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THE SOURCE CODE BLOG

The amount of money involved in today’s product sourcing environment is so great that you’ll find just about anybody will (and does) offer their services in hopes of making a quick dollar.

While the identification of middlemen is easy, the point of this article is hash out what your money buys you depending on the middleman you choose.   

For starters there are two main groups of intermediaries: Western and Chinese. As with any industry, within those two groups are companies displaying varying levels of service, competency and operational excellence. 

We’ll start with the basic level, connectors. Found in both western and Chinese groups these companies simply play match maker. Western connectors may try to dress up their services by stating claims like “they leverage their overall buying power to provide the best price and quality through their pre-qualified supplier base”. However in the end they’re simply connecting a buyer and seller and taking a commission for doing so. Additionally they take no responsibility for the quality of the products provided. Chinese connectors are very similar to their western counterparts even presenting themselves, at times, as owners of the factories. Again the reality being they’re outside sales agencies receiving commissions for connecting buyers and sellers, assuming no other responsibilities.

Next you’ll find the lone ranger types or in other words the pure salesmen. Mostly found in the west. These are individuals who have spent significant time in a specific industry as a global purchaser and have now broken off on their own. Through their past contacts and negotiation skills they’re able to service a handful of clients and provide competitive prices with good quality products. They’re typically limited to one industry segment or product category and have no organization behind them to help if something goes wrong. While product quality is mostly consistent, they focus completely on servicing their business with little attention paid to operational improvements. Additionally there is usually a short-term business focus as these individuals are at the end of their carrier with retirement insight.        

Lastly we have full service sourcing organizations. Found both in Western and Chinese circles, companies within this group focus on the buyer experience and offer a diverse range of services and industry specialties. Normally transparent where their margin lies, they provide legitimate value to supply chains through a varying mix of: logistics, project management, product development, quality inspections/handling, order management, sourcing and R&D services. Typically operating across multiple product categories and industry segments, they deliver customers an optimal mix of price, product quality, delivery terms and communication for their specific business requirements.

It is my believe that middlemen can provide value to most supply chains, however it’s incumbent on the purchaser to layout their expectations and choose the appropriate intermediary for their organizational requirements.  

That’s it for today. Stay tuned for the next weeks post.

(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)

 

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