Friday, September 22, 2023

The role suppliers play in the international supply chain

Must read

Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

Founder and CEO of Mercado Labswith a 25-year history of building engineering solutions that improve end-to-end efficiency in the supply chain.

With the supply chain becoming such a hot topic, the first thing that comes to mind is huge container ships carrying goods across the ocean or “delayed delivery” notices plastered on websites.

However, if you ask a supply chain professional, they may think more specifically about frustrated importers trying to calculate the risks of under- or over-ordering of goods or the impact that late deliveries will have on quarterly reports.

When it comes to the supply chain, I think not enough time is spent thinking about the relationship between suppliers and importers.

Products are the lifeblood of any supply chain. Suppliers dictate the successful procurement, production and manufacture of these products. In addition, how well the supplier does in their role can make or break how well their importers do. Without knowledgeable, experienced suppliers who know how to participate on their side of the supply chain, there would be no products to sell and no profit to make.

It takes an average of six months to complete an order, and suppliers make up four-fifths of the equation. During this period, also known as the first mile, a lot can change. Forecasts can shift and products can fall in and out of favor. These factors (and more) create enormous challenges for both the supplier and the importer. Coupled with a lack of modern technology and connectivity, it can make effective collaboration between both parties incredibly difficult.

Changing times

For those who follow baseball, it has always been a pitch-and-catch situation between the suppliers and importers. Like a catcher, an importer calls “the play” by stating which products they need for the market. The supplier ‘sets the tone’, which means that the products requested by the importer are delivered. While the importer dictates the desired course of action, it is the supplier who must deliver.

Historically, the general focus among suppliers has been on cost: “How can I get my product produced at the lowest price?” Over the past five years, this has become increasingly complex; importers must now also consider factors such as speed-to-market, environmental, social and governance (ESG) measures and resilience.

Now, supplier dependence and expectations have shifted. When the pandemic started, suppliers and factories around the world were forced to close for the sake of their workforce, leaving their importers looking for solutions. Even as factory staff began to trickle back, importers soon realized they were among dozens — if not hundreds — of other importers waiting for updates on suppliers, products, and manufacturing.

Not only that, but suppliers found themselves in a tricky spot when they learned that other suppliers depended on the same level two and three suppliers to fill their pre-Covid backlogs and fulfill raw material orders that the pandemic had disrupted. This has led to the realization among importers that they can rely on suppliers much more than they previously thought.

As the supply chain continues to face challenges, importers must look to relationships with their suppliers to future-proof themselves against unexpected shocks. The importance of fostering a positive and mutually beneficial relationship between importer and supplier cannot be overemphasized.

But how can it be? Here are three main areas that every importer should focus on:

1. Transparency. Suppliers always want to have insight into the demand for products. An importer who fails to notify his supplier when demand will be high or low will quickly fall out of favor and risk not having the products he needs when he needs them.

They won’t be a high priority when times get tough and suppliers decide how to prioritize who to help. But it also goes the other way. Importers want to know the status of their products at all times as sales are at stake, so vague warnings from suppliers relayed via spreadsheets and email are not enough. The more transparency both parties can offer, the better.

2. Dedication. Forecasting, long-term commitments and stability are critical to fostering a mutually beneficial relationship to keep costs low and quality high for both parties. If a party proves to be unreliable in times of crisis, trust dwindles and can negatively affect the relationship later on.

3. Digitization. A modern and complex supply chain needs the right technology to cope with the influx of data required for transportation $2.8 trillion of goods around the world. Unreliable and outdated software like spreadsheets and email are not built to handle the complex and ever-changing data we see in the supply chain. Instead, companies should use dedicated platforms that make communication between importers and suppliers efficient, timely and (most importantly) easier.

The impact of improved supplier relationships

By taking the steps to improve relationships, companies are sure to see many benefits, including:

1. Increased sales. Delivering products on time, efficiently and correctly will help you get to market faster when demand is highest.

2. Closer Partnerships. Although suppliers are often thousands of miles away, they are a critical aspect of your end-to-end supply chain operations. Building supplier relationships will increase your supplier’s willingness and enthusiasm to work with you.

3. Better grip on the first mile of the supply chain. By improving and standardizing supplier relationships, you can improve your supply chain across the board. Many importers are currently groping in the dark with their first kilometer. By digitizing suppliers and networks and bringing them online, you can maintain a better overview, increase order visibility and help improve transparency in operations and partnerships for a better time.

Communication is the key to a good relationship. The more clearly, frequently and accurately a customer can define and share goals and objectives, the better the supplier can respond. Factors to consider when communicating with suppliers include language, culture, distance, experience, tools, and previous relationships. These challenges can be difficult to overcome, but major importers acquire the necessary expertise and/or hire professionals with the right experience. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

More articles


Please enter your comment!
Please enter your name here

Latest article