A new way of buying from Asia
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Case Examples

With us you are able to successfully outsource your purchasing needs. We will find you the best factories and ensure that your products are always of first class quality, not forgetting on-time deliveries. You can focus on your core business when we take care of the rest. The below case examples show what benefits you can get from using our services.

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Case example 1 – focusing on quality and price

Challenge

Client X was buying components directly from factories; 200 000 pcs per year á 2 USD. The client had one full time purchaser focusing solely on Far East Purchasing and there were 20 shipment per year. Client was not fully happy with their supplier network and was facing quality problems in 3% of the products. The quality problems with the components led to problems with their own assembly line.

Solution

After starting co-operation with Buying Oce Asia, new factories were found and better buying prices were negotiated. The buying prices from factories were reduced by 10%. Thanks to improved quality from the new factories and Buying Oce Asia’s online QC we were able to reduce the ratio of quality problems in to less than 1%. Total salary costs from Buying Oce Asia were 15 000 USD per year – additionally there was an agreed commission of 8% based on the purchase value.

Comparing the costs and savings

Before

  • purchase cost: 400 000 USD per year
  • quality problem level: 3% per year
  • costs for using outsourced QC: 10 000 USD per year
  • costs for in-house purchaser: 70 000 USD per year
  • Total: 480 000 USD After
  • purchase cost: 360 000 USD per year
  • Buying Office Asia salary costs: 16 000 USD
  • Buying Office Asia commission (8%): 28 800 USD
  • Quality problem level: 1%
  • 50% savings in the allocation of the in-houseFar East purchaser: 35 000 USD
  • Total: 439 000 USD

After

  • purchase cost: 360 000 USD per year
  • Buying Office Asia salary costs: 16 000 USD
  • Buying Office Asia commission (8%): 28 800 USD
  • Quality problem level: 1%
  • 50% savings in the allocation of the in-houseFar East purchaser: 35 000 USD
  • Total: 439 000 USD

The bottom line

  • Savings of 8.4% (40 200 USD)
  • amount of goods with quality problems reduced by 66.7%
  • considerable cost savings, better quality, increased efficiency in assembling, ease of mind, full transparency

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Case example 2
– getting rid of the middle men

Challenge

Client Y was importing 700 000 products per year at an average price of 3USD. There were 250 shipments per year and quality problems in 2.5 % of the products. The biggest challenge for the client was the high variety of products that they were sourcing, and even though they had 2 full time European employees working on their Far East Purchasing team they were buying more than 50% of their products through buying agents and trading companies.

Solution

After starting with Buying Office Asia we were able to replace the trading companies and agents with direct factory contacts. This lead to an impressive average savings of 12% in the buying prices. Additionally we set the AQL (acceptable quality level) with the factories to to less than 1.5% and followed that strictly with our in-house QC team; resulting in an average of 1.2% quality problems. Total salary costs from Buying Office Asia are 45 000 USD per year – additionally there was an agreed commission of 6% based on the purchase value. Thanks to the turn key service from Buying Office Asia, the client was able to find new roles for both of their Far East Purchasers.

Comparing the costs and savings

Before

– purchase cost: 2 100 000 USD per year
– quality problem level: 2.5%
– costs for using outsourced QC: 125 000 USD per year
– costs for in-house purchasers: 135 000 USD per year
– Total: 2 320 000 USD

After

– purchase cost: 1 848 000 USD
– Buying Office Asia salary costs: 102 960 USD
– Buying Office Asia commission (6%) : 110 880 USD
– quality problem level: 1.2%
– no cost for in-house Far East purchasers
Total: 2 061 840 USD

The bottom line

– savings of 11.1% (258 160 USD)
– amount of goods with quality problems reduced to less than half
– considerable cost savings, better quality, improved customer satisfaction, ease of mind, full transparency

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Case example 3
– no more fixed costs

Challenge

Client Z was buying 50 000 products per year at an average price of 30USD. There were only 10 shipments per year and thanks to their focus on quality and own Far East Buying Office they were able to keep quality problems at a level of less than 0.5 %. The biggest challenge for the client was the seasonal nature of their business and the high fixed costs (total of 190.000 USD including rent, salaries and overheads) that they had for their own buying office in China.

Solution

After couple of successful test orders the client decided to close their Chinese buying office down and started using Buying Office Asia’s services. We renegotiated the terms from the existing factory that client was super happy with, and succeeded in getting a marginal cost reduction of 1% thanks to improved packaging solution.  Since customer only needed our services during the peak seasons, our cost level was considerably lower than what they had to pay when having their own office. Our total salary costs are at a level of 75 000 USD per year including merchandising, QC, etc.. Additionally there was an agreed commission of 6% based on the purchase value.

Comparing the costs and savings

Before
– purchase cost: 1 500 000 USD per year
– quality problem level: 0.5% 
– cost for in-house buying office: 190 000 USD per year
– Total: 1 690 000 USD

After
– purchase cost: 1 485 000 USD
– quality problem level: 0.5% 
– Buying Office Asia salary costs: 75 000 USD
– Buying Office Asia commission (6%) : 89 100 USD
– no cost for in-house buying office
Total: 1 649 100 USD

Summary
– savings of 2.4% (40 900 USD)
– same quality level
– increased flexibility, no fixed costs, ease of mind, no personnel problems

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