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Differences between a procurement outsourcing agency and a trading company

Differences between a procurement outsourcing agency and a trading company


A procurement outsourcing company and a trading company are two different types of businesses, with different objectives and operations.


1. Objective


Procurement Outsourcing company:


The objective of a procurement outsourcing company is to provide procurement services to other businesses. Their primary focus is to help their clients manage their procurement processes more efficiently and effectively. They may do this by offering services such as supplier identification and selection, contract negotiation, supplier management, and procurement analytics. The goal of a procurement outsourcing company is to help their clients reduce costs, streamline their procurement processes, and improve their overall procurement performance.


Trading Company:


The objective of a trading company is to buy and sell goods for profit. Their primary focus is on identifying profitable opportunities in the market and buying products from manufacturers or suppliers at a lower cost and selling them to retailers or other businesses at a higher cost. The goal of a trading company is to generate revenue and make a profit by buying and selling goods.


2. Areas of work:


Procurement Outsourcing company:


  • Sourcing suppliers: The procurement outsourcing company works to identify and evaluate potential suppliers for their clients based on their specific needs and requirements.

  • Negotiating contracts: The company is responsible for negotiating the best possible terms and conditions with the chosen suppliers to ensure the best value for their clients.

  • Procurement management: The company manages the entire procurement process for their clients, including purchase order management, delivery management, and supplier performance management.

  • Cost reduction: One of the primary objectives of a procurement outsourcing company is to help its clients reduce costs by negotiating better prices and terms with suppliers and streamlining the procurement process.


Trading Company:


  • Buying and selling: A trading company buys products from manufacturers or suppliers and sells them to retailers or other businesses for a profit. They may also act as an intermediary between buyers and sellers to facilitate transactions.

  • Market analysis: Trading companies need to have a good understanding of market trends and demand for specific products to identify profitable opportunities.

  • Logistics: Trading companies need to manage the logistics of shipping and delivering products to customers. This includes coordinating with shipping companies, managing inventory, and ensuring timely delivery to customers.

  • Risk management: Trading companies need to manage the risks associated with buying and selling goods, including market fluctuations, supplier performance, and changes in demand.


Overall, the key difference between a procurement outsourcing company and a trading company is that the procurement outsourcing company focuses on providing procurement services to other businesses, while a trading company specializes in buying and selling goods.


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