What key information should you know before getting in touch?
There are numerous outsourcing risks that could be related to the supplier, including its location, their financial stability, risk management practises and the integrity of the business and people running it.
Particularly for overseas sourcing, economic and political stability in the country in which they operate is important information to be aware of. Political unrest and international disputes can lead to difficulties and delays, whilst some regions could have economic sanctions set against them preventing you from legally trading with businesses within it.
Sanctions can also be applied to businesses and individuals themselves because of financial misconduct, such as bribery and money laundering, as well as established links to terrorist organisations. Conducting thorough background checks become essential when trading with organisations abroad to safeguard your business from both fraudulent activities as well as reputational damage.
Once you have established that it is legally okay to work with a company, its financial stability is of next importance. Choosing a supplier who is struggling with cash flow and resources could leave your business unable to fulfil its own obligations in the long run. You will want to know all of this before moving forward with any deals and contractual commitments.
What is the culture like in the country you are looking to trade with?
The culture of a country will inherently influence the way in which the people who live there think, communicate and behave. This may impact the way you communicate with your supplier, as there could be a difference in cultural norms and beliefs. Be mindful of this to avoid potentially offending any business partners or making assumptions based on your own cultural norms. Language barriers can have an influence on the detail of information given to you, so doing some secondary research such as looking at business reports can provide better access to key information initially.
Are they the right supplier for you?
When part of your businesses operations are based in overseas locations this will automatically limit the amount of oversite that there is from the main location. Not having complete control over day-to-day activities whilst needing to trust your suppliers will be difficult if the right supplier were not chosen in the beginning. Associating your business with another allows them a degree of influence over your reputation. Knowing how a supplier treats their staff is important as you want to avoid being affiliated with a business who is going against labour laws or crossing ethical lines. Ensuring that your supplier provides safe working conditions for their workers and does not practice child labour is essential.