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OPERATIONS

The Question You Forgot to Ask

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How much lead time is needed from the moment you compete for an order to the moment when it has to be at its destination? Generally, for international orders, you need a longer lead time than you would need to ship within the United States.

For international orders, additional time is needed for:

  • Negotiating with the international buyer
  • Negotiating your purchase with the vendor or supplier
  • Settling your financial transactions
  • Preparing documentation for customs and completing other legal prerequisite paperwork
  • Dealing with unexpected shipping delays that may occur because of longer distances and customs

As trade administrator of a small company, I learned this lesson the hard way. This is what I experienced when exporting soda pop to Mongolia.

Opportunity Knocks

Sometime in February, our company received a lead that a large distributor from Ulaanbaatar, Mongolia, was interested in purchasing some soft drinks made in the United States. We jumped on the opportunity and submitted our quote to the buyer. At that point, we did not know that the distributor wanted the order for a specific event, and we did not ask.

In our quote, we estimated the soda production time to be three weeks. The quote became an order in late May. At that time, we learned that this large order was needed by mid-July, because it was to be sold during the festivities of the Mongolian national holiday.

We had three weeks to get the soda, which was within our original parameters. This left us with three weeks to get the goods to the final destination, as the buyer needed a week to distribute the soda to the retailers.

The manufacturer of the soda pop was a well-known local beverage company with a significant market share in the United States. Summer was one of its busiest seasons. When we placed the order, we learned that its turnaround time was approximately four weeks.

Opportunity Lost -- and Regained

It was not good news. Our estimate had not taken into account that summer was the peak season for the industry. After intense phone conversations and endless faxing back and forth, our parties agreed that the order was not going to make the deadline.

Though our first order of soda was unsuccessful, we were able to establish a good working relationship with our Mongolian counterpart. The willingness to openly deal with problems and to maintain communication allowed us to learn about one another, our style of doing business, our challenges and needs. We successfully applied what we learned from the first failed order to fill the second order of soda pop for Mongolia.

These are the lessons I learned from this experience:

  • Find out as early as possible when the customer needs the order, even if you don't have the deal yet.
  • Check on the vendors' seasonal turnaround time before estimating the time it will take to get the order ready to ship.
  • Make sure you can ship the product in time to meet the buyer's deadline. Knowing that it is for a specific event is not the same as knowing when the buyer needs it.
  • Give yourself extra time for unexpected delays (usually two weeks is enough if there are no major crises).

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Last updated: May 31, 2000




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