Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Difference Between Sourcing Goods and Services

Now that we are done defining sourcing services, it is time to differentiate sourcing goods and services. The main difference between sourcing goods and services is Tangibility. 

In sourcing goods, you can inspect the product you received because it can be touched. The product’s tangibility can also enable you to test its quality and durability. This will allow you to know what exactly you can expect from your supplier.

On the other hand, sourcing services are intangible. It means that it cannot be determined by your five senses alone. Sourcing services are more complex than sourcing goods as it is intangible. 

Another difference between sourcing goods and services is transferability. In sourcing goods, you acquire materials to make your product that will eventually end up in the customer’s ownership. While the ownership of a service cannot be transferred as it is inherent to the service provider. 

The last difference between sourcing goods and services is the return policy. In sourcing goods, the goods can be returned or exchanged with the seller if there is any defect. However, the service rendered cannot be returned or exchanged once it is provided. 

Challenges in Sourcing Services

There are many challenges in sourcing services and one of these is the expectation from clients. The business that provides services does not know what the client desires due to limited information. As a result, both will spend more time specifying their understanding of the service. 

Another challenge is that the business provider may find it hard to put a price on its services. It is difficult to judge what additional work the client may ask from them. 

Although there are many challenges, these can be resolved by laying the terms for both parties. Laying their terms will create a common ground that will enable them to discuss and execute the agreement. 

4 Factors to Consider in Sourcing Services

As we discussed earlier, sourcing services have many challenges to face. These challenges can be addressed by these four factors that will help you limit your risk.

1. Be Able to Control the Unpredictability of Outcomes

The service provider is usually judged by its past performance and referrals. That is why the integrity of the service provider can be a way to tackle the unpredictability of a project. The service provider must show the details of the service outcome to manage uncertainties. 

If uncertainties are managed effectively by the service provider, the client will trust it more. This, in effect, can make the client enter into a long-term agreement with the service provider. 

2. Management of Knowledge

The service provider must ask for the documents, policies, and descriptions that contain the knowledge of the client’s needs. The service provider must ensure that these are always accessible. Also, the client’s employees must have general knowledge of the outcomes. 

The client will be involved with the production of the service. This will enable transparency and learning of the expertise of the service provider. This is useful if the client wants to renew the contract as it has learned the provided services. 

3. Reduction of Complexity

Intangible inputs and outputs add great complexity to the service provider. To counter this, the service provider must have a detailed plan and be conscientious of the project management.

Also, the service provider and the client must actively participate and assess the results before moving to the next phase. This will reduce the complexity and errors that may arise. 

4. Flourish your Relationship

The service provider and the client will be working for a long time. This makes them dependent on each other. It is better to solve any conflicts that may arise and build a relationship to successfully deliver the desired outcome. 

Building a relationship where both of you assess the problems will make project management easier. Because what you will deliver is an intangible product, trust is the key to limiting any misunderstanding. 

Examples of Sourcing Companies

In this section, we will introduce you to some prominent players in the global sourcing industry:

1. Dragon Sourcing

Dragon Sourcing is one of the biggest sourcing enterprises in the world. It offers a complete sourcing service to various companies worldwide. 

Here are some of the services that they provide:

• Product development
• Factory audits
• Freight forwarding
• Shipping and logistics
• Supplier verification
• Product Sourcing
• Price negotiation
• Order manufacturing
• Quality assurance

2. Link Sourcing

Link sourcing provides European enterprises access to manufacturers from China, Hong Kong, and other countries across Asia.

It has been the go-to option for many business enterprises of any type. Currently, it already has more than 100 standardized manufacturers from various industries. 

Link Sourcing services include:

• Price negotiations
• Product Sourcing
• Quality assurance
• Shipping and logistics

3. Jing Sourcing

Jing Sourcing is a Chinese sourcing company that specializes in importing goods in the country at the best rates and quality. 

Due to its years of providing the best services throughout the world, it has partnered with 1,000 manufacturers on popular platforms such as Alibaba. 

Aside from this, you will be assured that you are working with a sourcing agent in China that knows the ins and outs of the industry as it employs a minimum of 40 native Chinese workers. 

4. Easy Imex

Easy Imex is a global sourcing agency for both medium-sized and large enterprises. It helps businesses from Australia, the United States, and the United Kingdom in sourcing quality and low-cost products in China. 

Currently, it has become a single-desk import facilitator that offers sourcing services to people from across the world. 

Easy Imex services include:

• Logistics and shipping
• Customs clearance
• Taxes duty
• Price negotiation
• Factory audits
• Quality assurance

5. Meeno Group

Meeno Group is one of the sourcing companies in China that is sought-after by many businesses due to its reputation for experienced and talented professionals in China. 

Despite the demand from the Chinese market, it continuously has a smooth and efficient procedure that allows them to meet the changing needs of its clients.

Conclusion

To sum up, knowing how to source services is crucial for businesses. This article explained the differences between sourcing goods and services, emphasizing the challenges faced in sourcing services. It highlighted four key factors to consider when dealing with these challenges: controlling unpredictability, managing knowledge, reducing complexity, and fostering relationships.

The importance of clear communication and mutually beneficial terms was emphasized in overcoming challenges such as client expectations and pricing complexities. Examples of successful sourcing companies illustrated the significance of factors like negotiation, quality assurance, and building long-term relationships in the sourcing process.

In essence, mastering the art of sourcing services is vital for businesses in today’s market. This guide offers practical insights and tips for procurement professionals to navigate the complexities of sourcing services effectively.