Sourcing Offices Will Remain Key. Here’s Why.
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This is part three in our four part series on sourcing in modern times. To read the other parts in the series, go here.
In March, at the Made In Asia conference – the largest sourcing symposium in Hong Kong – the attendees listened to a plethora of different keynotes from many different business leaders. But one speech has resonated long after the end of the event. You may have heard the phrase before, now repeated often in sourcing offices and the industry at large: “Sourcing Is Dead.” This phrase, echoed over and over during the speech, was not the crux of the argument, it was the antithesis. The point being made was the same one we have made so far in this blog series: Sourcing isn’t dying, it’s changing drastically and fast. Which means that sourcing offices won’t die either. That is, unless they fail to adapt to the changing environment. The future of the modern sourcing office lies in its ability to change and adapt.
We have covered in some of our previous posts exactly why sourcing is changing – the instant gratification of end consumers and the rise of the Amazon seller have made the traditional methods of finding completed products effectively obsolete (for more information on this, see the first blog post in this series here). These changes are providing new, sink-or-swim style challenges for sourcing offices as well. Edwin Keh, CEO of the Hong Kong Research Institute for Textile and Apparel, summarized this problem best:
“In the past the role of many sourcing offices was simply to buy goods and make sure these goods were actually shipped. Today, its role is much more complex, since buying offices find themselves dealing with quality standards, ensuring design and manufacturing specifications are accurate, as well as compliance, legal and tax issues.”
That complexity is further compounded by geo-political changes. Sourcing offices have traditionally benefited from China’s low labor costs and relatively lax regulatory environment, but even those benefits seem to be changing, forcing the most globally elastic sourcing offices to shift toward the developing world – places like Thailand, Vietnam, and Cambodia. The ones who have already moved away from China have clearly seen the future, and will find themselves at an advantage as China starts to tighten its laws and increase worker value.
But how can your sourcing office best adapt to this new world order?
The first and most vital change that needs to be made is a change of mindset. Where a sourcing officer’s role was once a largely administrative function, it must, out of necessity, become more integrated with the business. Sourcing officers will need to change their focus from one of procedure, to one of quality control, supply chain management, product fit, and unique design. The sourcing office must be “another department” no longer, and shape itself as a core element of business functionality.
Second, rather than looking at relationships with suppliers as a simple exchange of goods for money, with no trust, or interest in establishing real connections, the sourcing office must look toward securing long term partnerships with its suppliers. The central role of a sourcing office is, by the very nature of the shifting environment, moving toward one of true innovation. This means strong understanding of customers, and a proactive approach in understanding exactly what is needed in your products to make your customers lifelong ambassadors.
Finally, it is absolutely vital for sourcing offices to find ways to speed up the purchasing process while at the same time improving the value to the end user. The most obvious first step to achieving these goals is complete process digitalization. By continuing to source products manually, you add far more steps than are needed into the process, guarantee redundancy, and increase costs. There may be a “Tsunami of data coming at us” as Mr. Keh has mentioned, but it doesn’t have to be overwhelming. You just need the right systems to do the heavy lifting for you. And make no mistake, you are the one that has to make this change. Manufacturers, especially Chinese manufacturers, have no interest in improving processes on their end. They do well enough the way things are now that they see no reason to adjust. This digitalization trend may move its way down the pipeline and force those manufacturers to change eventually, but you don’t have the convenience of time. It has to be now, or you won’t be able to keep up with the revolution.
The revolution we keep mentioning is happening now. Sourcing offices have to jump in the mix and change the way they operate. Whether it’s been brought into the fold of the business yet or it’s still just some small administrative branch, the sourcing office, and the people that work there, can bury you if these changes aren’t made. Transform the way your buyers think, transform the way they operate, digitize your processes, and keep yourself successful.