Price is generally considered to be one of the biggest factors when making any buying decision and companies in certain countries on the other side of the world often provide a great-sounding piece-price, making them an obvious choice at first glance. However, there are things that no one tells you about purchasing from offshore that dramatically change the overall picture. The choice of a supplier is one that should not be made rashly and should only be done after carefully considering any hidden costs. Here are six hidden factors that make buying from overseas an expensive choice.
Factor 1: Longer lead times
It should come as no surprise that purchasing from overseas means long lead times. American buyers often experience lead times of 12-14 weeks from the time the purchase order is received by the supplier until the time the product arrives on their receiving docks. Of course, some products have longer lead times by nature, but adding transit time across the ocean just makes the problem worse.
Factor 2: Increased inventory
Long lead times mean that it’s necessary to maintain larger inventory on hand to cover spikes in demand and emergency orders. Larger inventory means a higher investment on your part, which can negatively affect cash flow. It can also result in fewer inventory turns which can ultimately damage annual profitability.
Factor 3: Slower response times
Overseas companies tend to have slower response times when it comes to correcting shipments of non-conforming product, implementing engineering changes, or filling emergency orders. This becomes a real problem when you have orders that need to be shipped, but you don’t have stock. Domestic suppliers can respond far more quickly to problems, changes, and emergencies.
Factor 4: Increased shipping costs, import fees, and tariffs
The leap in cost from shipping product within the U.S.A to shipping product from overseas is exponential, and the current tariffs imposed on product coming from Europe and Asia can push that cost even higher. Though everyone
hopes the tariffs are temporary, there is no telling how long
they will be in place and what the long-term effects will be.
Factor 5: Communication issues
Communication with overseas suppliers can be much slower, especially for those whose day-night cycle is offset or even flipped with respect to the American company. Linguistic and cultural differences (various customs, different holidays, etc.) can also play into this, making communication with many overseas suppliers more difficult.
Factor 6: Currency exchange rates
In today’s volatile financial world, playing the exchange rate game can be dicey, especially when it comes to countries whose governments play fast and loose with fiscal policy. Rates move frequently, making the cost of doing international business unpredictable, at best.
Though offshore purchasing may seem to be the best option, these six factors typically reveal it to be much more expensive in the long run. Purchasing from a domestic supplier is usually a more cost-effective alternative, so why put your company at risk?
Here is where OMT-Veyhl USA Corporation comes in. We can supply everything from full table bases to just the components. Are you purchasing steel tubes from China? We can make just your steel tubes. Do you need painted items? We have two in-house state-of-the-art powder coating lines. Whatever your needs, we can meet them!
Are you looking for complete tables? We have recently launched the Essential table, a less expensive alternative to our higher-end lines, but made with our usual commitment to detail and quality. It is our answer to cheap Asian tables.
If you were ever on the fence about switching to a US supplier, NOW is the time! If you are ready to make the transition from overseas suppliers to domestic, let us know how we can help to ease your transition.