In the modern business environment, procurement service providers have become increasingly important. However, many people are unclear about what they actually do and how they differ from sourcing agents when importing from China. This blog will address these commonly asked questions.
What are the key roles and target audience of procurement service providers?
The procurement service provider (PSP) is a third-party company offering procurement-related services to other businesses or entities.
PSPs offer support in the entire procurement process, including but not limited to procurement needs analysis, supply chain management, procurement strategy formulation, supplier evaluation and selection, contract management, etc. The key role of PSPs is to help client companies to streamline the procurement process, optimize costs, and ensure timely and efficient procurement of goods and services.
To put it simply, PSP service offerings are comprehensive and mainly serve large-scale businesses in all walks of life, such as Apple, Toyota, Siemens, Walmart, Coca-Cola, Nike, etc. Internationally renowned PSPs include Deloitte, McKinsey, IBM Global Business Services, KPMG, Bain & Company, GEP, etc.
Example
A global manufacturing company, XYZ, specializing in automotive components, recognizes the crucial role of procurement in cost control and supply chain management. They have hired a PSP to develop an overall procurement strategy. The PSP will work in the following ways:
Evaluate XYZ company’s current procurement processes, supplier relationships, and procurement costs. Conduct market research in the automotive manufacturing industry to understand the product range, brand options, price ranges, etc. offered by different suppliers. Identify potential risks in supplier selection, procurement contract management, and cost control, particularly concerning XYZ company.
Based on the assessment of the current situation, the PSP collaborates with XYZ company to establish clear objectives: reducing procurement costs, enhancing supply chain flexibility, and optimizing supplier partnerships.
Develop procurement strategies and specific measures:
PSP assists in evaluating XYZ company’s cooperative supplier’s delivery capabilities (lead time and inventory management), selecting high-quality suppliers, and establishing an evaluation and performance assessment system for long-term partnerships.
PSP utilizes its network to find cost-effective suppliers and negotiates favorable procurement prices on behalf of the XYZ company. Also, PSP helps XYZ company establish a database of alternative suppliers to mitigate the risks of supplier closures or disruptions in the supply chain.
Optimize logistics routes, consolidate transportation batches, and optimize warehouse layouts to reduce logistics and inventory costs.
PSP helps build a comprehensive e-procurement system to automate and standardize the procurement process, reducing manual errors and processing time, thereby improving procurement efficiency.
PSP provides professional contract management support, oversees supplier performance, and ensures compliance with contract terms to minimize potential legal and compliance risks.
As you can see, PSP provides market research, professional procurement advice, and specific implementation plans for XYZ company. This helps improve efficiency, reduce costs, enhance supply chain reliability, and drive sustainable development for the business.
Procurement service provider vs sourcing agent: what's the difference?
In essence, choosing PSP and sourcing agent services is to outsource your procurement. However, the two have differences in terms of service scope.
Sourcing agents typically focus on finding suitable suppliers and products for clients, including supplier selection, negotiation, contracting, order placement, and shipping. For example, if you want to import toys from China, you can hire a sourcing agent to help you find toy factories, negotiate prices, confirm samples, conduct quality inspections, and arrange shipments.
In comparison, procurement service providers offer more comprehensive and extensive services, focusing on overall procurement strategy and process optimization using digital platforms.
Strategic planning and strategic sourcing. This requires big-data analytics on the market along with long-term industry experience. So, it’s usually offered by big international consulting firms like Deloitte.
E-procurement software and intelligent supply chain management platform to improve efficiency. These are usually multinational technical consulting companies like GEP.
Oftentimes, general sourcing agents are unable to provide the 2 service types mentioned above.
Procurement service provider vs sourcing agent, which one to choose? Actually, it’s up to your business scale and procurement demand.
In practice, large businesses like Walmart choose PSPs for comprehensive services. SMEs (small & medium-sized enterprises) like small e-commerce sellers may find sourcing agents sufficient to meet their needs, particularly when sourcing and customizing products from China. These comprehensive procurement providers may not offer the same level of meticulousness in product development and customization as sourcing firms like JingSourcing.
Jingsourcing is your reliable China procurement service provider.
Located in the industrial hub of Yiwu and founded in 2015, we have grown into a big sourcing company, comprising a dedicated team of 110+ professionals.
Clients first, and more than 4,000+ clients at different levels trust us.
For each sourcing project, we first evaluate sourcing time and inform clients. And in the entire procurement process, we keep in touch with clients at each chain. We are committed to clients, regardless of their order size, as our aim is to build up long-term relationships and work towards mutual growth. This is why 4000+ clients work with us when purchasing products in China.
Many of our clients are E-commerce and small businesses, including dropshipping. Regardless of your initial investment, even if starting as low as $500, we can connect you with trustworthy suppliers to manufacture products and customize packaging based on specific e-commerce requirements, ensure strict quality control, and provide highly discounted shipping rates.
Some of our clients are medium to large businesses with an annual purchasing volume exceeding $500,000. We can assign a team of up to 20 people and offer good credit payment terms after receiving goods, etc., to support rapid business growth.
We excel in product customization.
Each one in our sourcing team has years of experience in China sourcing across a diverse array of products and customization, unlike many other sourcing providers who operate with fewer than 10 people with expertise limited to specific categories.
Working with us can make your procurement process easy and smooth, especially in the case of customized project projects. On the one hand, we can quickly get your custom ideas through effective communication. On the other hand, we are capable of solving custom challenges and matching you with the most suitable supplier.
For example, an Australian Amazon FBA seller approached us to customize a bath bomb. Prior to contacting us, she found many suppliers on Alibaba, but was rejected for 2 major difficulties:
- Many of the raw materials listed in the bath bomb formula were only available in Australia.
- It was difficult to determine the exact quantity of each material based on her formula.
Our procurement specialist, Joe, who is well-versed in custom personal care products, quickly identified the solution and directly find the cooperative factory that has been in chemical products for more than eight years. In this way, we quickly determined alternative materials and precise ingredient ratios. And the second sample successfully achieved the desired fragrance as requested by the client.
Not all procurement service providers can do it, as this requires rich customization experience and a wide network of suppliers.
Our quote is the most competitive, at least 10% lower than Alibaba's.
You can find Alibaba suppliers for quotes and compare overall procurement costs (product cost + shipping cost) with ours. Finally, you’ll discover using us is the most competitive.
This is because we have rich factory resources of different factory sizes. So our quote is direct from the factory. Together with long-term experience in the industry and product, we can tell at a glance which type of factory is suitable for your desired product. Then, directly find the factory located in the industrial cluster to get cheaper product prices.
For instance, last year a physical store retailer in the USA wanted us to help him purchase a special-shaped glass candy jar in a size range of 25-30cm. Such large jars are not suitable to directly buy from glass bottle factories in Xuzhou, which specialize in the production of small glass bottles. If they were to do it, the price would be very high.
So we directly found our cooperative glass bottle factory in Shandong to produce the desired size. The price is much lower, half the price of Xuzhou factories.
Besides product prices, shipping costs account for the largest portion of overseas procurement expenses. Based on our partnerships with reliable freight forwarders, we can provide you with flexible shipping solutions at discounted agent prices. Take express shipping for example. Our discounted price is up to 20%-50% off the official prices, as our shipping volume is large. Additionally, we support cargo consolidation, which helps minimize your shipping expenses.
In short, we can help you reduce procurement costs while ensuring efficiency, as we have integrated good resources of suppliers and freight forwarders into our database.
Our in-house packaging and inspections maximize efficiency while ensuring quality.
With a 4,000-square-meter warehouse plus full-time staff, we have helped many clients to do packaging, including highly customized packaging for smaller orders, sourcing accessories for bundled products, and conducting comprehensive product inspections. Most other procurement service providers can’t do that.
When it comes to quality inspection, we offer AQL sampling inspection like 3rd-party inspection companies. But notably, we conduct a higher percentage of product checks and inspect products based on your checking focus after communicating with you. In the process, we send videos of the inspected products and confirm with you whether the defect we discover is acceptable. In addition, we also provide 1-by-1 inspections to minimize the defect rate to zero.
All of these are not available from third-party inspection companies. Meanwhile, using our inspection services can greatly save you time and suit your needs. If you also have repackaging needs, we can do packaging work while inspecting products as required, greatly improving your procurement efficiency.
Besides the above mentioned, our services also include production follow-up to ensure timely production, product photography for e-Commerce, Amazon FBA pre-services, etc. In short, we offer flexible one-stop China procurement services, particularly suitable for the ones with high demand for China sourcing supply chains.
