Services

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What is product sourcing? 

In business, the term refers to a number of procurement practices, aimed at finding, evaluating, and engaging suppliers of products. So, what exactly are these practices? 

 Sourcing Starts With an Agent and an Agenda 

What does a sourcing agent do? A sourcing agent assists companies with the process of locating sources for products and supplies at competitive prices and quality levels appropriate to the clients needs

Good sourcing agents have connections with globally dominant and niche product companies and know where to find the right supplies. They can negotiate with a prospective supplier and will be able to negotiate discounts and value add services that the client company does not have time or resource  to negotiate on its own. This can save the company time and money and may also create a longstanding and valuable contract for the supplier, so both sides have an incentive to work with a sourcing agent.

Key advantages of sourcing agents include:

 •  Higher control of manufacturing quality.

 •  Easier communication with a single point of contact.

 •  Standardized verification of reputable manufacturers

 •  Faster time to market 

 •  High intellectual property right protection

 •  Greater payment security and recourse

So, when starting the sourcing process, it’s essential that you firstly define what it is that you are looking for. When working with a sourcing agent, you need to know what type of supplier you want to work with. Having a clear direction will help in your research so that you’re able to find the right supplier. It’s also important to know what you should ask your supplier once you’ve found them. Does the supplier have a the right products? Are their prices within budget parameters? Specifications need to be initially set to ensure you’ll get the product you want – made by the right manufacturer that will arrive to the end user appropriately.

When working with a supplier, you should establish a clear joint commitment that includes:

 •  Identifying the best solutions.

 •  Upholding quality and efficiency.

 •  A unified approach – essential for delivering premium end-to-end solutions

 •  Rapid adoption of evolving technologies.

 •  Access to new distribution channels.

 •  A supplier engagement process

 1.  Make/Design/Buy Analysis

First, you must analyze the following: 

  •  Establish business cases to support decisions for products and services.

  •  Analyze potential solution options

  •  Manage the preliminary buy assignment and ensure it is understood and accepted

  •  Structure and analyze information and input data

  •  Prepare sourcing activities

2.  RFX

RFX is a catch-all term in strategic sourcing that captures all references to Request for Information (RFI), Request for Proposal (RFP), Request for Quote (RFQ), and Request for Bid (RFB). 

In this step, you will:

 •  Manage requests for information, proposal, and quotation

 •  Negotiate

 •  Achieve signed agreements with suppliers that fulfill your business requirements.

 •  Implement agreements.

 •  Register, archive, and communicate agreement data to relevant systems, stakeholders, and users 

 3. Contract and Purchasing Operations

Next is the "call off", when you:

  •  Create orders to buy products or services

  •  Monitor delivery

  •  Post a goods receipt

  •  Submit a claim to supplier

4.  Invoice to Payment

In this step, you will:

 •  Receive invoices manually or via electronic data exchange

 •  Process invoices and credit notes, including matching invoices with purchase orders  and securing authorizations

 •  Pay supplier invoices

 •  Handle statement of accounts, reminders, and supplier account reconciliation

5.  Manage Production and Quality

Production management focuses on upholding quality. Quality needs to be defined so that both the supplier and buyer understand and are in agreement. Defective products lead to unhappy customers,  A key part of an efficient supply chain is having a quality product all the way through it.

After you’ve established what you want, devised a plan, figured out the logistics, and maintained quality management, you’ll have properly sourced with your customers’ best interests in mind!