Procurement and supply of equipment abroad for international companies
The challenges
If you are planning to move goods or raw materials abroad, you should be aware of all the unique problems and challenges that may arise along the way. These are logistical difficulties, regulations, tariffs or language barriers, cultural differences, different time zones and fluctuations in the traded currency.
Issues related to outsourcing
Don’t assume the same laws apply overseas as they do here, especially in countries outside the EU.
- Depending on the market of your provider, you may encounter several problems:
- Various technical or industrial standards, which may not meet the requirements of the local standard.
- Import or export restrictions vary from both ends of the transaction, such as different tariffs and quotas.
- Complicated document requirements for cross-border processes.
- Fluctuations in currency rates.
- Unstable political or economic climate, whether in the local or regional environment.
Often, local customs or court rulings – in addition to international treaties – also apply in overseas countries. That is why it is of utmost importance to establish the relevant law and jurisdiction in case of disagreement.
- Conflicts with overseas suppliers
- Common sources of conflict with overseas suppliers include:
- Liability in case of product loss or damage
- Violation of intellectual property rights
- Providing insurance for all stages of the transition
A well-drafted supply contract will help establish expectations for all responsibilities and indemnities, and prevent potential disputes.
Additional challenges in procurement overseas
In addition to regulatory and legal differences, additional issues may arise when purchasing goods overseas. For example:
- Language differences, especially if you need to discuss technical issues or start a detailed dialogue. Misunderstandings or misinterpretation may affect your needs – for example, the supplier may be confused about the order quantities or miss a deadline. The language barriers may also affect your negotiations or cause a delay in communication, which may affect the bottom line.
- Payment methods for international transactions can become complicated.
- Shipping methods are also more complex, considering the large distances and the need to cross borders.
- Cultural differences are a potential problem. Understanding the business and cultural customs of your supplier’s country is a good way to create trust and develop a good relationship.
- Supply chain management can be a challenge. Consider how many providers you need. Over-reliance on key suppliers can create problems if one of them goes out of business. On the other hand, too many suppliers can be difficult to manage.
- Cash flow issues may arise as payments take longer for international suppliers. You may need to send money earlier for advanced payments and delay it for longer, which may affect your liquidity and working capital.
Keep in mind that the origin of your goods may affect the duties you will have to pay. Certain goods attract preferential duty, so check where your supplier’s materials are sourced.
We at Tact Technology Solutions specialize in purchasing and supplying equipment for international companies for various needs
We have tools, experience and professionals who can carry out the procurement in the best way and provide the required equipment abroad to any company that requires it and in accordance with the customer’s needs.
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