Most businesses find themselves with a diverse set of suppliers providing a range of commodities and services. As more and more companies seek efficiencies to leverage sales and improve competitiveness the supply chain is typically put under focus to contribute. Fuelled by improved communication methods, transportation and technology, the last 20 years has seen a significant shift in sourcing with more and more companies, often to the detriment of localised clusters of supply, employing a global supplier network.
Whilst cost is an obvious facilitator in sourcing from emerging economies, other rationale shouldn’t be overlooked. This includes opportunities to tap into a previously unavailable skills market and/or as part of a wider business strategy in building the business footprint in a key strategic area. Its important that whatever the rationale, and as with all sourcing decisions, the business case behind the decision is reviewed periodically to ensure that the reasons for global sourcing remain in the business interest (costs can change overtime!)
Whilst typical sourcing best practice goes someway into reducing the risk and complexity of selecting and co-ordinating a globalized supplier network it is still not without its challenges. Whilst from a simplistic perspective these include the obvious problems associated with different geographies, time-zones and languages other challenges with more serious business consequences should not be overlooked. Different views on Quality and performance are significant constraints and can turn what on paper looks to be a simple sourcing decision into a situation that requires significant management overhead and focus in order to deliver the same standard and performance as a more localised supply chain.
As with any other sourcing initative:
1. Run your sourcing programs thoroughly – don’t make cost your sole lever – consider your other business drivers (and your plan B if things go wrong)
2. Communicate your expectations – ensure your supplier understands your requirements on performance, quality and service
3. Don’t just assume that everything will be ok. Create a suitable risk and issues log and try and mitigate where possible – above all else – PLAN!
4. Consider how you will manage the supplier – Depending on the criticality of supply – consider whether you’ll employ local experts to assist with establishing consistent supply, or a local procurement professional who has the knowledge of the market your preparing to procure from.
5. Always ensure that you do not simply ‘gloss over’ any incidents that do arise. If there has been an issue that has arisen – deal with it as you would a local supplier.
6. Be sensitive to the market your procuring from – understanding issues around the labour force, their skills and the tools/technology available to them.
7. There is no reason not to learn from your new suppliers – different cultures can breed different innovations that might help your own business..
8. Finally the last way of bridging cultural gaps is simply to ensure that you recognise that there may be times when cultural gaps do crop up, but simply being aware, trying to minimise them and preventing them from disrupting the supply chain is a good starting basis.