If you are concerned about price, security or quality then it is essential that you clarify the compensation structure to your service provider. Here is a behind the scenes look at some of the tricks used to hide true interests and compensation.
- If they are compensated by the supply side then their interests are aligned with the seller not you the customer. You would be surprised by the number of sourcing agents and trading companies whom claim to be buyer representatives yet receive kickbacks and commissions from the vendors.
- If they are compensated by you based on a percent of Purchase Order value, then there is no incentive to cut costs.
- If your service provider is not the actual factory and gives you a final price per unit with out disclosing the actual margin, then most likely you are paying too much. They justify a margin by saying that their value comes from “having done the work to qualify the sub-suppliers or leveraging group buying power or providing project management services”. But if they are afraid to state their actual margin then they know the services provided don’t justify their mark up. Furthermore, if they do not disclosure the actual manufacturer then you have no way to validate the quality process in place and you have lost control over who has access to your intellectual property.
At PassageMaker there are no hidden mark ups or agendas. Any sub-suppliers used are pre-approved by the client and no mark up is applied. We charge a transparent per unit fee to perform inspection/assembly/vendor coordination services. This fee is based on the actual labor and management to inspect and assembly your given product. If a service provider can’t justify their margin by providing actual value to your supply chain, then they shouldn’t be in the supply chain!