Sourcing 101 Series Part 2 – Sourcing Agents

During our interview I was asking Martin series of questions about the nature of his work and how he sees the role and the value brought about by a sourcing agent today.
 
E. So essentially hiring a sourcing agent means partial outsourcing of multiple functions in sourcing and supply management?
M.B.: It certainly is true in my case in the industries I am involved with.
 
E. How important is to know local languages, culture, traditions?
M.B.: You are talking about the ability to communicate as a major factor in any trade relationships. It becomes especially true when dealing with different cultures.
  • Ability to communicate in business language to both clients and suppliers. Not all vendors or suppliers understand how purchasing organizations think and vice versa. They often times need a middle to communicate effectively.
     
  • Culture is the single most common reason for western businesses failures in trading with Asian producers. Here is a simple anecdote - someone from Asia recently sent an email to their potential customer with S.P.A.M. for a title. What serious western business will even get to see such email? Here is another example. Some years ago I was dealing with a Japanese customer who was complaining about product quality from a company I was working for. We spent days trying to understand and address the problem while the customer kept on complaining. The customer was indeed sending us feedback that we simply could not understand due to the cultural barriers. We hired a cultural expert that explained the issue - we did not apologize. No matter what we did factually, not having apologized was the root cause of the relationship issue. 
 
E. How important for a sourcing agent to have established relationships with suppliers?
M.B.: It is very important, especially with the time pressure being on.  But sourcing agent cannot and should not become biased.  There has to be a balance in sourcing agent – supplier relations that cannot be tipped. Otherwise you will see it very quickly in the price lists and quotes, which will not be good for customers.
 
E. What are the typical projects for which customers hire sourcing agents?
M.B.: Recently these are almost always based on target cost reduction for specific parts or components. You can see the market pressure built by the crisis. Another major aspect often disregarded by product designers is switching from small quantities to mass production. It required totally different approach to sourcing. For example, in small quantities having a product or component machined makes a lot of sense. But in larger quantities switching to metal injection could lower the price per part significantly. 
Valery Zelixon
Comments: 0; Published: November 27, 2009; Permalink
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