Sourcing Agent — The Ultimate Guide of 2022

Sourcing is innate in the procurement process. It is what we call the lifeblood of the company. With this in mind, we know that not all materials can be bought in a single country. Hence, how do companies source materials in other countries? Who are they gonna contact?

This article will guide you on what a sourcing agent is. We will tackle their responsibilities and qualities. 

Once you finish this article, you will know how to choose your sourcing agent. You will know how to utilize their talents and skills effectively to benefit your company. So without further ado, let’s start!

What is a Sourcing Agent?

A sourcing agent works with a company to help them locate sources of products and supplies for low prices. In simplest terms, a sourcing agent will help you find the right supplier that also matches your requirements. Sourcing agents provide the following services:

  • Quality Control
  • Supplier Selection
  • Market Research
  • Price Negotiation
  • Shipment Inspection
  • Quality Assurance
  • Customs Clearance

A sourcing agent can be a single agent or a business that serves various companies. After you select your supplier, the sourcing agent will help you negotiate the terms and conditions to ensure transparency. 

A domestic company may hire a sourcing agent for the purpose of sourcing for the best prices within the country. This is due to the fact that sourcing agents have connections with numerous suppliers that the company needs. 

A company may also hire an overseas sourcing agent. They entrust the agent to locate companies that can work overseas. The sourcing agent will make sure to assess their needs and find the best supplier that matches their requirements. Sourcing agents do this to satisfy the demands of the company.

Editor's note:

Hi there! My name is Marijn Overvest, I'm the founder of Procurement Tactics.
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Types of Sourcing Agents

1. Independent Sourcing Agents

These sourcing agents work on their own and can only work with a few clients due to their independence. However, working with a few clients gives the advantage to build a personal relationship with them. 

Independent sourcing agents usually work in the comfort of their homes or rent a small office. However, some have extensive experience working in a trading or sourcing company. 

Although they may have extensive experience with regard to sourcing, they may be difficult to find. Independent sourcing agents also have smaller networks than those of sourcing agencies. 

2. Sourcing Agencies

Sourcing agencies hire numerous agents and assign them to different focus products. For example, sourcing agencies may delegate the furniture to one of its agents and assign the beauty products to another. 

They boast a larger supplier network as they are supported by various teams that are employed in the agency. Sourcing agencies cost a little more than independent sourcing agents due to their large network. 

3. Full-Service Sourcing & Logistic Companies

These are companies that offer sourcing as one of their various services. Full-service sourcing is the most expensive of all three types. Although they pose a great advantage as they can also deliver the product that you need. 

Significance of Sourcing Agents

There is a saying that goes, “No one knows it all” and it is true. Dealing with foreign suppliers is a hard task as you have to learn their background. 

Sourcing agents know the language and cultural background of the country they are dealing with. This lessens misunderstandings that the suppliers might take offensively. 

Sourcing agents also increase your chance of finding high-quality goods that match your budget or even for a lower price. 

Benefits of Having a Sourcing Agent

1. Saves you Time

Hiring a sourcing agent in your company saves you time. You do not have to take a lot of time surfing the internet just to find a supplier. Hiring one will simplify your task and you can also pick those who you think are best for you. 

Your sourcing agent will handle all the things for you that will save you time in sourcing your materials. 

2. Reduces barriers

A sourcing agent must know multiple languages which will reduce the language barrier. This will allow you to lay out the details of your terms that can be understood by the supplier. A sourcing agent also knows the culture of the supplier. This will limit the omission of any offensive remarks that may upset the supplier. 

3. They are Negotiation Experts

A sourcing agent knows their network more than anyone else. It knows the limit of the discount a supplier can give regarding the price. This allows them to maintain the quality for a low price. A sourcing agent speaks the language of a foreign supplier which makes negotiation easy and fast. 

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4. Reduced the risk of Scam

If you are sourcing for suppliers with little to no knowledge about them, you are at risk of getting scammed. Sourcing agents help you by making sure that a supplier has its certificates and licenses to operate. It knows the criteria needed to meet the requirements of your company to avoid any scams. 

5. Extensive Experience and Wide Network

If you hire a sourcing agent, you do not just hire a person. You also pay for the expertise and networks it has. With this in mind, you know that you cannot go wrong in finding the right supplier due to its experience. 

Qualities of a Good Sourcing Agent

1. Transparency

Sourcing agents must be able to show you that they have a license to clear any doubts about them. They must be able to rely on information about the costs of materials to ensure that no one omits fraud. If it happens that you want to visit the supplier, they should not hesitate to agree to show transparency. 

2. Communication Skills

Communication is the key to building a good and long-lasting relationship with suppliers. That is why sourcing agents need to learn the language and background of the supplier. It is important to note that it will be the one who will mediate between the buyer and supplier.  

These agents need to communicate the terms that you wanted for your needed supply. Failing to communicate the details will not get you the products that you want. 

3. Have Experience and Networks

It is okay to work with starting sourcing agents. But if you have all the resources to hire an experienced one, why not? A sourcing agent’s experience shows that it is trusted in the sourcing community. It also shows that it has numerous networks that you can use to your own advantage. 

Things you Need to be Aware of in Hiring a Sourcing Agent

1. If it is Paid By the Supplier 

If a sourcing agent is paid by a supplier, then you should already doubt hiring it. Why? Because the loyalty of the agent is to the supplier so it will push its own agenda toward you. This will only create a conflict of interest. 

2. If it Works on Commission

Some contracts state that a sourcing agent will only get paid when you accept the goods. If it has seen any defects in your products, there is a high chance that it will not tell. Because it will not get the commission unless you accept the products that you need. 

In Conclusion

Sourcing agents may seem like an additional cost for your company. But it has many benefits it can give to you. Although there are risks in hiring one, you should note that the benefits outweigh it all. 

You now have learned everything you need to know about sourcing agents. We hope that you can use the knowledge that you gain in your business or your field of work. Feel free now to find a perfect sourcing agent that will suit your company.

Frequently asked questions

1. What is a sourcing agent?

A sourcing agent helps a company to find its needs through its various networks.

2. Do I need one?

There is no rule that states you need a sourcing agent. But it will benefit your company greatly if you have one. 

3. How much is the salary of a sourcing agent?

The average salary of a sourcing agent in the USA is $65,000. The salary depends on each country. It also depends on whether the sourcing agent is on a commission or an hourly basis. 

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