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Sourcing Supply and Development

Is it prudent to outsource a crucial activity like Sourcing & Procurement?

As a professional provider of Sourcing & Procurement Consulting and Services for 15 years, InSourcings has a team of experts specialised in different areas of engineering and is familiar with the vendor landscape having hundreds of years of collective field experience. The team members are also conversant with all the requirements and proper processes like quality assessment, testing and certification, intellectually property and patent protection, communication protocols and documentation as well as packaging, warehousing and delivery. This collective expertise improves efficiency and overall performance.

Will outsourcing cause a financial burden on the company?

For professional Sourcing & Procurement Service providers, this is a core competency and not an additional department, with the expertise across different specialisations shared by several customers. Their entire efforts are devoted in building up resources and scouting for the most competitive vendors for forming an effective supply chain, reducing dependency on a small base, which can cause constraints in case of contingencies. The recent Covid-19 crisis is an example of such disruption that throws production schedules awry. It is not easy to replicate such expertise within the company’s in-house resources that will surely cause additional overheads. Comparatively, outsourcing this activity will not only offer significant cost advantages but also lead to better utilisation of the company’s human resources which can be devoted to more productive activities.

What about client confidentiality and data security?

These are important and valid concerns which are addressed during sourcing and procurement services right at the initial stage with comprehensive agreement with terms and conditions spelled out in details, adhering to the best industry practices. Apart from client confidentiality there are also issues of data security in terms of hacking of cyber-attacks which are taken care of by effective cybersecurity measures. All these concerns are addressed by policy and regulatory framework and appropriate legal provisions.

Sourcing as a Service

How reliable are Sourcing Companies when it comes locating the best deals?

Professional Sourcing & Procurement companies are not run-of-the-mill operators looking at making a quick buck and vanish. These are hard-core professionals engaged in serious business of providing a critical service that is increasingly being outsourced even by the large companies. They have the necessary knowledge and experience of scouting for the most competitive vendors with a good track record of order fulfilment. They go about their business systematically and work hard to get the best deals because the success of their business depends on making more such deals.

Do these best deals come with a compromise in quality?

Quality is at the heart of successful buyer-seller relationship because no buyer is likely to place a repeat order where quality is compromised. Globally, businesses are facing stiff competition and the cost of failure is high. The presence of professional intermediaries ensures that the buyer has access to the best services that put in place effective quality control measures and inspection routines at every stage of the process, with the buyer in the loop about the actual procedure. In case of any issue of quality, there is elaborate record keeping and documentation that can trace the exact batch and find out the precise reason for the problem – a defective material or a wrong welding joint, for example, for remedial action.

What happens in case the quality is not consistent?

The very nature of a professional intermediary is to take care of consistency in quality because that is what keeps it in business. These agencies invest a lot in creating the checks and balances that ensure consistent quality. Their experts are familiar with the nitty-gritty of materials, machinery, production processes and have access to the latest in test equipment and inspection protocols. They are well versed in the processes of welding and heat treatment, for example, or the fabrication of reactors and pressure vessels, and the need to conform to the relevant international standards in terms of safety and end use certification. Above all, all these are spelled out clearly as part of the terms and conditions right at the outset.

Quality Control and Inspection

How to ensure supplier capabilities while outsourcing Sourcing & Procurement?

Usually buyers suffer when they deal with suppliers without understanding their capabilities, which leads to problems. Often suppliers accept the order and fail to deliver which can cause serious bottlenecks in production. In fact, this is the biggest problem a company can face, all because there was no proper due diligence carried out. This is where professionals can help with their experience and familiarity with the complexities that the process entails. These Sourcing & Procurement companies not only find the supplier, but also continually monitor the services to ensure all delivery demands and standards are met. For the buyer then it is a matter of holding regular reviews and insisting on remedial actions in case of any abnormality.

Will quality be compromised in the process?

This is a valid concern but misplaced because quality can be compromised even if a company does this activity in-house, if there are no inspections or quality control audit checks and balances. Professional Sourcing & Procurement companies are not only familiar with the products and components but also the quality control aspect as well as various inspection requirements. These constitute a part of the terms and conditions and there are checklists to follow with active participation of the client in verifying all the quality parameters at each stage.

But how to ensure that the supplier does not renege on the agreement?

Often companies take the easy way out and enter into a deal with a supplier without entering into a formal contract. Professional Sourcing & Procurement service providers are trained to look at these issues and help create binding legal contracts and the necessary paperwork which for a company can be a difficult task given its priorities. The solution is to rely on professionals to help in these matters as they are not only familiar with the process but also have ready templates for entering into such contracts which are binding, this assuring a healthy supply chain.

Allied Services

What are the options to source parts and components that are no longer in production?

Original equipment manufacturers usually give adequate notice when discontinuing a product line and even provide spares for a certain period. Beyond that, it is often a matter of using various sources or making do with poor substitutes. But there is also an alternative to seek reliable substitutes from professional agencies who have also worked in the past with such OEMs and have a better understanding of the exact substitute or make available one through reverse engineering.

Can external agencies be trusted with critical operational requirements?

While there are companies that insist on doing everything in-house, there is often a high cost associated with it, and these are exceptions rather than the rule. Today, even very large companies are outsourcing many tasks as it allows them to concentrate on their core expertise. This is helped by the fact that service providers today are thoroughly professional and extremely competent in understanding the requirements and providing the best solutions at highly competitive rates.

Will use of substitute materials or equivalents cause safety and reliability issues?

Not if a proper assessment is conducted with respect to material properties like weight, tensile strength, etc. While it is always advisable to use the recommended materials of appropriate grade, at times substitutes or equivalents are used due to shortage or unavailability, or other reasons like weight reduction or even cost, without impairing performance. In such cases it is important to seek expert advice or professional expertise to ensure there is no compromise in safety standards and the final product attributes are not impaired on account of substitution.


How can a company outsource a critical function like logistics which is central to the operations?

Even though logistics is an important activity to the operations of a manufacturing company, it is not its core competency, which continues to be manufacturing. The amount of time, money and human resources devoted to having all logistics planning and implementation in-house often becomes a big overhead expense that can cause a significant dent in the profitability without getting any commensurate advantages. Globally the trend is to leave such peripheral services to professional providers and concentrate on the core activity with highly successful results. Outsourced services are managed by professionals, who are not only well versed with the vendor ecosystem but are also familiar with all the procedures to ensure a smooth, end-to-end service.

Will quality of services provided by external agencies be compromised in the process?

Outsourced service providers are highly qualified professionals for whom their core competency is to provide quality services. They are staffed with experts who have years of experience in each branch of logistics services like documentation, clearances, export regulations, packaging, transportation and tracking of the entire process. They are instrumental in setting up efficient supply chains by taking care of all the loose ends once entrusted with the responsibility. Above all, their business depends on maintaining the high quality of their services as it is often the word of mouth that gets them new business and a bad reputation is the last thing they are looking for.

Yes, there are advantages, but will this not end up in costing much more at the end of the day?

No, not at all. As already explained earlier, doing all these activities in-house is actually more expensive as the company will have to invest in everything related to logistics services including warehouses and transport fleet, in addition to having the required personnel and staff on the roll for all the activities. Professional service providers have many clients who are using their services so they already have all the infrastructure in place and as the cost is shared across all their customers, all the parties are benefitted by the economies of scale. Besides, they are in a better position to negotiate the best freight rates. They also are not restricted to any geography and provide global services.


Why should a company rely on an outside agency for prototyping?

Most small and mid-size companies are always strained for resources. Prototyping for developing new products is an activity that needs a lot of those, besides the infrastructure in terms of software and hardware, machines, etc. This adds to the burden on the manpower and impacts the ongoing projects as well as new product development. Outsourcing of prototyping services to professional agencies gives a better control of the process as it simply has to monitor the progress and approve the developments at every stage, making the necessary changes and modifications at every iteration. The company also benefits from better resources as professional agencies work on the latest facilities available in the market.

Will this not be a time consuming affair and cause delays in the timelines?

The results with outsourcing come out much faster as it actually speeds up the process since you are dealing with professionals with adequate infrastructure and dedicated manpower to complete the task. They are also experts in the business and have a lot of experience with working on prototyping services for various other customers. The client actually benefits from their experience not only in terms of a faster turnover but also through ideas, insights and suggestions born out of this experience. It is like having additional manpower, than what the company would normally have, while attempting to do everything in-house. All this efficiency would translate into the fact that the products can come into the market much faster.

What about the cost to the company? Will this not be an expensive proposition?

If a company has to invest in a similar set up like the professional agencies, there will be a lot of investment to make for the infrastructure as well as the manpower without having that much development work in the new products all the time. On the other hand, outsourcing allows you to pay only for the services used and get access to all the skills and expertise without all that costly investment. The overall advantages of outsourcing have been well documented today where this has become a trend of lean manufacturing with companies concentrating only on their core competencies and reaping the benefits in the process.