What We Do in Importing-

As the world’s largest importer, U.S. imports in 2021 were valued at over $ 3.4 Trillion Dollars, which is the highest since 2000.  Pre-Covid in 2019, Imports were $ 3.11 Trillion Dollars, which means our Imports went up by over 9.32% which is substantial.

In 2021, the GDP in the U.S. was $ 23,350 Trillion, and our Imports constituted 14.56% of our GDP. Our deficit in 2021 was $ 2.71 Trillion Dollars or 11.60% of our GDP.

What Does Importing Entail?

Step One:                        Sourcing

First and most important step, A Pre-Sourcing Supplier check list to screen and select the proper Partner to make your Products.  Yes, they are a Partner as you rely on them for the survival of your business.

Supplier Characteristics- To name a few: 

  1. Cost                                                8. Reputation
  2. Quality                                          9.  Certifications
  3. Delivery                                       10. Collaboration
  4. Location                                       11. Customer Base
  5. Capacity                                        12. Financial Health
  6. Flexibility                                      13. Social Responsibility
  7. Lead Time                                     14. Product Development

Unfortunately, this step has been ignored by companies and the latter elected to simply follow their competitors and use that same manufacturer.  The pattern for Companies to have One supplier in One Country has been the norm, and as a result we are experiencing all the supply chain problems today and for years to come.  Simple facts. 

Apple, a leader in their industry, had mainly one supplier in China and in February 2023, after 15 years of challenges and obstacles in every launch of iPad/iPhone, decided to explore new manufacturers in India and Brazil due to the supply chain problems in China. 

 

Step Two:           Manufacturing Overseas:

Outsourcing seems to be the most favorite activity for Companies; however, in-sourcing is not part of their overall strategy thus complete dependence on that Foreign Manufacturer.

In Step two, Once you narrow down your choice of Countries, you need to evaluate your industry in the Foreign marketplace:

 So, What to Research in Each Country/Industry:

  • Country Factor
  • Technology Factor
  • Product/Industry Factor
  • Location Factor

Above will determine ease of doing business in that Country and Relative Competence of these manufacturers.

 Now, What to Compare in Each Country/Industry:

  • Labor Cost
  • Manufacturers available
  • Production Volume of Mfg./Industry
  • Skilled labor

The common reason usually given for “manufacturing overseas” is “it is cheaper”.

However, today this is more of a myth, I have one simple question; “If it was that much Cheaper, why Companies have been raising their prices on everyday consumer products by 30% to 50% at the retail level since 2020?  Because of Supply Chain costs, Yes, but these are a part of the Product cost.  

Taking into consideration “Shortages, Delays in Importing, Lost Sales & Profits” into your Cost of Product, it may no longer be cheaper.  All above combined may lead to loss of market share and business closing down.                     

Step 3:                 Logistics:

In 2021, the Global Logistics industry market size was approximately $ 9.53 Trillion U.S. Dollars.

In 2020, the North American logistics market was sized at over $ 2 Trillion U.S. dollars and ranked second after Asia-Pacific.

In 2020, $ 732.3 Billion U.S. Dollars in revenue was generated by the U.S. freight trucking industry,

Logistics costs are about 10% of our GDP, and deal with Transportation of your Products and managing your inventory. 

Logistics costs are on the average about 11% of your sales S/M/L Companies).  For smaller companies it is much larger.

Logistics costs could range from 18% to 21% from the overall cost of your Product.

As a result, Such Costs are very important to manage and include:

Factories:                               Where production takes place

Warehouses:                         Where Products are stored (Overseas & Domestically)

Transport                               Port to Port + Distribution Channel

Distribution Centers:            To service B2B and B2C

Other Functions                    Inventory Control, Packaging and Order Processing

Very Important to have the proper Technology in place to manage all Logistics Tasks, monitor progress, control costs, and proper level of inventory.

 What are your Logistics Costs?  How do you Manage them?

Do You Know Your Logistics Costs?

 Step 4:                   Marketing in Home Country

Once the parts of Sourcing, Manufacturing & Logistics are put in place, now the most challenging part of the process of Importing is to bring the Products to the Home Country, Sell them and make a Profit.  Really simple and yet quite challenging.

In 2021, our Imports were over $ 3.4 Trillion Dollars, and constituted 14.56% of our GDP. Our deficit in 2021 was $ 2.71 Trillion Dollars or 11.60% of our GDP, mostly due to our imports.

Steps for Importing / Marketing in Home Country

Developing Strategies for the following:

Positioning Strategy

Full detailed Marketing Plan:  Who to Sell to, Where to Sell, How to select Distribution Channels, What Price to sell at and Why

Competitor’s Analysis

Next Generation Product Line

That Manufacturer Overseas needs to make your Products, act as your Partner and develop Future Product lines for you as well.  Food for thought.

Last and Most Important, Back-Up Plan:  Manufacture Locally 15% to 25% of your Products to avoid supply chain shortages and lost sales. 

Very Simply, Manufacture Locally your Higher-end Product line.

Core Advantages of Producing locally:   

Ability To Launch Products Faster

Protecting your IPR

Low Minimums

Quick Turn-Around Times

Lower shipping cost

Better Quality Control

Naturally, you need separate Strategies to deal with all aspects of Importing.  Keep in mind, Sourcing and Logistics are your Competitive Advantage in the industry if managed properly

 Let us help you with that task, we have a lot of experience doing that. 

One Simple question, What is Your Strategy?

What Steps are Needed?

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We help our clients who are Small Businesses, Solve their problems

and Grow their Business.

We Understand Your Needs and Share Your Dreams.

Contact us at:                        info@ppiinc.biz