Product Sourcing – The Ultimate Guide For Professionals in 2021
For every procurement manager, product sourcing should already be considered general knowledge. Product sourcing is, simply put, the process of finding and buying products to sell. For the seasoned procurement manager, product sourcing also means looking for reputable suppliers to buy quality products at a quality price.
While the definition sounds simple enough, the actual process isn’t. The absolute truth though is that product sourcing is a complicated process that demands analysis, research, and months of calculations. The end goal for every sourcing process has always been finding good products from good sources at a good price; that itself requires a lot of value to consider.
Product Sourcing 101 – Where to Find Wholesale Supplies?
For a procurement manager, the key to establishing a good product sourcing strategy is through finding a good source for wholesale supplies. Again, it sounds pretty simple but in truth, however, it’s like finding a needle in a haystack.
But you’d probably tell us that there are a lot of sources for wholesale supplies. The moment you search for them online, you’d be bombarded by advertisements and email brochures from organizations that offer wholesale supplies. The quantity isn’t the problem here; it’s the quality that one needs to watch out for. There are enough stories of product sourcing companies getting duped by wholesale suppliers who are simply just out to earn money. These companies do not care how they’d get their products as long as they manage to earn a dime. These are companies that you need to watch out for.
Fortunately, there are ways to go about product sourcing where company risk is leveled to a minimum. Most of our proven tips and tricks can be viewed, studied, and executed through our Negotiation Gamechanger course but that is another topic for another time.
The Negotiation Game Changer Certificate Program teaches you:
- the skills needed to drive better, fact-based decisions that ultimately benefit both organizations and its employees.
- a comprehensive analytics skill set that will enable you to achieve deals with results you have been dreaming of.
The 6 Steps of Successful Product Sourcing
Sourcing for new products can be very exhausting and nerve-wracking. Fortunately, the Internet has enough information online for every procurement manager to read on how to be a champ when it comes to product sourcing. Here are the best and easy steps on how to be successful when sourcing for products:
1. Product Research is Key
If you’re going to buy a product, then you need to understand the product. This is a sort of golden rule among procurement managers. Market research is essential to success; without it, you run the risk of buying products that will not sell at all. While doing product research, one needs to think of the following key values
Trends – Always look at trends in the product category and look at how companies deal with the trends.
Store Data – When you look at specific stores, what do the numbers tell you? Are the products interesting enough to keep the store afloat?
Consumer Demand – Finally, check if the products are in high demand. Have a look at what the consumers are asking for. Make sure to get every data available.
2. Get in touch with potential suppliers
Even if you’re not interested yet in making any purchases, getting in touch with potential suppliers is an important step. Yes, we mentioned suppliers. A wise procurement manager knows that getting only one best supplier is a dumb move; the more cards or suppliers you have, the better chances of choosing and deciding which one is better than the rest. Also, keep in mind that products change their value over time. The supplier who is offering the best product at the right price today may change their values the next.
3. Ask for Samples
Only a rookie procurement manager doesn’t ask for samples. The best procurement manager is one who knows the advantage of asking for samples. This way, you and your procurement team can have a closer look at the product. After testing it, gather with your team and discuss your findings.
4. Choose a supplier for a trial run
Once a retail buyer finds a product that shows potential, never hesitate to ask for a trial run for the product; this will give you an idea of the number of products that are on a trial run, together with sales ratios and consumer feedback. Also, remember that a buyer can choose certain products for the trial run from the supplier’s overall lineup.
5. Give your supplier an evaluation and decide
After the samples and trial run, it’s time for the procurement manager and his/her team to give their evaluation. Whether or not the company chooses to move forward with the supplier, giving an evaluation is something that both the procurement team and the supplier can appreciate. Check to see if the product achieved the goals you’ve set. Did the product overperform or underperform? How was the product received in stores?
Also, evaluate how well the procurement team communicated with the supplier.
- Did the products arrive on time?
- Were concerns addressed by both teams without problems?
- Are the products in good condition when they arrived?
The following evaluations will give you and your team ideas of how to move forward with product sourcing. Never hesitate to evaluate all suppliers after the production run.
6. Keep your options
What we mean by this is that you need to come up with a list or database of other suppliers that you can potentially communicate with in the future.
Keep your lines open. You’ll never know if one of those potential suppliers may suddenly turn up with some good products. Also, if in case your present supplier suddenly closes down or experiences bad luck with the business, then you have alternate sources for the supplies that your company needs.
The Product Sourcing Agent Debunked
Behind every product sourcing strategy is the product sourcing agent.
Also called simply a sourcing agent, it’s the responsibility of these guys to assist a company in locating sources for products and supplies at a low price to help the company save money on its production run. Most product sourcing agents represent a single company or he/she could run a business that serves other companies too. Because of the nature and scope of their work, a product sourcing agent is often required to be very knowledgeable with multiple languages, along with a good sense of business and coordination skills.
The average monthly rate for the product sourcing agent is $ 4,913 per month. So annually, that’s $58,966. But if a product sourcing agent applies maximum effort, top earners are said to have earned at $96,500 in a year. Now that’s good money.
Now before you get all excited, you need to know the requirements and qualifications on how to become a sourcing agent:
- Must have a Bachelor’s Degree in Business or Chemical Engineering.
- Must be able to travel at a moment’s notice.
- Must know global commerce.
- Prior working experience in product sourcing is a must.
- Must have a solid understanding of supply chain management.
- Must be a MASTER NEGOTIATOR.
- Must be confident, a people person, and dedicated
What is product sourcing?
Product sourcing is the process of locating suppliers for buying supplies or products for the company.
How to do product sourcing?
A company needs to find suppliers to buy supplies that are needed for the company to operate. Product sourcing is needed to regularly find those suppliers.
How do I become good at product sourcing?
You can become good at product sourcing by undergoing training meant for sourcing.
Want to become a Product sourcing agent?
You must become a Master Negotiator first!
Enroll in our Negotiation Gamechanger certificate program today and learn everything there is to know to become a master negotiator!
Talk to us! Visit our website at www.procurementtactics.com. We promise we won’t bite.
"Very useful course, many actionable strategies"
Want to close better deals? Prepare faster and achieve deal results you have been dreaming of? This course is a perfect fit for ambitious procurement & sourcing professionals. Enroll now and equip yourself with the full range of skills needed to master the deal.