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Trader Or Manufacturer:TThe internet has made it easier for people to connect, and therefore establish direct bussiness connections, what are the advantages and disadvantages... read full article

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Trading Company or Manufacturer ?

 

Reliable Trading companies are committed to long term International Trade, product quality, prompt deliveries, and customer satisfaction. Often manufacturers are not seriously committed to exports. We have come across many instances when manufacturers have approached buyers for exporting their products only because of a temporary shortfall in capacity utilization caused by of some problem in the domestic market.

As soon as the situation in the domestic market has improved some manufacturers have been known to renege on their export commitments. There is also the concern that manufacturers may divert finance or materials supplied to them for executing an export order to other uses.

Adding Value:
Trading Companies also seek to strengthen the bonds with it’s manufacturers by ensuring that they provide value addition to the export activity, they do not confine themselves to merely finding customers for the manufacturer. They contribute to the exporting process by providing import-export services,inspection services , as well as developing additional warehousing facilities, andinvolving themselves in financing the transaction. These value-adding activities make client/manufacturer relationships strong.

Long-term relationships:
So a Trading House having found an efficient manufacturer would be loathe to leave it. Efficient manufacturers are hard to come by, and the manufacturer who performs well is unlikely to be by-passed. Therefore it is important for the manufacturer to supply goods as per commitments. Also the manufacturer should describe the product accurately to the Trading House indicating its advantages as well as its limitations.

 

some manufacturers have been known to renege on their export commitments.

It is generally the Trading House’s performance in obtaining continual orders, and the manufacturer’s performance in executing orders which stabilizes the relationship and makes purchase from reliable trading companies less risky. Trading Companies know the mills and manufacturers and may have more leverage should there be a need in the future to resolve disputes.

Export documentation and shipping:

Trade documents must be carefully prepared so that there are no problems in transportation, shipping, clearing customs, obtaining payment as well as handling any subsequent claims. Trading Houses have well staffed and well equipped documentation and shipping departments and this is a major service they can provide. They have knowledge and experience which enables them to select the best modes of transport in terms of cost and quality of service. Often they can consolidate cargo which may often be going to the same destination port or warehouse overseas, thus lowering costs.

 

How do Trading Houses help manufacturers and foreign customers?r

MANUFACTURERS	FOREIGN CUSTOMERS
Goods are collected and payments made at doorstep.	Proven record of reliability for quality, prices and delivery
Better price realizations because of overseas marketing organization	Lower costs thanks to a network of procurement facilities
All risks and hassles of exporting avoided.	One stop shopping facility.
Global network for techno-commercial information	After-sale services assured.
Market entry at lower cost	Lower transportation and handling costs.
Long term business perspective	Long term business perspective.

 

 

Managing crises and disasters:

Export activity is dependent on number of variable factors many beyond the exporter’s control. This sometimes leads to unforeseen occurrences, for example the inability of a supplier to deliver at the last moment resulting in the Trading House having to locate an alternative source, or a buyer being unable to accept delivery of ordered goods requiring that an alternative customer be found soon. Trading Houses would have experience of many such dangers and have developed capabilities of dealing with them.

 

Long term benefits:

Trading Companies provide services both to suppliers as well as customers. Customers benefit from dealing with a company which has a proven record of reliability in international trading as well as a commitment to long term relationships. Buyers get confidence regarding the supply of their goods with commitments of quality and delivery. Suppliers benefit from getting at their disposal the facility of international marketing infrastructure of the Trading Company.

Also the Trading company looks after all matters relating to the interface with the buyer, from presenting the merchandise to realizing the payment. The Trading House can obtain the benefit of economies of scale in purchasing, transporting, shipping, insuring and borrowing funds. A part of this benefit is passed on to the manufacturer.

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