When Does Product Sourcing become ideal for an Organisation?

A lot of companies outsource services for a host of benefits, and product sourcing works on similar grounds as that of sourcing customer service as well as operations. Product sourcing is much like outsourcing, but what is being procured from overseas is a product or products manufactured by partnered wholesale companies.

 

How this works is that the parent company, usually with the help of hired agents and procurement specialists, narrows down appropriate manufacturers or suppliers, and hands over the control of their product line to them.

 

By placing an order with manufacturers based in a low-cost market like China, they can later offer the imported product line attained at conserved costs and time, to efficiently sell to their client base. In addition, companies also turn to China sourcing for the raw materials and equipment they require for business operations or manufacturing finished products.

 

The following points shed light on when an organization is ideally ready to venture into product sourcing:

 

When the Product Requires Expertise

 

Certain products require expertise to develop, and chances are that not every member of the organization has what it takes to deliver. Outsourcing the procurement of these products to a China sourcing agent or company, who can locate manufacturers with the required expertise, then becomes necessary.

 

When there are Lack of Resources to Meet the Product Requirement

 

Product development has numerous stages, and each stage involves the use of certain resources in order to complete work on the development of the product in question. Sourcing from manufacturers equipped with the resources to handle this is a valuable solution to the problem.

 

When Manufacturing the Product is Highly Expensive

 

Organizations can save tremendously on their overhead costs by outsourcing their product development to wholesale manufacturers, and hire a sourcing specialist to find the right fit. This specifically helps in order to eliminate extra spend when products are highly expensive to manufacture in-house.

 

When the Organization is Aiming to Offer Something Unique to their Clients

 

When organizations are looking to offer something unique to their clients, e.g. authentic Chinese crafts or one-of-a-kind furniture, then turning to sourcing agents in China could be just the medicine they need. Since procurement agents have the contacts and know-how of the local market, they can locate the unique offerings.

 

Why Do Organizations Outsource Procurement?

 

The following are the main reasons why organizations choose to hire a sourcing agent:

 

Lower Operational and Labor Costs

By outsourcing product procurement, an organization can drastically lower its operational and labour costs. This not only helps save time and money but also focuses the company’s energy on other departments that require attention.

 

Leverage Global Edge

Different markets all over the world offer all kinds of products, and incorporating the skills to find them is tough for organizations that lack the expertise. Sourcing specialists enable them to offer to their markets what’s available in another part of the world.

 

Extend Reach to New Markets

Outsourcing products through sourcing agents in different parts of the world help to develop connections and extend reach to different markets. E.g. through China sourcing agents, a foreign organization can establish its name in China, with huge potential for development.

 

Conserve Resources

Whether an organization is large or small, it values its resources. Organizations are constantly trying new means to utilize resources to the best of their abilities. Sourcing cost-effective products is a great way to conserve resources at hand and offer up a wider range of clients, no matter how small the team.


Shruti Agarwal

Shruti Agrawal is the Managing Director of Excella Global. Her electronics engineering background encourages her to be on the lookout for ways to challenge and disrupt business models to make them better. She has a keen eye for architecture and design paired with the ability of recognizing trends that work, which allows her to put forward value for her readers in the content she creates. Her experience in the procurement and sourcing industry only adds to this.

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