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Zhejiang ShiningHub Co., Ltd.
Zhejiang ShiningHub Co., Ltd.

What is a Sourcing Company and How is it Connected to Diversified Sourcing

What is a sourcing company


A sourcing company generally refers to a company engaged in the procurement of goods, which, with a certain budget, purchases goods or services externally under the principles of legality, openness, fairness, and transparency to meet the needs of government or business operations.


The main responsibility of a sourcing company is to find and select suitable suppliers to ensure that the quality, price, delivery time, etc. of the purchased goods or services meet customer needs. They usually use the internet or other modern technologies to simplify the procurement process and improve procurement efficiency.


TradeAider's WeContract service is an exceptional turnkey contract "sole agent" service in the form of a strategic alliance. Through WeContract Service, TradeAider can help buyers achieve the sourcing goal of cost reduction, quality enhancement and margin expansion effectively in two ways: a) make the best use of the over 95% factories which do not have chance to have direct business with buyers BUT have good capacity, lower prices, wider product ranges, hard working workers and can also be more cooperative; b) give full play to TradeAider's advantages of the cost-effective vast network of 80,000 quality control and product development specialists worldwide and the efficient digital system of the supply chain management. All these innovative measures not only lead to the internal cost saving within TradeAider but also result in bringing the most competitive products to buyers. In the event of any issues, TradeAider assumes full responsibility.


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What is diversified sourcing


Diversified sourcing refers to the practice of a company using multiple sourcing strategies to purchase goods or services from various suppliers or regions during the procurement process, achieving optimization of the supply chain and diversification of risks.


The diversified sourcing approach allows companies to reduce their dependence on a single supplier or region, enhancing the flexibility and stability of their own supply chain.


The connection between the two


The relationship between the sourcing company and diversified sourcing is mainly reflected in the sourcing methods and sourcing processes.


1. Sourcing method

Sourcing companies usually adopt the method of diversified sourcing, by seeking multiple suppliers, comparing prices, quality, delivery time, etc., to choose the most suitable supplier.

This procurement method helps the sourcing company to obtain better purchasing conditions and reduce procurement costs.


2. Sourcing Process

In the process of diversified sourcing, the sourcing company needs to communicate and negotiate with multiple suppliers to ensure that the purchased goods or services meet the needs of the enterprise.


The sourcing company also needs to evaluate and monitor the suppliers to ensure the stability and reliability of the supply chain. These processes require the sourcing company to have professional sourcing knowledge and experience.


For example


Assuming a large manufacturing company needs to source a batch of raw materials, in order to reduce sourcing costs and spread risks, the company chooses a professional sourcing company to conduct diversified sourcing. The sourcing company first collected information from multiple potential suppliers through the internet and other channels, and then conducted preliminary communication and negotiation with these suppliers. After comparing the suppliers' quotations, quality, delivery time, and other factors, the sourcing company selected several most suitable suppliers for cooperation. During the cooperation, the sourcing company also conducted regular assessments and monitoring of the suppliers to ensure the stability and reliability of the supply chain. Through this diversified sourcing approach, the large manufacturing company reduced sourcing costs and improved the flexibility and stability of the supply chain.


The advantages of a sourcing company


The advantages of the sourcing company in diversified sourcing are mainly reflected in the following aspects:


1. Rich resources and extensive market coverage

Sourcing companies usually have extensive market resources and supplier networks, able to cover multiple regions and industries worldwide. This allows them to easily find diversified suppliers that meet the needs of the enterprise, ensuring the flexibility and diversity of procurement.


2. Professional supplier evaluation and selection

The sourcing company has professional supplier evaluation capabilities, able to comprehensively assess suppliers from multiple dimensions (such as quality, price, delivery time, service, etc.). Through a scientific evaluation system, the sourcing company can select the most suitable suppliers to ensure the quality and cost-effectiveness of the purchased goods or services.


3. Negotiation ability and cost optimization

Sourcing companies usually have rich negotiation experience and skills, and can effectively communicate and negotiate with suppliers. Through negotiation, sourcing companies can obtain more favorable prices and more advantageous contract terms for the enterprise, reducing procurement costs.


4. Risk management and diversification

Diversified sourcing helps reduce dependence on a single supplier or region, reducing the risk of supply chain disruption. Sourcing companies can adjust their sourcing strategies in a timely manner according to market changes and supplier performance, ensuring the stability and reliability of the supply chain.


5. Sourcing process optimization and efficiency improvement

Sourcing companies usually have efficient procurement processes and advanced procurement management systems, which can achieve automated processing and tracking of purchase orders. This helps to improve procurement efficiency, shorten the procurement cycle, and meet the urgent needs of enterprises.


6. Legal and compliance assurance

When the sourcing company conducts procurement globally, it can fully understand and comply with the laws, regulations, and trade policies of various countries. This helps ensure the legality and compliance of the procurement activities, reducing the risks faced by the company due to non-compliant operations.


7. Market intelligence collection and analysis

Sourcing companies can collect and analyze the latest trends, price trends and other information in the global market, providing strong support for companies to formulate sourcing strategies. This helps companies seize market opportunities, reduce sourcing costs, and improve market competitiveness.


Sourcing companies play a crucial role in diversified sourcing, possessing a wealth of resources, professional evaluation skills, negotiation skills, risk management capabilities, process optimization capabilities, legal compliance assurance, and market intelligence collection and analysis. These advantages help companies achieve their procurement goals, reduce procurement costs, and improve the stability and reliability of the supply chain. They use their professional procurement knowledge and experience to help companies achieve their procurement goals, reduce procurement costs, and enhance the flexibility and stability of the supply chain.