This is one of the favorite questions that I like to ask candidates when recruiting people for our sourcing team and a lot of them find it difficult to establish a clear distinction. Among a lot of our clients also the line seems to be blurred and a lot of people believe that a sourcing and a trading company are one and the same thing.
There are good reasons why this line is blurred as sourcing & trading companies often step into each other’s domain so I will cover that in a future post. However, I hope I can address some of the key differences between a sourcing company & trading company in this post.
Process specialization Vs. Industry Specialization:
While there may be sourcing companies specializing in an industry, especially for highly technical industries like automotive, in most cases sourcing companies in China tend to be specialists in systems & processes related to quality control, international trade & supply chain management.
These processes & systems can be plugged into most industries & products. Traders on the other hand tend to specialize in specific products or industries.