Sourcing teams seem to have had a love hate relationship with agents in recent years—they’ve either been necessary or not, depending on who you ask.
But just as retailers have had to evolve with the times, so too have agents, and they’re adding offerings that reassert their relevance.
Touching on this topic during a sourcing trends panel at the recent Sourcing Journal Summit in New York City, sourcing executives had varying views on tapping into agents.
When asked whether agents are still relevant to the sourcing strategy at American Eagle Outfitters, SVP Mark Rose said it depends on how you work with them.
“We have a big relationship with Li & Fung and I think that’s a very effective relationship for us and Li & Fung,” he said. “But I think that’s because of the way we both participate in that relationship.”
Li & Fung has slipped from its perch as a force vital to sourcing, but in recognizing that, the company has been working to restructure, revamp and renew faith in what an agent brings to the table.
In an interview with Sourcing Journal this summer, Li & Fung Group CEO Spencer Fung said the company is moving away from the traditional role of an agent and toward a new supply chain model with more value added services. And even though factory direct has had greater appeal with companies trying to stay closer to their product and processes, that hasn’t hindered Li & Fung in its approach.
[Read more about Li & Fung’s changing role: Spencer Fung on Why the Role of the Agent has Changed Beyond Recognition]
“People say when you go direct, you actually skip a few steps—you don’t,” Fung said. “Whether you outsource to an agent or use your own offshore office, you still need a team to carry out all the necessary processes and steps. There’s no shortcut.”
Knowing that there’s still a role to play, Li & Fung has been considering how to appeal to a client that perhaps wasn’t knocking on its door before. The solution? Unbundling services.
Fung says it’s like ordering a la carte: there are core solutions the company offers and then tailored offerings, things like digital sampling, that a client could focus on if their budget doesn’t allow for an agent to manage every bell and whistle.
But using an agent really comes down to the needs of your business, according to Liz Hershfield, chief supply chain officer for Bonobos.
“We work with one agent and we work factory direct with the rest and it just depends on the product category and what you need,” she said.
For Bonobos, building better direct relationships with vendors was vital to help scale the business, keep things innovative and allow the company to maintain the low level of inventory it keeps, Hershfield explained.
“It’s really important that we have that direct relationship, but agents also serve a purpose, so I don’t see them going away,” she said.
Adding to that, Untuckit chief merchandising officer Bjorn Bengsston said e-commerce has no choice but to look at the use of agents differently than traditional retail might, because when you’re that close to the customer, the quality of the product is paramount.
“I spent a great deal of time in wholesale and I know that you could get away with a lot of things when you ship retailers that you cannot get away with when you ship the customer,” Bengsston said. “If you ship a shirt [to the customer], the button falls off, you get it right back—poor quality. If you ship a shirt with some loose threads in the neck, you get it back—poor quality. And so that puts quality in the forefront and the demands from e-commerce brands on their suppliers are much more stringent than I think they are on the wholesale side, so that changes the dynamic a little bit.”
Either way, the need for competition in the supply chain breeds models that are mixed based on what’s necessary.
“We shouldn’t have a monolithic strategy to access our vendor suppliers,” Rose said. “We should have a variety of ways we access them because we’ll find some work better than others and we get different ideas from what might come through accessing the supply chain with our own direct offices and what might come through working with an established agent. I think balance to create competition for innovation, speed, value, efficiency, sustainability—all of those things—will benefit by having a diversified strategy within the supply chain.”
Agents, according to the panel, should be considered a partner in business, regardless of your approach to using them. And in line with the demands of today’s supply chains, engaging agents more in the development process could be a better way to make use of their services moving forward.
“There is great potential I think to shift some of the functions over to the agent, and with all the PLM, PDM systems that exist today it’s possible to design and develop in real time, and I don’t think it’s impossible to move all the issues of the spec design over to the agent side and kind of let them get more engaged in the design process on a day to day basis,” Bengsston said. “I actually think agents are becoming more important. There was a time when you saw it as just an unnecessary load and people were going factory direct. I think they have made a resurgence and I think they will continue to become strong.”