You’ve made the decision to start an import-export business, chosen a product, and hired a few staff members to get started. The next step might seem a little daunting. It’s time to build your supply chain.
An international supply chain has several components. It includes a supplier and/or manufacturer, freight forwarder, and a warehouse and/or storefront. You’ll also need to hire a customs broker to help you navigate the various regulations surrounding the import process.
As you’re choosing the individual members of your supply chain, there are several things you should keep in mind. Here are some questions you should be asking to put together the ideal supply chain for your import-export business.
5 considerations when choosing a supplier
1. Which countries should you look in?
When it comes to finding a supplier, the first thing you’ll need to decide is the country. Taking free trade agreements into account can save you money on duties and taxes. You should also consider the distance between your supplier and the country you’re importing to.
The most affordable countries to find a supplier in are China, Malaysia, Vietnam, Indonesia, India, Thailand, Lithuania, Romania, Sri Lanka, and Mexico. Once you’ve chosen the country, check out directories and exhibitions to browse potential suppliers.
2. What kind of quality can this supplier deliver?
Not all suppliers are equal. Some of them produce high-quality items, while others may make absolute garbage. As you’re sifting through potential suppliers, be sure to ask whether they have experience making your specific product. A supplier might manufacture excellent handbags but have no idea how to make the eyeglass cases you want.
Before you sign a contract with your supplier, make sure you have a quality assurance process in place. This might involve hiring someone to check the quality of the products before shipment or having the supplier send a trial shipment that allows you to confirm the quality.
3. Which incoterms will you use with your supplier?
The incoterms you use with your supplier depend on the needs of your business. If you want the supplier to be responsible for the goods until they clear customs at their final destination, choose Deliver Duty Paid (DDP). If you want to have more control over the shipment from the point it reaches the ship, choose Free on Board (FOB) or Free Alongside Ship (FAS).
Once you’ve decided on the incoterms that work best for your business, make sure you and your supplier are on the same page. Your supplier is likely to charge more for DDP than for FOB or FAS. DDP is a good option for first-time importers because the supplier takes care of the entire shipment process.
4. Are there any references who can speak to the reliability of this supplier?
Imagine getting an amazing deal on your shipment only to find all of the items damaged because they weren’t packaged well. You can avoid this by seeking out references before signing a contract with your supplier.
Check with other businesses in your industry to find out if they’ve worked with this supplier, review testimonials, and search online for authentic reviews. You don’t want to become a victim of a terrible supplier.
5. How can you build a relationship with your supplier?
If at all possible, schedule a time to visit your supplier before signing the contract. This will leave no doubt in your mind that you’ve found the right supplier. It will also help you start to cultivate this important relationship.
To give your customers the best experience possible, you need to have a strong relationship with your supplier. That way, you’re able to communicate effectively whenever there are delays, defects, or other issues. Take the time to develop a cultural understanding of your supplier so you can avoid any unnecessary miscommunication.
5 considerations when choosing a freight forwarder
1. Is the forwarder able to meet your storage and shipping needs?
Before you start looking at prospective freight forwarding companies, you need to figure out exactly what your storage and shipping needs are. What’s the total volume of your intended shipment? Do you plan to ship via air freight or ocean freight? Will you use a full container or a partial container?
Once you’ve answered all of these questions, begin the search for a freight forwarder. You can research different companies online. As you’re considering your options, remember to think of your freight forwarder like a business partner so you can find the right match.
2. How does this freight forwarder manage risks?
International shipping is risky, no doubt about it. You need to find a freight forwarding company that has risk mitigation strategies in place to keep your shipments safe. Inquire with each forwarder to find out their exact risk management plan.
One of the best ways to protect your shipments is to invest in cargo insurance. If your freight forwarder doesn’t have cargo insurance, you may need to secure your insurance policy independently. Take this into account when budgeting for and selecting a freight forwarder.
3. What kind of tracking options are available?
There’s nothing worse than having no idea when your shipment will arrive and worrying that it got lost somewhere in the Pacific. That’s why it’s important to check what kind of tracking options your freight forwarding company offers.
Some companies allow you to easily track your shipment online. This can save you the headache of wondering whether your shipment will make it in time to clear customs and reach your customers by the delivery date. You’ll also want to check whether your freight forwarder is committed to good customer service and communication.
4. Is this a trustworthy freight forwarder?
Many importers focus on price more than anything else when building their supply chain. This can lead them into a trap. For the most part, freight forwarding companies that offer unbelievably low prices turn out to be a scam.
In addition to making sure you avoid freight forwarding scams, check to see whether your freight forwarder has the permits and licenses needed to ship your products. Forwarders are also required to have a foreign broker bond, which assures you of their financial stability.
5. Does this freight forwarder have experience working with your industry?
When looking into the reputation of your potential freight forwarder, check which industries they have experience working with. A company can have an incredible record when it comes to shipping clothes but could struggle to help you ship electronics due to their lack of expertise.
Another factor to keep in mind is the size of the freight forwarder. Large freight companies have lots of resources and connections, but they often aren’t able to give small shipping companies as much attention as you might expect. Small freight companies can offer great service to small importers but may not be able to help with higher-volume shipments.
As part of the process of establishing your supply chain, you’ll need to choose a reliable customs broker who can assist you with the customs process. At BorderBuddy, we offer solutions for businesses of all sizes. Give us a call today.