Many buyers always puzzled on making their decisions of buying from a One-Stop Shop or through a Sourcing Agent, especially when they have a lot of items in different ranges to buy.
As a professional sourcing agent in the construction and building region for up to 8 years, I have to say, the answer is, it depends.
If you are a large-scale construction company or real estate developer, that you need the items consequently and in large quantity, using a sourcing agent should be better. Because sourcing agent will give you several options with name of factories, their locations, contact persons, and you can contact the factory all by yourself, your sourcing agent will be acting as a third-party to give your suggestions and his evaluations to help you make the decisions.It sounds tedious and complicated, but your company must have enough staff to tackle over this and the benefit is you are able to change or cancel your sourcing agent if they don't perform well or by the time your suppliers work well with no neccessaries to continue a contract and payment with a sourcing agent.
However, if you are a small or medium sized construction company, architecture company or real estate developer or an individual house builders, sometimes you don't have the time and energy to check all the files of all different factories and products, you may feel upset doing this tedious works instead of applying to a one-stop shop that can give you more precise options that is suitable to your own projects or your countries, and at the same time, goods you buy from a one-stop shop can be more uniformed, they will more likely be seemed as a whole suite for your house or apartment. There are a lot of good choice for One-Stop shops of furniture, sanitary ware and building materials. I would like to recommend you, Builder Union Group which is one of the leading one-stop supplier in this field and they also have their own factories in most of the furniture and sanitary ware industries.
Now lets talk about more on the sourcing agent of procurement agent. Which can help a new buyer know more about how to start his purchase by using a sourcing agent.
The Sourcing Agent or Procurement Agent is a freelancer, or part of a larger organisation, arranging various aspects of the trade between China and the buyers around the world. There is no set standard for what exactly a Procurement Agent shall do. For the sake of clarification, I list a few examples below:
However, don’t expect to find an existing Procurement and Purchasing Agency for every single niche product out there. And, even when you do, it’s up to you to communicate your quality requirements and product specs – to properly educate your agency.
Some Procurement agents combine two or more revenue models. For example, they may charge a commission based on the order value, while charging you for additional services, such as Quality Inspections and Supplier Sourcing. Many also receive kickbacks from the suppliers, as an alternative side income. This may, however, come down to individual employees of the agency, rather than kickbacks as a company policy.
As a professional sourcing agent in the construction and building region for up to 8 years, I have to say, the answer is, it depends.
If you are a large-scale construction company or real estate developer, that you need the items consequently and in large quantity, using a sourcing agent should be better. Because sourcing agent will give you several options with name of factories, their locations, contact persons, and you can contact the factory all by yourself, your sourcing agent will be acting as a third-party to give your suggestions and his evaluations to help you make the decisions.It sounds tedious and complicated, but your company must have enough staff to tackle over this and the benefit is you are able to change or cancel your sourcing agent if they don't perform well or by the time your suppliers work well with no neccessaries to continue a contract and payment with a sourcing agent.
However, if you are a small or medium sized construction company, architecture company or real estate developer or an individual house builders, sometimes you don't have the time and energy to check all the files of all different factories and products, you may feel upset doing this tedious works instead of applying to a one-stop shop that can give you more precise options that is suitable to your own projects or your countries, and at the same time, goods you buy from a one-stop shop can be more uniformed, they will more likely be seemed as a whole suite for your house or apartment. There are a lot of good choice for One-Stop shops of furniture, sanitary ware and building materials. I would like to recommend you, Builder Union Group which is one of the leading one-stop supplier in this field and they also have their own factories in most of the furniture and sanitary ware industries.
Now lets talk about more on the sourcing agent of procurement agent. Which can help a new buyer know more about how to start his purchase by using a sourcing agent.
The Sourcing Agent or Procurement Agent is a freelancer, or part of a larger organisation, arranging various aspects of the trade between China and the buyers around the world. There is no set standard for what exactly a Procurement Agent shall do. For the sake of clarification, I list a few examples below:
- Supplier Identification & Price Research
- Sample & Prototype Development
- Quality Assurance & Quality Inspections
- Social Compliance Audits
- Product Compliance Consulting & Product Testing
- Shipping & Logistics
- Customs Procedures & VAT
Evaluating a Procurement and Purchasing Agency in China
a. Product Expertise
Knowledge about a product and industry is a decisive factor. First, and an insider has a much more comprehensive product expertise, which is required to understand what makes good quality (and price) for a certain product. Second, this may also speed up supplier sourcing and vetting procedures, as they can utilize an existing network of suppliers.However, don’t expect to find an existing Procurement and Purchasing Agency for every single niche product out there. And, even when you do, it’s up to you to communicate your quality requirements and product specs – to properly educate your agency.
b. Offered Services
There is no set standard for what exactly a China-based Procurement and Purchasing Agency should offer. let’s dig deeper into what various Procurement and Purchasing Agencies actually offer:| Service | Description |
|---|---|
Supplier Identification
& Price Research
| Supplier sourcing is the foundation of any Procurement and Purchasing Agency, unless they are working with an existing supplier network. However, the methods used to select suppliers varies greatly. While some agents base their selection entirely on relationships, kickbacks and low prices, others have sophisticated methods of identifying suppliers. |
| Design Capabilities | Some agents act as commodity traders, while others are specialized in developing custom designed products. Each one of these have their places, and shall not be handed projects for which they aren’t qualified. |
| Quality Inspections | Some Purchasing Agencies have in house Quality Inspectors, while others subcontract this to a specialized Quality Assurance agency. In most cases, it makes sense to find your own QC partner, as this is not only more cost efficient, but also more secure. Specialized Quality Inspection firms tend to operate according to international evaluation protocols, for example AQL. In addition, they also have local offices all over China, thereby reducing travel expenses and speeds up the process. |
| Product Compliance & Testing | This one ties in directly to Product Expertise, so read the following closely: There is not a single individual, or even company, in this world, that possess the expertise and experience needed to ensure compliance with all regulations, in all markets, for all products. At best, a Procurement Agency may have relevant experience in their field, but most may not even have basic knowledge. Product Compliance is such a complex area in itself that you shouldn’t even expect your agency to know what is required. You’ll need to find a specialized, probably local, partner for this. |
| Shipping & Logistics | Purchasing Agencies normally have partnerships with freight forwarders, which can help you to manage shipping from point A to B. You also may use a local partner that is what you prefer. |
| Customs Procedures, Import Taxes & VAT | The Customs Clearance and Tax Declaration is normally not managed by the Procurement Agent. Instead, this is within the service scope of most Freight Forwarders. However, some Purchasing Agencies have subsidiaries in their target markets, helping their clients to manage this part of their business. |
c. Procedures
Finding a supplier isn’t hard. You can just go on Alibaba.com or Globalsources.com and you’ll have millions of options right in front of you. However, identifying industry leading, and in relative terms, reliable, suppliers is a whole different thing. Let’s make a broad comparison between different types of Procurement Agencies:| Type | Description |
|---|---|
| Relationship Based Supplier Selection | This is the sort of agency you don’t want to work with. Instead of selecting a supplier based on their product expertise and compliance and manufacturing capabilities, this type of agent choose suppliers based on recommendations from relatives, friends or the size of the kickback they can get. This sort of agency rarely have any operational protocols whatsoever. Stay away. |
| Method Based Supplier Selection |
A proper supplier selection shall be based on customers specific needs. This requires that the agent understands the products technical specifications, and how a supplier’s ability to manufacture the product can be assessed. This requires a supplier assessment protocols that takes various data points into consideration. For example, the following:
– Product Compliance & Test Reports
– Company Data: Location, Registered Capital, Registered Business Scope
– Quality Management System: QMS Certificates and on site inspections
– CSR & Social Compliance
The agency shall be able to explain how they make this assessment, and provide documents outlining the details.
|
| Established Supplier Network | Many organisations don’t offer supplier sourcing and vetting as a service, but prefer to work within their existing network of suppliers. This has many benefits, but only works if your product is covered. However, for good reasons, these agencies may be reluctant to share information about their suppliers. |
d. Revenue Model
There’s more than one way for a Procurement and Purchasing Agency to make money. While many importers assume that all agencies make their way by charging commissions based on the order value, that is not the case. Below follows an overview:| Revenue Model | Advantage | Disadvantage |
|---|---|---|
| Commission | Lower costs before the product starts. Maybe. | Gives the agent an incentive to focus on large volume orders of products that require little to none development, prior to production. Not suitable for OEM products. |
| Fixed Price | Suitable for customized products that takes time to develop before they are ready for mass production. As you pay a fixed service fee, the agent has no incentive to cut corners to speed up the process, or convince you to place large initial orders. | Higher costs upfront |
| Kickback | For you, none. | The agent selects a supplier willing to pay the biggest kickback, or bribe if you will. That’s all there is to say. |
Suggestions
| Phase | Our Recommendation |
|---|---|
| 1. Supplier & Price Research | Use a specialized Sourcing Agency or manage the process yourself. You must know which suppliers you’re going to work with, and on what merits they are selected. Vetting ten to twenty suppliers at once is a lot of work, so you better have a specialized partner for this. |
| 2. Prototype Development | You are the product expert. Submit specifications and communicate your quality requirements directly with the manufacturer. Otherwise, important details may be lost in translation. In addition, having a middleman between you and the supplier is not only risky, it’s also inefficient. |
| 3. Product Compliance, Certification and Testing |
a. Find a local, or China based, Compliance Consultant that can help you assess which regulations and labeling requirements apply to your products, in your market.
b. Submit reference samples to a China-based testing company, for example, Asiainspection or SGS.
|
| 4. Quality Assurance, Quality Control and Factory Inspections | Use a specialized Quality Assurance agency, for example, Sofest Limited. They can also help you with Social Compliance Audits and Factory Inspections. |
| 5. Shipping, Customs, Import Licenses and Taxes | Use a local Freight Forwarder, with a presence in China. It’s critical that they know local customs procedures and tax regulations. |
