5 Ideas To Avoid Risk In Managing Your Global Supply Chain
Updated: Dec 31, 2020
We've all heard horror stories of founders who weren't equipped to or didn't understand the flow or process of paperwork to clear customs. Because of that, founders have lost thousands of dollars, and early-stage startups have failed. Here are the top five ways to be better equipped and better understand the regulatory flow of import or export.
Get Past the Gatekeeper
To successfully export a product from a country and import it into another, each government entity requires written proof of authority to conduct the transaction. Familiarize yourself with the regulatory requirements of each country, not just yours. You need to be on top of your paperwork. Incorrect paperwork is the number one reason products get held in customs, and the number one reason founders lose thousands of dollars in international sales.
Ask your contact to supply copies of the necessary import permits and business licenses to include in the export paperwork. If the company cannot provide those documents, then that should be a red flag. Why does this matter? Because dealing with customs is the foremost cause of interrupted international business deals. I compare successfully navigating the global supply chain to dealing with "Karen." Each Karen is different, but yet all Karens are the same.
Emerging shippers need to proactively anticipate satisfying customs' needs the same way you would expect a negative response from Karen. Behind every founder's horror story of how they lost money in an international business deal, there is a direct link to being able to clear customs. Emerging shippers need to double and triple-check the business has the authority to remove items from customs. Because it is Karen's job to stop products from incorrectly exiting or entering a country, and she's good at her job.
Talk the way they talk
Talk the way they talk means to speak to your customers in the way that is most effective to them. Research your customer's communication styles, patterns, and non-verbal or verbal cultural cues then adapt. For our company, we found data and analytics about our customer's traditional and non-traditional communication styles and patterns in the Global Agricultural Information Network (GAIN) reports from the Foreign Agricultural Service (FAS). Then when Velour Imports announced its services to customers, we used a data-supported direct mail campaign of postcards to introduce the company to luxury resorts.
Postcards as a direct mail campaign before calling customers on the phone meant that cold call is now a warm call. Before scheduling a face-to-face meeting (a month in advance) with the Director of Food & Beverage at the Grand Hyatt Baha Mar, the largest hotel and casino in the Caribbean, the Director had already received a postcard announcing our services. What also impressed the Director, he received a personal referral for our services from an International Trade Specialist at the Caribbean Basin Agricultural Trade Office (CBATO). Personal Referrals are still one of the world's most valuable currencies.*
Incredible swag makes a great lasting first impression (at in-person) events
Bring incredible swag to your in-person events. When was the last time you saw someone turn down a free t-shirt? Never. Instead of buying thousands of pens, koozies, keychains, or small tokens of appreciations splurge on a few high-quality items for your prospective million-dollar customers, the "whales." Food & Beverage is a particular category of commerce because buyers typically want or need to taste the product before buying it. Conferences and trade shows became a necessity for the sector because it created a chance to taste and sample on a large scale in a condensed space. Include shipping samples in your projected cost of acquisition. They are a necessary evil.
Never send a sample without a signature
Shipping samples are a must in following international trends for sales. Whether you work in Oil & Gas or Food & Beverage, sample shipments are the second leading cause of founders losing thousands of dollars in international businesses. Include the cost of your products and or shipping in your cost to acquire customers. If you are introducing a new product to a global market, it is only natural for customers to want to sample before buying, but do not ever send a sample before your customer signs a letter of intent (LOI) to purchase. A letter of intent (LOI) crafted by a good lawyer is one of the most important documents you will need in international trade. Your LOI should state:
Agreed time to review the product and make a decision
If you pre-negotiated a price, responsibilities, or Incoterms
Formal written confirmation of the customer's intent to purchase
Whether your business makes or ships widgets or beverages, do not pay to ship a sample until you have a signature as written confirmation the customer intends to purchase goods from you.
You cannot serve two masters
Basic biblical principles suggest one person cannot serve two masters. The slave will love the first master and resent the other. Or vice versa. If you are a manufacturer, then don't try to become the shipper. If you are a shipper, don't try to become the manufacturer and think you are going to succeed in business. Why? Because you will love one and resent the other. Instead, outsource your logistical needs. Today's widescale adoption of technology makes managing the global supply chain more user-friendly than it has ever been before. Thanks to freight forwarding platforms like Flexport, Nowports, and GoFlyy are available to coordinate your logistical needs digitally. Research digital shipping platforms available in your region or for your sector.
Similar to working in a corporate office environment, to succeed in international sales and save thousands of dollars, you need to manage up the import and export process. Managing up refers to doing whatever you can to make your boss's job easier by essentially managing your manager. When managing up, the subordinate customize their work style or behaviors to suit their manager better. As the shipper on record, you need to customize your work style or behaviors to suit the customs agents better. Establish two-way communication and share your priority information regularly. You should understand the process and flow of import or export paperwork. Both parties need to clear customs.
Ultimately, the best way to navigate international challenges is with ample social capital. Social capital is a network of relationships among people who live and work in a particular society, enabling that society to function effectively. Black and Brown entrepreneurs need a network to succeed in global sales. You need someone to vouch for you. The higher your level of social capital, the easier you will be able to get past Karen at customs. Once you make a memorable first impression, then adapted to your customer's liking and signed all the necessary documents, you could still lose thousands if the deal falls through. Hopefully, with these five steps, you will make millions the next time you have an international opportunity.
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