Advantages and disadvantages of working with domestic and foreign manufacturers

Advantages and disadvantages of working with domestic and foreign manufacturers

Since domestic and foreign manufacturers can provide different advantages and disadvantages in product supply management, it is important to choose the right manufacturers while creating your supply network. Domestic and foreign manufacturers may offer different alternatives, as well as their working methods and production capacities. If you are going to do a business in the B2C model and you need manufacturing companies, you need to do your research correctly as you will need to work with domestic or foreign manufacturers. Otherwise, problems in your supply network will make it difficult for you to do your job.

Advantages of working with local manufacturers

Ease of communication

When you work with local manufacturers, your communication becomes easier because you use the same language and are located in the same country. Being easy to communicate naturally also allows you to understand the production process more closely and to express your wishes more easily during the production phase.

However, since you are in the same time zone, there will be no disruptions in communication due to time differences. This makes job tracking even easier.

Procurement process is shortened

Being in the same country significantly shortens the lead time. This helps you to supply your products by contacting the manufacturers more quickly. Increasing shipping times in product procurement from foreign companies may also increase stock replenishment times, so your stocks may run out during busy periods.

Procurement costs are lower

Since you are located in the same country with domestic manufacturers, shipping times will be shortened and shipping costs will be lower. When you want to supply products during the replenishment process, you pay less for shipping.

You can examine the products on site

One of the advantages of working with local manufacturers is that you can examine the products produced on site. As domestic travel is easier, you will have the chance to go to the production site and examine the product quality and production process on site. This allows you to see the quality of the products you buy first hand.

You benefit from more flexible payment methods

You can use more flexible payment methods when you work with local companies. Some foreign companies may not use certain payment methods and this may not be suitable for you. At the same time, making payments in foreign currency may cause the costs you pay for production to constantly change.

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Production costs can be higher

When you work with local manufacturing companies, their production costs may be higher compared to companies abroad. Background expenses such as raw material purchases and labor costs can increase the production cost of the product.

Production capacity may be limited

The production capacity of domestic companies may also be limited according to the size of the factory. If there is no specific demand, the manufacturer will not want to increase its capacity. In this case, they can continuously produce for you with a limited capacity. This may cause your company to fail to grow as it will cause you to not increase your sales capacity.

Sticking to a single manufacturer can cause supply issues

Working with and being dependent on a single domestic production company can also create supply problems. When you work with a single company, this will directly reflect on you when this company experiences a problem. Your business is directly affected, as production slows down or stops will cause you to be unable to supply new products.

Advantages of working with foreign manufacturers

Costs are lower compared to domestic production

Foreign manufacturer companies can produce your products at lower costs compared to domestic companies in terms of labor and production line. The cheaper workforce and the wide production line allow you to supply the higher capacity product at lower costs.

You may have more alternatives

You may also have more than one alternative for production. You have a higher chance of finding multiple manufacturers abroad who can produce your products. In this way, since you can supply products from different manufacturers, you will have the chance to constantly renew your stocks even if you have a problem with a company.

It is relatively easy to find a manufacturer abroad

It is easier to find companies abroad that can produce the products you want with the quality you want. You can easily reach these companies on the internet because many manufacturers make themselves known in different marketplaces or platforms or because they highlight themselves with advertisements.

You can have high quantity production

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Disadvantages of working with foreign manufacturers

Shipping costs increase

When you work with a company from abroad, your shipping costs will also increase. Especially if you have bulky products, it will be necessary to transport the products by plane or ship. For this reason, you need to order high quantities to reduce your costs. In this case, you will need to have a warehouse and your warehouse costs may increase at this rate.

Procurement process is prolonged

The arrival of products from a long distance will affect the costs and extend the transportation process of the product to you. For this reason, during the replenishment process, you need to keep your stock lower limits high and coordinate the orders for new products by predicting the orders in advance.

Customs problems may occur

Since you will be working with foreign manufacturers, your products may be stuck at customs or some problems may occur at customs. Keeping the product at the customs will reduce the value of the product and delay your adding these products to your stocks. There may also be unexpected costs due to problems at customs.

You may not be able to view the products on site

Since the manufacturer company is abroad, it becomes difficult to visit this company to see the production stage and production quality. Even if you visit these companies for control purposes at first, you cannot do these controls continuously. This can directly affect the quality of your products. For this reason, you may need to make certain agreements and contracts in order for the production quality to be standard.

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