The International Procurement Process: 7 Steps to Seamless Global Sourcing

There are important hurdles to consider in international procurement. Language barriers, legal requirements, tariffs, power supplies and plug types, and increased shipping time are all factors. 

If this is a practice you’re interested in but not sure how to get started, read on. 

What is International Procurement?

Rather than buying supplies through domestic procurement within your own country, international procurement involves global sourcing, where you purchase supplies from companies outside your country. 

When done correctly, global procurement offers many benefits and can result in strong supplier relationships and a more diversified supplier selection. 

However, with potential challenges like shipping time, legal restrictions, tariffs, and language barriers, you need a firm grasp of how the process works before diving in. 

Creating a consistent, well-structured international procurement practice is essential for overcoming these challenges, which brings us to the heart of this post. 

The International Procurement Process

1. Get Budget Approval

Like any business deal, key stakeholders must be on the same page before initiating international trade. One specific area where everyone on your procurement team needs to be on board is with your budget. 

This is integral to the procurement function, as it ensures all decisions align with your company’s core goals. 

• How much will it cost to do business with potential suppliers?
• What’s the product price?
• What’s the international shipping cost?
• Will there be tariffs or import duties?
• How will exchange rates impact the deal?
• Are there any potential discounts with international suppliers?

These are critical questions to ask before putting anything into motion with international procurement activity. 

Therefore, you’ll want to have clear answers to each of these questions before purchasing and ensure that A) the numbers crunch and B) you have approval from all key stakeholders.

2. Purchase Requisition

This refers to creating an official document to request products from a foreign supplier. A purchase requisition should contain all essential information needed for transactions, including:

• Product/supply description
• The purpose of each product/supply
• Quantity
• Proposed delivery date

Once you have your purchase requisition drafted up, you’ll need to share it with the appropriate parties for approval. This will serve as a formal document that highlights exactly what you need for direct procurement or indirect procurement. 

It will also state why you need it and mention other elements like how much you plan on ordering and how you’ll receive shipments. 

In turn, a purchase requisition helps create transparency in supply management and can either be approved or unapproved. If unapproved, you can make the necessary adjustments and resubmit. 

3. Select Supplier

After you’ve gotten budget approval and created your purchase requisition, it’s time to find a supplier for international goods procurement. Due to the high number of international suppliers, this can feel a little overwhelming, especially if it’s your first time going internationally. 

To take the stress out, here are some key factors to consider when making your choice. 

First, start with the basics like a supplier’s product line, how long they’ve been in business, quality level, reputation, and how experienced they are with serving international buyers such as yourself. 

Next, look at things like: 

• Total cost after factoring in the pricing on goods, including shipping and tariffs
• Supplier capability and logistics (can they comfortably meet your supply chain demand?)
• Supplier's ability to offer proper power supplies and plug types based on an employee’s location (e.g., the US electrical system uses 120V, while a system in England uses 230V)
• Compliance with relevant international trade regulations, such as the ones monitored by the European Commission
• After-sales warranty

Finally, consider any potential legal restrictions involved with doing business with a potential supplier, as well as language or cultural barriers. 

4. Negotiate the Contract

After you’ve identified the supplier you want for your international purchase, you’ll likely want to negotiate the contract to get the best terms possible. Barring having a contract that checks every single box, some types of negotiations are usually in order when strategic sourcing.  

For instance, is there any wiggle room on pricing, or is it locked in? Would you like to make any tweaks to the payment terms and when payment is due on each invoice?

Does the default warranty leave less to be desired, where you’d like to make some changes to that?

These are just a few examples of areas that could potentially be negotiated in supplier relationship management. 

Remember that most international suppliers are accustomed to making negotiations, so it doesn’t hurt to ask before putting pen to paper. 

For helpful information on how to navigate this part of international procurement, we suggest reading this guide from the International Trade Administration. 

5. Issue a Purchase Order

After everyone is on the same page with supply chain procurement decisions and contract negotiations have been completed, it’s time to issue a purchase order, which serves as a legally binding document. 

A purchase order serves two main purposes. 

One is to confirm your business’s purchase request from a foreign supplier. The other is to outline the terms you agreed upon in the contract, such as pricing, quantity, shipping costs, when payments are due, and so on. 

This protects your business, as well as the global supplier, and gives both parties an official reference once your partnership begins. 

Whether it’s public procurement, government procurement, services procurement, or any other type of international procurement, it’s important to be thorough with your purchase order and double-check it to ensure 100% accuracy before it’s issued.

6. Inspect the Product

Once your order has arrived, you’ll want to perform a comprehensive inspection to ensure it meets expectations and has the quality level you agreed upon in your contract. 

Ideally, you’ll have a trusted team member or a quality control agency perform a pre-shipment inspection before goods are ever shipped, as this can help you spot issues early on to prevent later logistics headaches. 

Assuming that’s good, you’ll want to perform a detailed product inspection once it arrives at your facility, while looking at the following upon delivery:

• Packaging 
• Shipping labels
• Product quantity
• Appearance
• Weight and dimensions
• Model correctness
• Functionality
• Craftsmanship
• Defects

You can find an exhaustive product inspection checklist here to help guide your supplier performance assessment. 

7. Pay the Supplier

The final step in the supply chain management process is making payments. In most cases, payment will be issued once the product has been successfully delivered and has passed inspection requirements. 

At that point, it’s your responsibility to pay the supplier according to the terms you agreed to in the contract. 

Note that payment terms can vary considerably. In some cases, you’ll pay in advance, while at other times, you’ll pay upon delivery. And in some cases, there will be net payment terms like net 30, 60, or 90, where you have 30, 60, or 90 days to pay. 

Regardless of the arrangement outlined in the purchasing process, be sure to pay on time or in advance, as this is integral to building a strong, lasting supplier relationship.

And if the supplier reports your payment history to business credit bureaus, this will also help improve your business credit profile. 

International Procurement Challenges

Earlier, we briefly touched on obstacles that buyers often deal with when purchasing from suppliers on the international market. 

To recap, some of the most common challenges in global procurement management include:

• Shipping time - Whenever you’re ordering products from another country, you’ll usually encounter a longer shipping time than when buying domestically.
• Legal restrictions - You, for example, may encounter rigorous licensing requirements or prohibited items when buying internationally.
• Tariffs - This may increase the overall cost of buying products from international suppliers. 
• Currency fluctuations - When buying domestically, you’re always using the same currency. However, fluctuating international exchange rates can potentially impact pricing. 
• Quality control - You may not always have the same level of quality control with international procurement. 
• Differing power supplies and plug types - This is a recurring issue in many international procurements, so it’s something to be aware of when choosing a supplier and address upfront.
• Language barriers - Any time you’re partnering with suppliers that don’t speak your native language, it can create communication issues. 

Why Businesses Choose allwhere for International Procurement

Due to the intricacies and complexities of an international procurement strategy, many businesses opt to partner with third-party professionals like allwhere. 

We specialize in IT procurement services, where we handle the process from start to finish, helping you find computers, monitors, accessories, and other devices from the most reputable global brands. 

We handle all of the logistics and communication, and you can track the procurement and deployment of your IT assets from one convenient procurement software dashboard. 

If you’ve been waiting to source globally but aren’t comfortable or don’t have the time to manage the international procurement lifecycle, we’d love to help! You can learn more here. 

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