FEaTuRE Sourcing & Procurement
in middlemen who can do more than just just source, but they are experts in their lot of them off because we have people
source from the same vendors they can industry. They have better relationships on the ground.”
now easily find themselves. More than with factories and have the responsibil- Once a relationship develops, however,
ever, middlemen need to be able to prove ity for follow through. Liu believes that and a retailer gains the knowledge needed
their creativity and value to keep their if someone has to be hired to do the job - or the Chinese vendors become more
place in the market. anyway, a good trading company is an dependable - the agents’ survival is again
“There is transparency from end to end excellent choice. “Every- jeopardized.
and [with it] is the desire and ability of one needs to make money, “China will eventually get
a lot of businesses to manage their own and if a person can justify to that stage of reliability,”
supply chain,” says Edwin Keh, refer- their cost, then next it’s just says Jeric Ma, Deputy Man-
ring to the almost instantaneous access about what other services aging Director of Premier
to information. Keh is the Senior Vice they can offer,” Liu says. Resources International’s
President and Chief Operating Officer of (PRI) Shanghai office.
Global Procurement in Walmart’s buying Metamorphosis PRI, a U.S. international
office in China. If a retailer doesn’t al- trading firm based in Rich-
Established in 2001, Walmart’s current ready have its own opera- mond, Virginia operates as
headquarters in Shenzhen is the largest tions in China, an agent or the purchasing office for
buying office in the world and just un- an existing relationship with several large retail groups,
der 1200 people. Though they still out- a factory serves as the assur- including Keystone, Midas
source things like final quality assurance ance for quality and delivery. “If we can and formerly Circuit City. In 1995, they
inspections, the buying is all mainly done go direct [to the factory], we will do that. pioneered the import direct program for
in-house and from suppliers who either [But that’s] because we have that relation- Circuit City and then implemented the
own the factory or have control of one. ship,” says Jeff Bishop, General Manager same at Best Buy the following year.
Although Keh believes that a good agent or AGD (ACE Global Distribution). “In order to ensure our continued exis-
could still prove invaluable to a retail op- With 4500 stores in the U.S. and hun- tence we have to become more than just
eration. dreds more across 60 countries, AGD has a buying agent,” Ma says. “Going beyond
“The service required now is a quan- their own buying team in Shanghai and a the supply chain, we now help our clients
tum leap from what it was,” say Keh. “In warehouse of more than 1500 skus serv- do branding and marketing and our core
terms of creativity, operation and fulfill- ing their international storefronts. Bish- competence has become helping our cli-
ment, [agents] that allow their customers op, however, recognizes that not all busi- ents develop their own private label.”
to focus on retailing are the ones that will nesses are equipped to start purchasing Whether it’s offering more services or
thrive.” operations in China and suggests those evolving into something completely dif-
Galy Liu, President of V-Mart Indus- that can’t ought to look to agents. ferent, the middleman seems to be head-
trial Development Limited agrees. His In China, it’s not uncommon to en- ing in a new direction.
factory produces wooden furniture for re- counter a flurry of problems when deal- Wang agrees that the survival of these
tailers like Crate and Barrel, Pottery Barn ing with manufacturers. From quality is- middlemen relies on whether or not they
and JCPenney and he works exclusively sues to delivery times to variances from can change into something that their cli-
with trading companies and agents to ful- order, issues are a part of doing business ents cannot live without. “If the agent
fill each order.“It’s not about the added here. And those are only the ones you can [continue] to create value in their
cost of an agent,” Liu asserts. “It’s about can expect. space, then they can continue to exist
the added value that an agent brings.” “We’re here and we still have prob- there,” he says. “[But] we’ll see - we’re liv-
He stresses that the great agents don’t lems,” says Bishop. “But we can hedge a ing history.
www.supplychains.com MARCH/APRIL 2010 37
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