Whether you’re jumping on the e-commerce bandwagon or going down the traditional route with a physical retail business, you’ll need a steady, reliable source of products. To obtain those products, you must be privy to the ins and outs of the procurement cycle, and have some idea on how to go about sourcing materials and products for your business.
Develop a sourcing policy
The first thing to do is to develop a sourcing policy. A comprehensive sourcing policy is a set of guidelines designed to help procurement professionals carry out their responsibilities. When designing your sourcing policy, there are six main questions to ask yourself: Who is responsible for each business function; what does each person do; where are these people based; when do they carry out certain tasks; why do they carry out those tasks; and how do they go about executing their responsibilities. These six questions cover the whole information-gathering process that allows you to fully understand what you need to kickstart the procurement cycle, and how to go about doing it consistently and systematically.
Be sure to involve all the company stakeholders in the development process of the sourcing policy to obtain their input and feedback, and ensure that everyone is on the same page when it comes to the procurement process. Once the sourcing policy is finalised, refer to it periodically throughout the duration of the procurement cycle, and review the sourcing policy on a regular basis to make necessary changes. A sourcing policy is a living document that evolves in tandem with your business and should be used as reference when on-boarding new employees and effecting changes to the procurement process.
Individual sections should also be regularly reviewed and updated, especially when additional processes such as a new e-procurement solution is implemented, or when there are changes to the company’s organisational structure. The code of conduct and ethical practices should also be revised as required, or even just revisited periodically, to encourage the procurement team to implement best practices at all times.
Find a product source
Having put together a functioning e-commerce site or developed your physical retail space, you are now ready to source for products to stock your site and shelves. Apart from referring to the guidelines in your sourcing policy, you will need to access product sources or contact suppliers to begin the sourcing process. If you prefer going with the e-procurement method, there are a variety of legitimate internet sources that list thousands of local and overseas manufacturers and wholesalers, which are genuine and factory-authorised.
A wholesale supplier that is factory-authorised has a direct relationship with a manufacturer and is given certain select rights to wholesale the manufacturer’s products. Working with such genuine wholesalers is safer and ensures that you do not fall for scams that relieve you of your business capital but do not deliver the goods. Of course, the benefits of having a wide social network are many, and you could possibly find suitable suppliers, or at least leads and contacts to follow up on.
Aside from the e-procurement method, there are other channels to obtain your supply of products. Trade shows are a good place to learn about upcoming and current market trends, grow your network of potential suppliers, and hopefully, find the right product source. Trade magazines are a cost-effective option for sourcing products as well. Wholesalers and suppliers sometimes advertise the fact that they will be participating in trade exhibitions, so take note of the dates and attend these events to obtain more information. You could also contact trade organisations and industry associations linked to the products that you are looking for. Having access to manufacturers from other countries, these organisations and industry associations can help you broaden your supplier network and connect you to manufacturers and suppliers locally and abroad.
Make your business presentable
Gathering information on product sources is but one of the steps toward stocking your shelves with proper inventory. To secure a deal with the right suppliers, you need to be seen as authoritative and perceived as a company, not a consumer. Register your business according to the rules and regulations of the country you reside in, taking care to establish yourself as a business entity and not a sole proprietorship. This makes it easier when applying for business loans. Having a good banking history, an excellent credit rating, and strong references also help to prove your credibility and raise your standing with potential suppliers.
Be sure to prepare a solid pitch that clearly illustrates the idea behind your business, the products you wish to sell, and why they would want to do business with you. Once you’ve landed a suitable supplier, it’s best to establish the terms of the business deal from the start. If you are unsure of how to structure business deals, enlist the services of an attorney to help you draw up a contract that is fair to both parties and covers all your business and sourcing needs.
Source strategically
When you source for suppliers, products or services strategically, you are employing a procurement process that entails discovering, prioritising, improving and re-evaluating your sourcing activities. Traditional methods were more reactive in a sense that businesses would respond to demands or other requirements as they arise. Subsequently, businesses turned to tactical sourcing, whereby a procurement strategy is used to anticipate needs and plan accordingly, but which is still reactive in nature.
With the onset of strategic sourcing, the procurement policy took centerstage, with internal stakeholders and suppliers collaborating and playing an active role in analysing company expenditure and mitigating supplier risks. It emphasised proactivity and value-adding to the sourcing and procurement policy, which led to sustained improvements to offline and e-procurement methods, higher profits and a more efficient procurement cycle in general. At the end of the day, the saying ‘Customer is King’ holds true, and the most important element in a successful business is the customer. Understanding your target market and endeavouring to source for the products or services that appeal to them will ensure that your profit margins grow healthily and sustainably.
Sourcing is a continuous process throughout the life of your business. It might seem daunting at times but we hope that this article has made some of the processes a little more easier to understand. If you feel like you need more professional help, ThunderQuote’s sourcing tool might be the best software for you to start sourcing professionally! Let us know if you need more help by clicking here.
ThunderQuote is the most comprehensive business services portal in Singapore, Australia and ASEAN , where hundreds of thousands of dollars of procurement contracts are sourced every month by major companies like Singapore Press Holdings, National Trade Union Congress and more.