Doing Business Abroad

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The key to doing business abroad is to make sure you have adequate distribution in place. Sounds simple, right? However, logistics can be quite complicated for new businesses that are still trying to obtain a global footprint. Take a continent like Africa for instance. Having knowledge of one port terminal over another can be invaluable when shipping there. It’s not wise to handle the logistics yourself when there are companies with more intimate knowledge of these gateways to the African economy.

Distribution itself is only one piece of the puzzle. Any business needs to focus on their entire supply chain, which includes everything from sourcing materials to the final delivery to the customer. Because the breadth and depth of the supply chain can be quite complicated, this is another area that should be handled by an experienced partner. We previously discussed the importance of port terminals, but how is your product moved beyond that? Simple, finding a good ground and air partner as well. A reliable logistics organization should be able to take your products on that final leg to the end customer. This can be accomplished via rail, truck, or even by plane. The availability of multimodal transport is key to success.

If you build a successful supply chain you will achieve the pinnacle of results, and that is an efficient amount of days in inventory. This is a measure by which most companies hold themselves to. The longer a product remains within inventory, or transit, the longer the company must wait to collect on payment. There is a true cost associated with this metric. Generally referred to cost of capital, it is a weighted average interest rate related cost associated with the length of time a company holds inventory and receivables, and the lower your inventory and receivables remain the better. Think about this way, it’s the opportunity cost of what you could have done with that money instead of building that inventory up.

As you can see there are many areas of your supply chain that are vital to running a healthy company. If you’re a new company, or simply do not have the expertise needed, then don’t be ashamed to outsource the necessary pieces. The most important aspects of a successful business is at the crossroads of quality, efficiency, and customer satisfaction. If you achieve success in those areas then you should see a direct correlation with your bottom line earnings!