Sourcing Raw Materials: A Better Process

Sourcing raw materials always brings with it some inherent risk. You may face a variety of challenges.

Some materials might not be ethically sourced.

You may have unexpected delays in getting those raw materials to you–and those delays may continue to plague you long after the initial sourcing process is over.

Sound familiar? The last couple of years have shown us powerfully how even minor problems with the supply chain can escalate into substantial issues that can impact your entire business. Fortunately, there are some strategies you can use to improve your raw material sourcing and better maintain your supply chain, enhancing resilience and allowing you a more effective, trustworthy source of supplies. 

1. Source Locally When You Can

Local sourcing has a few critical advantages. First and foremost, it makes it easier to determine whether your materials are ethically sourced, since you’re able to get more information about your source. Next, it’s often easier to get local materials to you, with fewer delays–and you may be able to bring them in faster when your inventory needs change suddenly.

Pay attention to where your materials providers are getting their materials to help better maintain your supply chain. If your providers are sourcing their materials from overseas or even across the country, you may encounter delays despite the steps you have taken to localize your sourcing. 

2. Build a Diverse List of Sources for Raw Materials 

Diversity is always a wise approach–and your raw materials sourcing is no exception. Sole sourcing, in some cases, may be less expensive, but it also means that you are entirely reliant on that source for your vital materials. If there are shortages and challenges that impact that supplier, you may find it impossible to overcome them for your own sourcing needs. On the other hand , if you have diversity in your sourcing, you may find that you can still bring in some of the raw materials you need even when challenges impact other areas of your supply chain. 

Suppose, for example, that there is a shipping delay that impacts raw materials coming from overseas. If you have a local source for those supplies, you may still be able to support at least part of your usual production and keep your customers happy, even if things aren’t going entirely according to plan. Sourcing from multiple countries, when you must bring in overseas materials or supplies, can also help ensure a steady stream of supplies. 

3. Increase Your Available Inventory

If you’ve found yourself struggling to provide the supplies your customers need, consider ways that you can increase your own available inventory. You may need to invest in additional warehousing options to maintain that higher level of inventory, but it can ultimately prove incredibly beneficial to your entire business.

With the right supply chain planning solution, you can get a better idea of what supplies you need to have on hand: what your customers really need, not just immediately, but in the near future. When you have the supplies in your own warehouse, you can often better manage your overall inventory. 

The inventory in your warehouse also puts you in a better position to weather potential supply chain problems, which means you may be better positioned to keep your customers happy even through a shortage or other problem. 

Keep in mind, however, that you must accurately predict your inventory and supply needs for increasing your inventory to do you any good. You must also continue to track the inventory you have on hand so that you can use it effectively, rather than allowing it to gather dust in a warehouse or ultimately get damaged. Furthermore, if you have perishable goods, there may be a limit to how many you can keep on hand. 

4. Connect with a Distributor

Distributors often can  help find additional resources when you are struggling with your primary supply source. They usually buy and sell on a global level, which means they can keep up with current trends and provide you with the most cost-effective solution to your current supply chain needs. 

Often, distributors also have resources well beyond the ones you can access on your own, which means they may be able to find supply pathways or solutions that will help you over a difficult patch. 

If you work with a distributor on a regular basis, you may find that they can help build your supply chain and your inventory for potential future shortages or help you navigate and avoid problems that may become more serious.

5. Leverage a Consignment Approach When Possible

Sometimes, to manage your inventory effectively, you may want to use a consignment approach: you send your products to a distributor but maintain ownership of them until they are sold. Once they’ve been sold, the distributor will pay you for them. Platforms like Amazon FBA, for example, can take care of many warehousing responsibilities for you, which may allow you to maintain greater overall inventory without substantially expanding your existing warehouse solutions. 

A consignment approach can cause some problems if you fail to properly forecast demand for your products. However, by using the right supply chain management solution, you can often effectively predict trends, manage inventory, and ensure that you have the right products on hand.

Navigating supply chain challenges has become increasingly difficult for many businesses in the past two years. Sourcing raw materials, including ensuring that you have a steady supply of the materials you need, can be difficult. With these strategies, however, you may be able to do a better job of sourcing the materials you need, maintaining your supply, and increasing overall satisfaction.

Do you need a supply chain management solution that can help you better track and keep up with your needed supplies ? We can help. Contact us today to learn more about how our solutions can benefit your business.