Buying raw materials from overseas suppliers holds many attractions for chemical consumers. The primary benefit, of course, is a lower price. If a company in Europe or the US can establish a low-cost supply chain that sources materials from China or the Middle East, it can gain a tremendous competitive advantage.
Buying raw materials from overseas suppliers holds many attractions for chemical consumers. The primary benefit, of course, is a lower price. If a company in Europe or the US can establish a low-cost supply chain that sources materials from China or the Middle East, it can gain a tremendous competitive advantage.
However, monitoring a supplier located halfway across the world can present a number of challenges. Many small and medium-sized companies do not have the skills or the resources to tackle the problems that could arise if their supply chain is several thousand miles long.
Buyer beware
What are the potential pitfalls of dealing with a company in another country? Difficulties in communication and the difference in culture can sometimes cause a great deal of confusion. Commercial practices can also vary widely leading to misunderstandings and delays.
Buyers may have to factor in long lead times requiring them to estimate their order quantities well in advance. It may also be necessary to arrange for the inspection and testing of raw materials before shipment.
Some of the other areas that a buyer has to look out for are:
- Are the chemicals being purchased of the required quality?
- Have all regulatory requirements been met?
- Does the raw material have any impurities that could be hazardous?
- Is it necessary to conduct an audit of the supplier’s site before placing an order?
- Are the commercial terms entered into with the supplier legally binding? How difficult is it to enforce your rights in the country where the supplier is located?
Very often, small and medium-sized companies shy away from dealing with overseas suppliers because of the risks involved. By doing this, they forgo the tremendous benefits that they could gain from buying raw materials at significantly lower prices.
Fortunately, it is possible for small companies to source materials from the global market without having to bear the attendant risks. Online platforms offer many services that greatly reduce the perils of dealing with suppliers from other countries.
Online platforms can offer a perfect solution
An e-commerce platform that lists suppliers from various countries gives a buyer the opportunity to take an informed decision before committing itself to a transaction. Here is some of the information that a company can gather about a seller in another country just by viewing its profile on the online platform’s site:
- Which countries has the company exported to in the past?
- Has the supplier been inspected by a third party inspection company? In many instances, an assessment report would be available.
- What is the supplier’s rating? Do other buyers recommend this company?
- What is the volume of business that has been done in the past? Details about the number of transactions and their dollar value would usually be available.
The online platform would also permit a prospective buyer to contact the seller and request a quotation.
If a small or medium-sized company wanted to gather all this information on its own, it would need to incur a great deal of expenditure. It would also have to allocate a significant amount of administrative and management time for the purpose. Sourcing raw materials from an online platform offers an efficient and simpler alternative.
Some online platforms offer additional protection
Several e-commerce companies undertake to guarantee the purchases made on their sites. For example, the “Trade Assurance” service launched by Alibaba promises to refund the amount paid to a supplier if the delivery is delayed or does not meet the committed terms.
Online platforms allow small companies to gain the advantages that their larger competitors enjoy in sourcing raw materials. By registering on an e-commerce site, a chemical consumer can buy from overseas suppliers and lower its purchasing costs.
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