What is a Sourcing Agent (Procurement Agent)?

Estimated reading time: 12 minutes

Something quite clear is that Global sourcing agents are vital in procurement and supply chain management for international purchasing and production.

In this article, we will explore what a sourcing agent is and How they connect various businesses offering products and materials with suppliers.

What is a Sourcing Agent? – Get it at a glance

A sourcing agent is supposed to help companies be in contact with reliable suppliers at the best price for a product or commodity. Their service offerings may often include everything from the following necessary services:

• Quality Control: Products are checked if their quality meets the standards specified and if they will also meet the expectations of the buyer.
• Contract Negotiation: Writing clear contracts with clear expectations of what is to be delivered and penalty clauses so that everybody is held accountable.
• Cost Optimisation: This helps give overall cost reduction through better management of production costs, logistics, tariffs, and other possible risks.
• Product customization: This allows one to come up with a new product or modify an existing product based on individual needs.
• Prototyping Support: Assist in designing and developing different prototypes while ensuring products meet functionality and design specifications.

Here are some important things to think about:

• What the sourcing agent can do: Make sure that the sourcing agent should be able to physically access the products.
  This includes aspects such as quality checks, conformity with certain standards as well checking for compliance with certain qualities that you need in your product. They should also be able to identify quality suppliers, look for a possibility to negotiate lower prices, and organize shipment.
• Where the sourcing agent works: You should select the sourcing agent from the country where the manufacturing is going to take place. Such localization provides better monitoring and allows for quick response in case of an emergency or other unexpected situations.
• Is the sourcing agent trustworthy? Ensure that the sourcing agent is a legal one and that they are trustworthy and reliable. Search for accreditations, any references, and evidence of the effective working of the business.
• What you need from a sourcing agent: Find a sourcing agent who knows about your product. They can guide you through the particularities of certain industries and guarantee that the quality and price will be ideal.
• Not all sourcing agents are perfect: In any given supply chain, it is crucial to consider the evaluation of various sourcing agents. You can evaluate their services, price ranges, and client ratings to decide which one will suit you best.
• You can do it yourself: However, if you’re experienced and have your supply base already established, you may not require the services of a sourcing agent.
• Hire a local sourcing agent: Since it is common to source from China, it would be an added advantage to work with a China Sourcing agent. They possess knowledge of the language, culture, and geographical environment of a country, which may help them in the identification of viable sources which may lead to sourcing of products at lower costs and efficient management of logistics related to shipment.
• How much does a sourcing agent cost? Understand their fee structure, usually a percentage of the transaction.

Sourcing agents often referred to as purchasing agents, buying agents, or export agents, these professionals handle every aspect of the sourcing process.

What is a Sourcing Agent?

As I mentioned earlier, sourcing agents are companies that assist businesses in:

• Identifying suppliers
• Negotiating prices
• Processing orders
• Ensuring quality during the sourcing process

In addition to the above, some sourcing companies, like OwlSourcing, also offer extra services like shipping from China, custom packaging, and product design.

In the context of international buying, businesses hire sourcing agents to better understand their field, market, Trends in Chinese manufacturing, regulations, and logistics, thus lowering the risk of procurement.

Sourcing agents usually employ one of the following fee structures:

• On a commission dependent on the size of the order
• A fixed fee
• At times, certain services that are provided by specialists might cost money on an hourly basis

Therefore, it is highly advisable to define the fee structure from the very beginning of cooperation to avoid misunderstandings and problems with cost regulation.

Sourcing agents, like OwlSourcing, are vital partners in global procurement, offering services that simplify sourcing and ensure product quality from suppliers.

These agents assist businesses in locating suppliers, negotiating prices, managing orders, and quality-checking products.

Furthermore OwlSourcing offers logistic services which include shipping as well as product packaging and product design.

If you looking for customized services for China and Hong Kong can be obtained, for more details please contact us.

What Does a Sourcing Agent Do?

Widely, the agent provides learning to businesses and helps them in some way depending on their sourcing processes. Here are the primary responsibilities of a sourcing agent:

1. Supplier Identification and Evaluation

Sourcing agents are skilled in locating appropriate suppliers necessary to fulfill demands. This entails searching for potential suppliers by carrying out research and building relationships with them.

Once these suppliers are identified, sourcing agents follow this process to assess their suitability:

A) Assessing their ability in production

B) quality and productivity

C) their capability of delivering on their promise, and so on.

This step is very important because the supplier needs to be in a position to deliver goods that conform to these standards all the time.

In this evaluation process, factory audits are commonly performed where agents will go to the suppliers’ factories to ensure that they conform to industry standards and the client’s specifications.

2. Price Negotiation and Order Management

Price negotiation and order management are two different processes that are conducted on separate web pages.

One of their important responsibilities is often to obtain the most favorable prices and conditions of purchase from the suppliers. Its major goal is to ensure that cheaper prices are negotiated for the client, but the quality of the products is not affected.

After coming up with the agreement, sourcing agents are responsible for the ordering process of the contracts.

This ranges from the generation of purchase orders to tracking the various details of the suppliers to ensure that they are honored at the specified time.

During the production phase, sourcing agents follow up the procurement process and solve any hitches that may be encountered, for instance, delayed production or substandard goods.

3. Quality Control

Quality control is something that all sourcing agents are keen on achieving in their undertakings. To avoid providing the client with compromised products, they employ sound quality assurance measures.

This can involve a physical examination of the item before it is forwarded to the client, this way any imperfections can easily be noted and rectified eliminating chances of customers realizing they received a substandard product.

The consistency is achieved through the non-delivery of low-quality products which leads to improved customer satisfaction rates for the sourcing agent’s clients.

4. Additional Services

The majority of sourcing agents avail of other supplementary services that help in the general procurement.

The offered services can include managing the transport arrangements which entails that products should be delivered effectively and inexpensively.

Specialized packaging services can ensure that the packaging of the product best suits the clients’ branding and functionality They make the product appear more appealing to the market.

Also, some sourcing agents like OwlSourcing provide a product designing service through which clients help in designing or redesigning their products to fit into the market.

These additional services are a one-stop shop that offers for procurement thus increasing the efficiency and effectiveness of the process. 

If you are interested in these services, you can visit our Extra Services.

What Are the Benefits of Working with a Sourcing Agent?

Companies decide to seek the help of sourcing agents for many reasons. One of the main reasons is the ability to utilize the agents’ experience and familiarity with the material conditions, tendencies, and laws at the international and national levels, which sourcing agents generally have.

This knowledge shortens the duration of undertaking various processes while at the same time reducing the level of risk.

Particularly if the business is young or has not yet grown in terms of size, the factors of operating and purchasing costs receive higher attention.

Thus, it is not necessary to create an independent foreign company. However, it is crucial to choose the correct partner.

From this view, procurement agents can be helpful in optimally managing the local operations while, from the cost perspective, they are definitely more preferred.

Here is valuable information about the Benefits of Working with China Sourcing Agents.

Just like what OwlSourcing mentioned in the video: You can think of OwlSourcing as your branch in China. We will help you complete your sourcing tasks and improve your business.

A sourcing agent attempts to optimize the supply chain, focusing on minimizing the total cost by managing all production and shipping steps—raw materials, packaging, shipping, customs, and documentation.

It minimizes wastage, on the one hand, while also promoting sustainable relations with suppliers, on the other hand.

Do you need a sourcing agent?

It is completely depending on your business requirements. In other words, having a sourcing agent may not be cost-advantageous for companies dealing in low order quantity or simple products.

For instance, if a customer wants to source a small batch of items, such as 100 kitchen utensils, they might find an all-inclusive price from a supplier. Otherwise, additional shipping and agent fees may add costs without adding much value.

In such occurrences, buying directly from a distributor or supplier platform may be a better option.

I emphasize again, that this is particularly so for businesses in situations where they require small quantities with little variability and minimal customization.

Global Procurement Agent

Through my personal international procurement consulting work, I have come across cases where partnering with a local sourcing agent in China often builds invisible strains on profits.

Most local agents either focus on minimizing the costs of sourcing or ensuring timely delivery.

While those aspects are crucial, they may not necessarily cover everything essential for the ultimate good of profitability and strategic growth.

Limitations of Local Sourcing Agent

The problem often is that many of the local sourcing agents have very specialized focuses.

While their niche, regional, and industry-specific knowledge certainly brings value to customers desiring targeted sourcing solutions, it is often these agents who overlook broader aspects of the supply chain that can affect overall costs when considering profitability.

An agent may source an item cheaply but may forget to look into issues of logistics, customs, or quality checks that increase the cost afterward or even delay cutting profits.

Global Procurement Perspective

On the contrary, global procurement consultants have wide experience across regions and industries, bringing in a more holistic approach. A consultancy with global expertise understands how each segment of the supply chain-from supplier negotiations to end delivery profitability.

We look at optimization not just of sourcing costs but factors like logistics efficiency, regulatory compliance, and quality control that together contribute toward long-term savings and growth.

For example, on one project we collaborated with a client who, to achieve the lowest manufacturing cost, had involved a regional sourcing agent early in the process.

Although the strategy was successful in reducing some of the early costs, the total costs started to increase because of unforeseen delays in delivery, product inconsistency in quality, and higher freight.

With a global outlook, we reassessed their supply chain from end to end and helped them identify suppliers in various regions.

This maintained costs in balance, ensured good quality reliably, and reduced the delivery times, which in turn automatically improved their profit margins.

Selecting a procurement partner with global knowledge and expertise helps organizations visualize how different parts of their supply chain fit together best for maximum profit while reducing risk and supporting sustainable growth globally.

How to Find a Trustable Sourcing Agent?

Choosing the right sourcing agent is crucial, and several key factors should be considered in the selection process:

1. Communication:

Indeed, good communication is crucial because unfulfilled requirements most of the time result from a lack of communication.

Recruiting agents should be able to Negotiate cultural differences and be intelligible with the candidates and clerks who do not speak fluent English both in writing and/or spoken word.

It should be available on email, social networks, and video conferencing among other platforms.

Learn effective strategies on how to contact Chinese manufacturers and establish successful business relationships.

2. Professionalism:

Engage sourcing agents who work with a lot of professionalism in their work. This includes having possession of the correct training, experience, and organizational skills to be able to produce the right expertise on the service of a business.

Based on this, expertise when adopted in your procurement process should lead to the attainment of quality procurement results.

3. Reliability:

When you have found a dependable sourcing agent, then it is safe to assume that this resource will be able to deliver your expectations and stick to the schedule you had discussed.

They should be obedient and have the ability to keep to your instructions and seal a deal on the due time. It is right on the mark to say that engaging the right partner can be both time- and cost-saving.

Do you know how to find a reliable sourcing agent in China? Read “Top Ways to Find a Reliable Sourcing Agent in China” for guidance.

4. Efficiency and Responsiveness:

Organization efficiency refers to the capacity to undertake activities without applying so much energy or taking as much time as expected. A good sourcing agent will assist in managing tasks and ranking priorities hence avoiding time wastage.

Ideally, they should also be well conversant with using various tools that can also help in the achievement of the project objectives and should also be able to reply to your questions or requirements timeously.

5. Supply Chain Optimization:

For overseas buyers, who do not have their offices or employees in the sourcing country, sourcing agents become extremely important in managing the supplier chain.

This latter role entails features that could help them evaluate suppliers, acquire requisite resources, and also manage suppliers for overseas buyers.

These are valuable competencies in their application aiding the company to achieve purchasing efficiency within the supply chain.

OwlSourcing ensures that you receive the absolute best price for the quality and kind of products you are interested in.

When your business is ready to expand into the global markets, we are always ready to assist you during that colorful process.

We are ready to be of service so that your ideas turn into reality and all of your commodities hit the shelves.

Sourcing Agents vs. Buying Office

Distributor vs. Sourcing Agent

Sourcing Agent’s Role in Amazon FBA Sourcing

Amazon sourcing agents are perfect for businesses shipping directly from Chinese factories to Amazon, essential resources include third-party inspection for quality, a shipping agency for exports, and an FBA prep service for Amazon compliance.

Without clear coordination between buyer and manufacturer, logistics can become complex and costly.

Read More,

• Top Ways to Find a Reliable Sourcing Agent in China
• Benefits of Working with China Sourcing Agents
• China Sourcing Agent Fees – How much do sourcing agents typically charge?
• How to Source Products From China

Final Thoughts

According to the degree of globalization and the progress over time, more international trade activities are being conducted in various parts of the world.

This has given concern to many small and medium enterprises that aim to venture into the international market for the acquisition of resources and products.

It is especially critical in the initial years of business development to implement the measures aimed at cost decrease and efficient utilization of resources.

Depending on the current state of a particular company, which may not have Overseas Subsidiaries in a specific region and where more attention needs to be paid to costs and budgets, Sourcing Agents can prove to be the best option as far as the effective utilization of certain resources in a certain period of the year is concerned.

Finally, if you are seeking a sourcing agent, just contact us and we will get back to you within 24 hours. OwlSourcing was alongside you throughout the sourcing process.