Global procurement strategy

What are the challenges for a global procurement strategy?

The costs — A global strategy of supplying is often used to take advantage of lower labor costs abroad. But such a strategy incurs additional costs for a company that it would not have to bear on the national market.
To name just a few, these costs range from multimodal transport costs to brokerage fees, bank fees, customs fees, and insurance.

The laws — Global procurement requires buyers and suppliers to choose one of the three bodies of legislation to apply to their respective contracts in a global procurement strategy: the law of the country of the buyer, the law of the country of the supplier, or the law of the country of the supplier, or that provided for by a treaty accepted by both countries.

The motto — The buyer and the seller must agree on the currency to be used. While some buyers require a contract in their currency for the sake of simplicity, it is wise to use the vendor currency when it is likely to depreciate in relation to the buyer's currency between contract signing and payment dates.

The delivery time — On the global market, the delivery time is generally much longer than on the domestic market. Indeed, maritime transport is considerably slower than air transport. In addition, importation involves customs delays that do not exist in the case of domestic purchases.

Language and culture — If you do not know the language and culture of the supplier well, you increase the risk of communication problems, misunderstandings, and your meetings may be difficult or even heated.

Transport — While local procurement generally involves a single mode of transport, global procurement requires multimodal transport — a process combining land, sea and air transport, to transport the supplier's products to the port of embarkation in his country, then to the port of disembarkation in your country, then to the port of disembarkation in your country, and finally to your warehouses, you must integrate this data into a global procurement strategy.

Payment methods — Global procurement often involves payment by bank mandate, which requires the active participation of both the buyer's bank and the supplier's bank.

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