Which Key Factors Must Be Addressed By Your Global Sourcing Strategy?



Even though you can expect to benefit from lower labor costs when you source internationally, make sure you account for other additional costs associated with doing business overseas. For example, your strategy should include ways to manage and minimize multi-modal freight charges, broker and bank fees, import/export taxes, insurance, and more.


Which currency will you and your partners use for your business transactions? If you’re the buyer, don’t assume that your own currency is always the best choice. It may be smarter to use the supplier’s currency if you think the value of your own currency will increase between the time of your agreement and the payment date.


You must determine which nation’s laws will govern your contract. Will it be based on the laws of the buyer’s country or the seller’s? Or, will you base your contract on laws from a treaty that is recognized by both countries?

Lead time

Always allow extra time for doing international business. Lead times can be affected by a variety of factors ranging from customs clearance to the extra time required to ship product as sea freight.

Language and cultural fluency

You must have someone on your team who is fluent, not only in the language of your partner’s country, but also in the culture. This is the only way to prevent misunderstanding and broken expectations. Not only does this keep everyone on the same page, but it also helps you avoid a lot of unnecessary delays and expenses. It helps you win the confidence and support of your partners.

Shipping modes

If you only source product domestically, you’re probably used to only using only one mode of transportation. Global sourcing is multi-modal, meaning that you’ll need experience and expertise with air, sea, and ground transport. This will involve in-country logistics on the supplier side, international shipping, and then delivery from your port to the final destination.

Payment methods

International transactions typically involve letters of credit and/or other instruments that pass between the buyer’s bank and the seller’s bank.