Global Sourcing: Reaching Second Level Savings

Over the weekend, I had a chat with my wife and her business partner about a global sourcing program they have up and running with an Asian supplier who is shipping to the states. In the past couple of weeks, they found that they were able to reduce their total costs even more for this program by taking a new look at their freight (including ocean, rail and truckload) and importing options. Now, these are two former physicals traders who have moved cargo around the world for decades, so they're not exactly new to the import and shipping game. Without getting too much into the details of this particular case -- and this is not an area that I'm expert in -- I learned that it can more than pay off to develop numerous options (including examining different ports of entry) while also becoming expert in harmonization codes and import classifications. Even the location where a container clears customs can play an important role in shipping time and landed cost. What I've learned from this is example is that for many companies who have already gotten global sourcing programs up and running, reevaluating transportation and importing approaches can lead to a second level of savings down the road. It's not easy -- and it takes a different skill set than most sourcing and procurement teams have internally -- but taking a new look at these areas can more than pay off in the long run.

Jason Busch

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