The word “sourcing” can be intimidating. Why is there so much talk about the simple process of procuring goods, supplies, or services from another source? The idea seems simple, but the reality can be complex, labor intensive, and nuanced.
Though simple at first glance, sourcing can be an overwhelming endeavor. For a sourcing agent to find the best manufacturers and the best price points, they need to perform a thorough evaluation of potential sources for their client’s products. They need to ask questions like “Where is the best place to source this product; domestically or internationally—and if it should be sourced internationally, from which country?” and “What steps are necessary to ensure products obtained from multiple, separate sources are comparable in quality?” and “Will the quantity of product the client is seeking be a good match for this source?”
The issue becomes even more complicated when you consider the logistical challenges of sourcing products. There are considerations such as: shipping costs, local laws and regulations, tariffs, and minimum order quantities. There are additional, less obvious considerations, such as cultural concerns (Chinese New Year, anyone?) and quality disparities between facilities that are even more difficult to navigate.
Additionally, to source products effectively requires considerable and sustained effort. As economies shift, prices of goods rise and fall, currencies fluctuate, and relations between countries improve and deteriorate, the sourcing landscape shifts. In order to be able to find the best price on products, you need to maintain relationships with various manufacturers in various regions of the world.
Finally, sourcing is a nuanced process that requires a comprehensive understanding of the issues at play, particularly when dealing with the laws and regulations in multiple countries. For many businesses, weighing the pros and cons leads them to (correctly) believe that using a sourcing agent is more efficient than attempting to undertake the project in-house.
The Case for a Sourcing Agent
There are a number of reasons why hiring a sourcing agent is a cheaper and more effective alternative to attempting to undertake the endeavor in-house:
- Sourcing agents have preexisting relationships with manufacturers. This means that they are more likely to be able to find the best products at the best prices.
- Decreased logistical costs. Preexisting relationships with manufacturers and regular visits to manufacturers mean that you will not need to foot the bill to send an employee to tour every manufacturing facility in China.
- Understanding of local laws and regulations. This can help to avoid costly fines or other legal repercussions, as well as saving the countless hours that would be required to have an existing employee learn those laws and regulations.
- Regular quality inspections. These inspections help to ensure that your products are consistently excellent.
- Experience. Hiring a high-quality sourcing agent gives you access to information compiled over years working with foreign manufacturers, and helps to maintain a consistent and smooth flow of supplies to your business.