With globalization demolishing trade boundaries, every company has to attempt to deliver at lower prices and with better quality and consistency. With sourcing initiatives that are fine-tuned to the requirements of a specific company, it is possible to save anywhere up to 20% and also build stronger relationships with suppliers for achieving better quality control.It can be extremely challenging even for companies with a global footprint to really understand the ever-changing dynamics of local procurement and supply chain management that will enable them attain the desired competitive edge. Hence, the coming into existence of sourcing companies who undertake to identify cost-effective local sources, develop new competencies, streamline supply-chain management, improve cross-functional collaboration, and build supplier relationships that are more productive.
Identify Local Suppliers
One of the key tasks mandated to a China sourcing company by their clients is to locate sources of quality materials at prices that are substantially lower. Often this task is made complicated by issues such as consistency of quality and availability, and logistics. The raw material procurement will also need to move in tandem with the projected demand that may fluctuate quite substantially due to market conditions. The brand equity of certain suppliers also needs to be factored in as any premium paid for such supplies may be well worth it in the perception of customers.
Cultivate Supplier Relationships
Strategic sourcing involves far more than a global hunt for the cheapest materials. Sourcing companies make it a point to cultivate long-term and positive relationships with key suppliers to enable their clients get multiple benefits. These include product-customization, just-in-time deliveries, cost and quality-control. Many ethical companies have been able to make a substantial difference to the local environments from where they source their goods and raw materials. These close relationships with suppliers also enable companies to create positive images about themselves. In fact, the modern customer expects companies to play a positive role in improving the economic and social environments of their suppliers and help stop any sort of commercial exploitation.
Examining New Possibilities
It is quite natural that companies become somewhat myopic about the processes they use for sourcing their inputs. Induction of professional sourcing companies that are domain experts often serves to open up new vistas on the subject. Since these companies are working with a number of clients, they end up accumulating a lot of knowledge on problem-solving as well as reworking sourcing strategies to meet client requirements. Constant exposure to the changing dynamics of global sourcing enables these companies to suggest completely new perspectives and techniques of improving parameters governing cost, quantity, quality and logistics. Being neutral, they are often in a better position to identify bottlenecks and suggest alternate routes that might actually improve delivery.
Adding Scalability to Operations
One of the fundamental advantages of sourcing goods, services, and materials from third-parties is that companies are freed from the responsibility of having to do everything by themselves. Using independent supplier companies allows them to build capacities more effectively as precious capital is now free for other vital activities that address the sales and marketing issues. Since it is now possible for companies to project their demands quite accurately well in advance, they can instruct their suppliers to increase or reduce supplies as per demand without such dynamics affecting their owned operations. Such scalability of operations means that the company is able to address market requirements far more nimbly.