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Written by Ray Jia
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Saturday, 06 March 2010 23:05 |
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For many reasons, a traditional middleman or agent would like to hide the sources from the buyer. This is the cause for many frustration around China sourcing: mistakes, misinterpretation, delay in responding, being stuck, losing negotiation power, not being able to bring about continuous improvements, the developed sources gone with the agents...
- Keeping the buyer away from the supplier so that the buyer won't skip purchasing through the agent. Well that means, the agent does not believe he/she can add value to the supply.
- The agent has deals with both sides and doesn't won't the buyer and the source talk.
- The agent takes advantage of the trust from the buyer, and only select the supplier that offer good terms for himself/herself. He/she is afraid to expose the source, to the buyer, which is not as capable as a competitive one would have been.
In all cases mentioned above, the agent isn't acting on behalf of the buyer as an agent should be. he/she represents his/her own interests or the seller's interests. That means his/her benefits are less aligned with the buyer who employs him/her than with the other side.
Sourcing companies that offer transparent sourcing services represents the buyer's interests and are only aligned with the buyer's benefits. Following are the advantages of this approach.
- Communication is much more efficient as the buyer talks directly to the source.
- Direct relation helps individual product developments.
- The buyer and the source can work together to identify improvement opportunities, which would be possible in the other case.
- The buyer and the agent can work together to strategically manage the suppliers for the best benefits of both parties.
- Competitive suppliers are selected instead of the suppliers who offer the best deals for the agent.
- Issues are solved much faster than the case where there's an barrier.
- The developed supplier relationships become very valueable assests for the buyer.
When you are selecting a sourcing partner to work with, make sure you understand from them how they are supposed to expose the sources to you and what are the business relationship between the agent and the suppliers. Only trust specific facts but not over promising "no problems".
- Will you provide the contacts of the suppliers?
- Will you recommend switching the suppliers when it is determined that there's better ones out there?
- Am I allowed to talk directly with the suppliers?
- Do you receive any commission from the supplier? Ask the agent to sign an agreement on this important point.
- How many suppliers do you contact for a typical projects? Do I have access to the process documentations? Can I be involved if I choose to? Can I audit the process if I require?
Even if these questions are answered perfectly, you still need to continuously monitor and evaluate the true relationship set up among that parties and see if the model is deviating from what is supposed to be.
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Last Updated on Monday, 24 May 2010 00:19 |