What does a Sourcing Agency do?

What does a sourcing agent do? A sourcing agent is an individual or agency that represents a certain buyer in the sourcing of commodities and products that would otherwise be out of the buyer’s scope. Sourcing agents are typically required when it comes to international trade – particularly in new markets where the buyer has no previous experience on contacts.

Typically, a sourcing agent is only required to find new suppliers for their client. However, there are a number of additional services and responsibilities involved depending on the buyer’s needs.

What services do sourcing agents offer?

So, what kind of additional services do sourcing agents offer? Naturally, the sourcing agent service fees will vary substantially depending on the scope of work required by the buyer. So, it is also worth being clear about what you need before rushing in wish a sourcing agent so that you can fully understand the charges involved and indeed the services you will be receiving in exchange.

Here are some of the main services and duties of a sourcing agent:

  • Supplier selection
  • Price negotiation
  • Production follow-up
  • Quality control
  • Product compliance and testing
  • Shipping and logistics

What does sourcing product suppliers involve?

Sourcing product suppliers is the most basic duty of a sourcing agent – finding suppliers that meet the requirements of their clients, and exceed expectation. Following that, a sourcing agent will then negotiate with the prospective suppliers on behalf of the buyer in order to get the best possible price and confirm the details of production to best serve the buyer’s needs.

Understandably, this can make some people feel uncomfortable – having a sourcing agent speak directly with prospective suppliers. This is because some believe that their agent may be cheating them and trying to secure the best possible deal for themselves. Of course, we cannot comment for all sourcing agents out there, however, for the most part, sourcing agents are far better off dealing honestly and in the best interest of all parties involved (the competitive nature of this industry is built on quality and efficiency of service).  In any case, if this is something that makes you feel uncomfortable, whether supplier information is provided to you largely depends on the service model agreed upon by your sourcing agent and as such, you can negotiate accordingly.

Follow-up, product quality inspection, logistics

As we explore the wider scope of a sourcing agent’s responsibilities, let’s look at follow-up, product quality inspection, and the logistics involved with moving the newly sourced products from A to B.

After having secured a new supplier, the next step is to arrange the production of said goods. A sourcing agent can help to coordinate with the production facilities, monitoring the entire production process from start to finish and ensuring that the factory finishes the production in a timely fashion and to the highest quality.

Following that, your sourcing agent will then provide a thorough quality control inspection service. Coordinating with the quality inspection company, they will analyze the finished products and dial in the production process in order to minimize the defective rate before arranging shipment.

Finally, the last step of the process is then to arrange the shipping. This is a step that requires a high-level of industry knowledge and expertise. There’s much more to it than just finding a good bargain and the most competitive shipping prices. A quality sourcing agent worth their salt will also advise you accordingly as to what legal documents and product certificates will need to be prepared for customs, e.g., CE, FDA, RoHS, COC, and so on.

The majority of these services will be made available by most reputable sourcing agents. You can pick and choose the services which best apply to your unique situation and requirements.

Who can benefit from working with a sourcing agency?

Now that you have a better understanding as to what a sourcing agent does, who can benefit from working with one?

  • Those with no experience importing: importing products from overseas is a complicated process with an awful lot of red tape. While it is certainly something that can be learned, leveraging an established company with the experience and connections in place already can benefit you greatly.
  • Companies with multiple product categories to manage: if you are working with a large number of product categories then your supplier requirements could go from 1 to 10+ which can be a full-time job in itself. Working with a sourcing agent who can source and manage multiple suppliers for you can enable you to focus on other important ‘revenue-generating’ tasks such as building your customer base.
  • Large supermarkets and retailers: large supermarkets and retailers deal with thousands of different products and as such, having a solid supply chain and excellent supplier relationships is a critical to their success. This is where working with a sourcing agency becomes more or less an essentiality.
  • Those who deal in specialized product categories: dealing in specialized product categories – particularly when sourcing from overseas – often requires a certain cultural etiquette. Take the Chinese chemistry & medicine industry as an example: it will be difficult to find and secure quality suppliers without the inside knowledge and experience dealing in the Chinese market and as such, a sourcing agent can be incredibly beneficial to your business.

Conclusion

It is important to recognize that there are some very good sourcing agents in the industry – just as there are some very bad. That said, you needn’t be afraid of pursuing a sourcing service for your business. You simply must approach it with careful consideration.

A quality sourcing agent will play a vital role in your supply chain management and helping you to obtain some of the most competitive prices on your products, while also taking care of the tedious and often complicated follow-up processed. If you find the perfect sourcing agent for you, it can work wonders for your business.

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