China Sourcing Agents: Past, Present & Future – Part Two
July 13, 2018
In our previous blog, China sourcing agents: Past, Present & Future – Part One,we discussed the role of sourcing agents and how they were defined in the past. The role of agents is an ongoing concern and we have written about it in a previous blog series here.
Today, we jump to the present. Some people think agents are not absolutely necessary to control one’s supply chain. But in reality the need for control over the supply chain, if anything, has increased. In this blog, we’ll discuss how the role of the agent has changed and why sourcing agents are still essential in today’s world.
Management and technology
First, let’s look at management. The buyer’s burden is not just to buy, it is also to manage his supply chain. Generally, sourcing agents don’t contribute much to management, they tend to be implementers. However, technology now makes it possible for buyers in the USA (or Europe) to closely monitor the manufacturer in real time. Companies like Assembly facilitate this process. In this way, buyers can instruct their sourcing agents how to act, aided by real time video monitoring of products being made. This helps to avoid, and possibly eliminate, some control issues for the buyer. But with any pro, there is a con: access to real time knowledge of what is going on takes time. And most of it occurs after hours. Most buyers do not want to be inspecting the production of their widgets in the middle of the night. Delegating that responsibility is important. This requires a human touch, using clear and prompt communications, and paying attention to details, procedures and processes.
We all know that many products “made in China” are assembled from components that sometimes come from far away. China assembly of the Apple iPhone, for example, represents only 3% to 6% of the manufacturing cost. Components come from Taiwan, South Korea, the USA and Europe. A good agent understands this and knows to look for cost effective solutions way beyond the local area he lives in. But most agents today are still focused on their local factories. For example, a huge number of shoes are still made in Guangdong, but, increasingly, they are also produced in Chengdu and agents are often reluctant to take the initiative to go there. Good agents have learned to broaden their horizons, offering a nation-wide vision and benchmarking of factories across China and even including other regions such as Vietnam and Bangladesh. As they branch out to new areas, their services are becoming more complex: Quality assurance, for one, is a highly specialized field that requires good cultural knowledge of the local manufacturing environment. It is still harder for a Chinese agent to get things done in Pakistan than it is in Dongguan. On the other hand, it is easier for agents to use logistics specialists to fill the need for efficient shipping and consolidation.
Corporate Social Responsibility (CSR):We discussed CSR in a previous blog, 3 Things Your China Supply Chain Needs to Focus On. In the old days, many importers did not care if the rubber boots they bought came from prison factories, as long as the price was good and the quality was reliable. They did not spend much time to investigate whether the factory was a polluter or whether they hired underage workers. But, in today’s world of instant information, buyers must buy responsibly or their customers will shun them. This adds an additional layer of service and responsibility for the agent: prequalifying and auditing factories.
Finding and keeping a good China sourcing agent is still an essential part of managing the China supply chain. But for those who care about excellence, optimal pricing, and who must have absolute control over quality, having one’s own sourcing team in place is still the best, most efficient and most reliable way to manage one’s supply chain.
In the next blog, we’ll discuss how future trends will affect the role of sourcing agents.
What has your experience been with sourcing agents recently? Share your thoughts with us in the comments below!
By Jocelyn Trigueros