Steps for Sourcing and Importing Products

14 Steps for Sourcing and Importing Products

If your company plans to import goods from outside the UK, we can help you understand if your company is ready to import. We help our clients with the various steps of the import process and guide them through the challenges of dealing with overseas suppliers.

These are the important steps that your company should follow when importing products from overseas suppliers into the UK.

Step 1 – Identify the Products for Import

Sourcing products from an overseas supplier can enable your company to take advantage of lower production costs, allowing you to sell your products at a more competitive price within the UK. However, it is essential that you research the UK market, the demand for the products, and identify the right products to sell.

Step 2 – Sourcing Countries for the Products

Once you have identified the products for importation into the UK, the next step is identifying the countries that produce them. There will be a few factors to consider, such as the availability of product manufacturers, manufacturing costs, business environment, regulations, lower duties, and taxes. Chambers of Commerce offices within your target country can be a useful resource.

Read my Sourcing Case Study >>

Step 3 - Finding Overseas Suppliers

Many companies will start sourcing goods online; some will use trade associations, and others will use sourcing agents. Your company could also use various government agencies, which can assist you in identifying reputable suppliers and establishing solid international trade relationships. Dealing with a new overseas supplier can also come with challenges, such as communication barriers, time zone differences, cultural differences, shipping lead times, duties, and tariffs. Finding dependable overseas suppliers can sometimes be difficult, and we will help you undertake the process.

Step 4 - Trade Compliance

Trade compliance is the process of understanding and adhering to the laws and regulations controlling the export and import of goods, products, information, and technology between two or more countries. In addition, trade compliance covers many different trade agreements between countries, which can reduce import or export costs.

It is important that your company and individual employees remain compliant with the laws and regulations of the countries they are trading with in order to avoid the consequences of non-compliance. These consequences can include monetary fines, penalties, and the seizure of goods arriving at the port, while the worst-case scenario can result in prison time for individuals.

Step 5 - Incoterms 2020

By your company and the supplier agreeing to the relevant Incoterms 2020 rules for the international supply chain and then incorporating them into the contract, you and the supplier will understand responsibilities in the event of loss and damage. Including the Incoterms 2020 rule in the contract will confirm who is responsible for every stage of the international supply chain, including customs clearance and insurance requirements. The Incoterms 2020 rules also make it clear who pays for each different cost within the international supply chain.

Step 6 - EORI Number

The Economic Operators Registration and Identification number (EORI number) is used by customs and other authorities to monitor and track shipments coming into and out of the UK. To get an EORI number, your business usually needs to have premises based within the UK and this is called ‘being established.’ To apply for an Economic Operators Registration and Identification Number (EORI number), you will need a Government Gateway user ID and be VAT registered.

Step 7 - Export Customs Clearance

For every shipment leaving an overseas supplier, export customs formalities must take place to meet regulatory requirements. Export customs clearance is a process whereby an export declaration is developed and the required documents are submitted to the authorities by the supplier or their appointed agent. In many cases, export customs clearance can only be performed by a company holding valid customs authorisation or licensing.

The export customs clearance process must be completed before the cargo can leave the country of origin. In the case of cargo consolidation, often the export customs clearance is required prior to the cargo entering the freight forwarder’s export consolidation warehouse.

Step 8 - Tariff / Commodity Code Classification

There are Commodity Description Codes for over 98% of products, classifying products from a pin to an elephant. These codes assist in identifying what the product is for customs clearance purposes, so that correct duties and taxes can be charged, preferential trade agreements can be applied, and import or export restrictions can be identified.

When moving your products between other countries and the UK, your company must classify them correctly using tariff/commodity codes. Commodity Codes (sometimes referred to as Trade Tariff Commodity Codes or Tariff Codes) are used within the United Kingdom and are generally 8 to 10-digits in length.

Your company has a legal responsibility to classify the imported goods correctly with the UK customs authorities. The classification of the goods will determine the UK customs duties and taxes payable.

Step 9 - Main Documents for Shipping and Clearance

Having the correct documentation is vital when you import goods, as inappropriate or overlooked documentation can lead to shipping delays, increased costs and business risks, such as cancelled international commercial activities. Even if your company use a freight forwarder, your company will still be held liable, as the importer of the goods, for late or incorrect documentation.

HM Revenue and Customs state that the importer is responsible for ensuring that the UK Customs Clearance Agent has been given clear and accurate information. HM Revenue and Customs also state that your company, as the UK Importer of Record, must make arrangements to check the accuracy of customs clearance declarations made on their behalf.

Required Import Documents:

Purchase Order
The Commercial Invoice
Packing List
Certificate of Origin
Transport Documents

Step 10 - International Shipping Process Flow

Your company will need to develop an international business strategy and plan to ensure products and services meet the demands and requirements of the Business. During this planning process, your company should be able to identify the benefits and disadvantages of different international supply chain options. The planning step should also include identifying what products or services need to be produced and in what quantities. This involves your company deciding how the products will be sourced or manufactured and where the end delivery location will be.

International transportation will involve moving your products across borders of specific countries by air, land, sea, or via multimodal solutions. The international transportation can be complex, and it is important to move your goods in the most cost-efficient way and in a timely manner. International shipping can be a challenging process when it comes to moving your products across international borders due to supply chain complexities and many customs regulations. It is therefore important to have full visibility of the end-to-end international supply chain. When looking to achieve greater supply chain transparency, your company should consider the Incoterms 2020 rules within the contract, business and customer requirements, trade compliance, competitiveness, cargo location, rates, documentation, and supply chain activities.

Step 11 - Freight Forwarder

Your contracted freight forwarder acts as an intermediary between the supplier who makes the shipment and the final destination for the goods in the UK. The freight forwarder will take control of getting your shipments from the supplier to your UK warehouse. Although they do not carry out the shipments themselves, they offer your company different transport modes such as sea/ocean freight, rail freight, road transport and air freight shipments. Documentation typically required by the freight forwarder includes the export commercial invoice, shipper's export declaration, bill of lading and other documents required by the carrier and the country of export, and the UK.

Step 12 - Customs Clearance Agent

The Customs Clearance Agent, also referred to as a Customs Broker, is a company that facilitate the customs clearance of imports into the UK. The Customs Clearance Agent assists importers with the clearance process, while submitting all necessary documentation and the customs clearance declaration or entry to enable import of the goods. In the case of imports, the Customs Clearance Agent will ensure that the appropriate duties and taxes are declared. HM Revenue and Customs state that when your company are employing the services of a customs representative (Customs Clearance Agent) to prepare declarations on their behalf, it is your responsibility to determine the terms of that representation and ensure that the person making the declaration has been given clear and accurate information.

Step 13 - UK Warehouse Delivery and Handling

You will need to ensure that your imported goods are stored safely, efficiently, and cost-effectively, while complying with UK regulations and customer expectations. Some importers have found it cost-effective to outsource their UK import warehouse and cargo handling to a third-party logistics provider with their own warehousing. The UK delivery destination should be clearly marked on all shipping documentation and stated on the customs clearance declaration.

Step 14 – Record Keeping

HM Revenue and Customs state that you are required to keep records for all traded goods you declare to HMRC for four years, for duty and tax purposes and for government statistics. It’s vital that you have a robust system for keeping business records. This will help you comply with international trade regulations and allow HMRC to carry out audits effectively. All businesses must keep and preserve certain records and accounts and be able to present these upon request to HM Revenue and Customs (HMRC). If you’re VAT registered, you must keep records and accounts and/or if you’re importing or exporting you must declare any goods you move and keep appropriate records.

Import Blogs & Case Studies

Read my Import Blogs and Case Studies to see how I have worked with clients to tackle different import challenges. In each case an appropriate solution was identified and implemented to manage the client's Imports.