies are shying away from global sourcing and are therefore missing out on some huge opportunities. Here we look at possible reasons why:
- Concerns over language barriers
It can be tempting to stick to English-speaking countries only when it comes to product sourcing, to avoid language barriers. However, global sourcing companies can help with all aspects of this, including the preparation of price lists and catalogues in other languages as well as helping with advertisements and other correspondence.
- Transit risks
Although production abroad can produce certain transit challenges, many of these risks can be mitigated. For example, there are now many types of business insurances on offer, with products transported by sea being covered by marine insurance for instance.
- Worries over product quality and business transparency
Maintaining a high quality product is essential and it’s easy to think that quality can only be achieved using domestic suppliers. However, nowadays manufacturing excellence can be found all over the world, and at Darian we know exactly which suppliers to choose and in which country to keep your manufacturing costs low and quality high.
- Financial uncertainty around manufacturing abroad
For companies that have never manufactured abroad before, the financial side of the process can be incredibly daunting. Issues like taxes, tariffs and import duties will need to be clarified as will policies, procedures and rules specific to that country. Darian has over 30 years experience in this area so will be pleased to offer advice that exactly suits your needs.
- Questions around currency and payments
Obviously, when working with suppliers abroad, companies will need to consider currency and exchange rate implications. Many manufacturing companies only work with suppliers that deal in Stirling, but again this can mean missing out, despite exchange rate fluctuations. Again, Darian can advise on this and work with you to solve any payment issues as they arise.
- Frequent market changes
It isn’t always easy to anticipate changes in demand and supply conditions overseas and many manufacturing companies find this off-putting. However, such change can mean new opportunities and bring new suppliers into the market, making global sourcing incredibly dynamic. Frequent market changes can certainly be positive and should be viewed with optimism rather than simply as an insurmountable challenge.
Partnering with a reliable procurement company is the best solution to ensure that your business reaps all the benefits of extending its supply chain overseas. While sourcing globally usually reduces costs significantly, it will increase the complexity of your business. This means that having the right metrics and capabilities in place to manage and administer the more complex and risky supply chain is imperative.
A reputable UK sourcing agent like Darian Global Sourcing can help you to navigate the complexities of this new and increasingly vital element of running a competitive and profitable engineering or manufacturing business. We have proven experience and skill in the overseas procurement industry. We are leading the way, helping companies in the UK and Germany to access the benefits that sourcing their components from overseas can bring.
When you partner with us, your company can gain leverage as well as greater access to the latest technologies and intellectual capital which are well beyond that offered by a domestic supply network. We can harness our experience in overcoming the obstacles associated with global sourcing so that your business can become more profitable and more successful in its field.
Get a Price from Darian
Whatever type of components you’re looking for, here at Darian Global Sourcing we specialise in helping you to access the best quality products from overseas suppliers. As experts in the global sourcing sector, we minimise your risks and help you to save costs with absolutely no disruptions to your supply chain. Discover the benefits of global sourcing with a reliable company like Darian Global Sourcing as your partner and increase your profitability exponentially.
How Darian Global Sourcing can help
Established in 1986, Darian is a world-leading specialist in low-cost, high-quality product sourcing across multiple engineering and manufacturing industries. For more than three decades, we have worked with a huge number of companies to reduce their production costs and grow their market share – and there’s very little we haven’t seen before. To discuss any aspect of global sourcing and purchasing for your company, speak to our expert team now on +44 (0)1858 433096 or use our contact page. Boost your competitiveness today.
Szmigiera, M., 2021. Manufacturing labor costs per hour: China, Vietnam, Mexico 2016-2020. [ONLINE] Available at: https://www.statista.com/statistics/744071/manufacturing-labor-costs-per-hour-china-vietnam-mexico/. [Accessed 9 September 2021].
Trent, R. and Monczska, R., 2002. ‘Pursuing Competitive Advantage through Integrated Global Sourcing’, The Academy of Management Executive (1993-2005), vol. 16, no. 2, pp. 66.