Why Importers and Distributors Need to Diversify Their Sourcing

When running a business, few people have the luxury of simply saying, “Let’s just wait and see what happens.”

This rings particularly true for importers and distributors. More often than not, it’s a constant hustle to ensure efficiencies, confirm schedules, monitor shipments, maintain retailer relationships and track product overseas, among many other things. The coronavirus pandemic has not only lengthened the list of to-dos, but it has complicated the list, as well.

Many retailers and distributors, for example, source their products from China. This is because, honestly, it’s cheaper to manufacture the product in China. This isn’t news; we’ve known this for a while. Before the coronavirus pandemic occupied headlines, we often read about how the tariff war with China was going to impact the consumer goods industry. China and the US have been trading partners for a long, long time.

Because it isn’t safe for workers to go into factories and warehouses, China isn’t able to process, produce and export goods amid the coronavirus pandemic. It’s a domino effect. Because of that, North American importers and distributors aren’t able to receive their product; there’s no output from China. The current status of the consumer goods industry begs the question: how valuable is it to diversify sourcing?  

It’s a straightforward question with a not-so-straightforward answer. It’s valuable to diversify your sourcing. Having said that, though, it’s not quite so easy.

As we mentioned, it’s cheaper to work in China. Sourcing product from an alternative country or factory means you run the risk of a price increase. The same could be said of quality and lead times. When you have a partnership with a factory, you know exactly what to expect, but when you’re exploring other options, you need to address and investigate whether you’ll be getting a product of comparable or better quality. As far as lead times, it’s essential to ask how long it will take to produce the same quality product at the same volume with a different partner.

Diversifying your sourcing is something we’d encourage you to consider. That way, in the event of some other confrontation with China, your production doesn’t have to stop or be put on hold. You can continue processing your product and working with your other vendors.

You know your business better than anyone. You know what you’re looking for, what you need, and what your business needs. Trust your research and your gut. And when it comes to monitoring your sourcing, Aptean Distribution ERP can help you. We can help you keep track of your products and vendors as they move throughout the factory overseas, what part of the process your sources are in and how to clarify and expedite communications.

It’s a tricky time; we want to do our best to help you navigate it.

If you’d like to talk more about how Aptean Distribution ERP can help you navigate your sourcing needs, please reach out; we’d love to talk.