We work with clients regularly to help them source from near and far shore overseas suppliers. Whether a company is sourcing from the southern mediterranean, far east Asia (from a European point of view) or from another place, caution is advised.
How to vet overseas suppliers
Overseas suppliers should be vetted in advance of being brought on board. In so doing, there are several factors that companies should take into account, including the criteria below.
Reputation
Check the reputation of overseas suppliers, including their history of working with other customers and their overall reputation in the industry. Look for reviews and testimonials from other customers, and research their track record for quality and delivery. You may need to consider visiting their facilities. If the company is located in a moderate or high risk country, that must be form part of the evaluation.
Communication
Good communication is essential when working with overseas suppliers. Ensure the selected suppliers are responsive and easy to communicate with. You may also want to consider language barriers and the availability of translators or interpreters. It is good to consider business culture. Words do not always mean the same thing from one culture to the next.
Quality standards
Make sure that the overseas supplier’s products meet your quality standards. Obtain samples or product specifications before you commit to an order. Independent product testing can be a good idea to avoid purchasing non-compliant goods. This means ensuring the product meets the relevant performance and conformance standards. Product testing is a frequent audit requirement these days and conformance issues in sub-components can arise.
Price and payment terms
Be clear on the price, including any additional fees such as shipping and customs. It is important to understand what forms of payment are accepted and the associated terms. Letters of credit and credit insurance can be important considerations in higher risk countries.
Delivery and logistics
Consider the logistics of transporting goods from the overseas supplier to your location. Think about the shipping times, customs requirements, and any potential issues with delivery. The incoterms used, determine both the terms and costs of delivery. Make sure you know the incoterms that apply.
Legal and regulatory considerations
Be aware of any legal or regulatory requirements that apply to importing goods. This includes tariffs, import restrictions, and product safety regulations. It is also important to consider any supplementary issues that could arise from inputs into products. Factors to consider include sustainable forestry certification, risk of modern slavery or forced labour, war zone restrictions and carbon impact.
These considerations help organisations identify overseas suppliers in a structured, and risk focused manner.
For additional material you can consult CIPS here and more Keystone material here.
