Mitchell Wekey
Learn about the 5 most common ways to manage importing risks when you rely on suppliers to deliver your supplies.
After importing cars to NZ and dealing with countless other products, I can tell you that you have to always take into account the following ways to manage importing risks or you will run into problems.
There is always risk when you do business overseas. The entire business culture might be different than what you are used to and there is a really good possibility that there are regulations in place that you have no idea about. Even confusion risk is high, especially when the supplier is speaking another language.
There are numerous potential problems that can appear when comparing various countries. For instance, because of the current coronavirus pandemic, you never know when new export controls are introduced. You need to reduce such risks and a huge part of how you do this is with market research.
Your suppliers need to be reliable. They have to deliver exactly what you agree to in the contract, at the specified time and in the exact quantity discussed. That is why you always need to assess product quality. This includes investigating the management system that is used by the supplier.
The thing is that when you choose the right supplier, the entire process is simpler. This is because you are sure there won’t be any delivery problems to deal with and goods will always have the appropriate quality. However, suppliers can always fail when it comes to meeting obligations so you have to keep monitoring the process.
It is logical to say that if the supplies come from a long distance, there are higher possibilities that something will go wrong. The same goes for supplies that are perishable or fragile.
What is particularly important with mitigating risks associated with delivery problems is to have a solid contract in place. You want to be sure that every single important condition is listed, including what happens in the event that something goes wrong.
Remember that it is actually quite common to have import delays. Prepare for them and have a procedure in place for dealing with all.
When you pay for your imports in advance, you open the doors to finding out that goods do not appear or faults exist. This makes it difficult to be compensated and to recover the payment. Such a process can become expensive and is definitely time-consuming. Protect yourself by setting up suitable payment terms.
No matter how you pay, be aware of all the costs and fully understand what the supplier is responsible for.
Last but not least, when you agree to a specific purchase price and you use a foreign currency, you might end up with problems in the event that exchange rates change. Make sure that you set up suitable protection for such a situation or to at least take it into account.
