Pros and Cons of Working with a Sourcing Company

As the world economy shifts and changes, more and more companies are seeking to outsource their production centers to overseas environments to improve revenue generation and overall company productivity. This is not something only large companies are doing – even small businesses around the world are becoming involved in globalization trends. When deciding whether or not to work with the sourcing company or go directly to a factory to purchase your goods there are many different things that
need to be considered, including:

  • Costs
  • Quality Control
  • Logistics Management

Costs

One of the primary concerns for companies, costs can play a major factor in deciding whether or not to commit to an action. When considering whether or not to go through a sourcing company or go directly to the factory, going factory direct can actually save the company a large amount of money in fees that would normally paid to a sourcing company for its services.   On the other hand, if a company is not willing to go through a sourcing company it must also invest in other areas to ensure that the goods that it purchases from the factory are adequate for its needs, as well as that the goods can properly be transported from the factory to the company. This can include factors such as quality control, logistics and ensuring the reliability of the shipment reaching its final destination.

Quality Control

One of the most important factors when purchasing goods from a factory, quality control can be key to ensuring that adequate products that are to the standards of the purchasing company are produced. This can particularly be an issue when working with unknown production facilities or if a company is just starting to expand to overseas areas and outsourcing its production. Should a company be willing to invest in a quality control specialist this would not be a major issue. Finding a qualified quality control specialist, however, that is localized in the area the company is seeking to produce its goods in can be a very difficult prospect.  Generally this is a much more viable option for larger companies, however smaller companies can utilize third-party providers such as sourcing companies to assist them in ensuring the quality of the products they wish to purchase. Without an experienced and qualified quality control specialist the final product purchased from a factory may not be adequate for the purchasing company’s needs.

Logistics

Once a product quality has been assured, the next major step in obtaining a product from the factory will be in securing proper transport for the product from production facility to the purchaser. This can be especially difficult if a product must pass through customs regulations as most products produced overseas do.  Many difficulties that companies face include specific quotas imposed upon the product by the government, regulations prohibiting certain products entering into a country, specific treatments or production methods certifying the product’s safety, certifications attesting to the product’s quality or value or a number of other regulations.  Sourcing companies can help assist with the filing of all proper forms and with the hiring of a trustworthy and reliable shipping company to deliver the products to the final destination without delays or loss of product.

While it may be true that sourcing companies do have an additional cost to the purchaser to use their services, if a company is not willing to invest resources in a foreign country to monitor and control its outsourced production a sourcing company will most likely be a better solution and can help protect the interests of the purchaser.

Written by Alexander Grimes

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Written by Alexander