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B2B Sourcing: International Sourcing VS Local Sourcing

 

WHAT IS SOURCING?

 

Sourcing is the stage that comes before any purchases are made. It is one of the initial steps of the procurement procedure. Before you can source products from any supplier or manufacturer, you must find and vet those sellers. With an effective strategic sourcing process, you will find reliable, and quality suppliers to supply the goods you need.

 

When we talk about sourcing products from the local or international market, our end goal is to get high-quality results. The prevailing idea about sourcing is that domestic sourcing allows more control in a shorter time, whereas international sourcing is more cost-effective. By doing in-depth research we can analyze the strengths and weaknesses of both options. In some instances keeping it local is ideal and there are some times when you can take advantage of the global sourcing.

 

Sourcing is about finding the right balance between high-quality materials and their affordability. The lesser you spend on materials, the more profit your business earns. However, if in the pursuit of bigger profit you buy shoddy material, your end product will be of lesser quality. This will damage your brand in the longer term. It is important to upkeep the standard of quality because your customers want quality and won’t return for reorder if you do not provide the quality for the price they paid.

 

WHAT IS INTERNATIONAL SOURCING?

 

International sourcing is also referred to as low-cost country sourcing. It is a procurement strategy that falls under a broad category of procurement efforts that involves a country with a stronger currency typically US, UK, Canada, Australia, and West European nations purchasing materials from resource-rich low-cost countries that are weak economically; think China, Pakistan, India, Indonesia, Bangladesh, Bolivia, Russia, Mexico, Brazil, and East European nations.

 

The aim of international sourcing is to minimize expense and maximize profit. This form of sourcing is used for simple raw materials, parts, products, and accessories that pose a less serious consequence. International businesses all over the world use this strategy to save money and provide jobs to developing countries.

 

Pros of International Sourcing

 

  • Access to a wider assortment of products
  • Access to renowned international suppliers 
  • Access to unique products
  • More probability of profit
  • Higher production capacity
  • Lower labor rates with higher efficiency
  • Overseas suppliers are more open to working with small businesses

 

Cons of International Sourcing

 

  • Due to geo-political instability, your order can be subjected to delays.
  • Taxes and tariffs are higher for international sourcing.
  • The supply chain process for international trading is complex.
  • Shipping costs for international trade is quite high
  • Documentation required for cross-border trading is time-consuming and complicated.
  • The lead time is variable.
  • Supplier relationships

 

WHAT IS LOCAL SOURCING?

 

The phenomenon of local sourcing denotes the sourcing of simple raw materials, parts, products, and accessories from within your own country. Shopping local is convenient but comes at a fair and square price. Due to the fast and easy nature of this type of procurement, you can order parts and get them delivered within a certain timeframe without having to pay for shipping charges and duties.

 

Sometimes supporting the local community and manufacturers is the main goal behind local sourcing. International sourcing might be the best alternative where other countries have lower labor and production costs, domestic sourcing can be a better alternative in some cases.

 

Pros of Local Sourcing

 

  • Local sourcing offers a shorter lead time
  • It builds consumer confidence
  • You can build strong relationships with local suppliers

 

Cons of Local Sourcing

 

  • Lesser variety is available for local sourcing
  • The suppliers are less efficient and not available in large numbers.
  • The local restrictions can cause hindrance in the sourcing process.

 

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