Especially in low-cost countries, “sourcing” involves a lot of strategies, managing a Global Sourcing process means much more than managing the concept of “procurement”. Global sourcing involves all aspects of the product. It must be delivered on time, within budget and to the quality standards that your company expects.
By signing procurement contracts internationally, the company takes on a very delicate task because decisions to manufacture products at a distance of half a globe are not easily made and involve maximum attention and supervision.
When sourcing offshore or abroad, supplier management is a challenge because it is made up of different cultural backgrounds. In addition, foreign management may also have quite different business objectives and sometimes, ethically, their approach could be considered questionable.
5 ideas as points of interest
Here are five ideas you could use as points of interest to consider if you want to increase your chances of success in your Global Sourcing business:
Try to know as well as possible the local culture, but also the business culture.
Lack of familiarity with them as well as communication barriers that will give rise to differences, not to mention discrepancies generate the most important causes for a failed activity with impact and major repercussions on the business of the company you work for.
Establish clear communication channels…
…with the operational departments, with the basic management level, as well as with the next level. You need to develop a strong, cooperative team both within your organization and abroad. This will help you address any corporate issues that may arise. And don’t forget to involve top management. If it is not behind you as a fulcrum, your work will be more difficult.
Seek to understand the technical aspects.
I am referring to the basic technical aspects of the products to be supplied. This does not necessarily mean being an expert in the field, but you should have at least a basic understanding of the components, subassemblies and finished products you purchase.
Carefully identify suppliers in low-cost regions.
This should be done on the basis of rigid procedures involving the qualification of potential suppliers at technical, qualitative, operational and financial level. Identify exactly what is happening to suppliers and their factory locations, not just corporate offices. This also involves the verification of ISO and other standard international certifications. Remember that it is extremely important that the qualification process includes the potential qualification of the supplier for subcontractors as well.
Before making any decision, visit the work points of potential suppliers.
For this stage, make sure you plan a delegation with enough days so that time is not a pressure that will prevent you from allocating the right time to each provider. Take into account at least 2 days for each provider.
As a final note, I would just say that I have listed some criteria that can affect the Global Sourcing process and obviously they are much more numerous. These criteria also vary depending on your organization’s strategies and involve a lot of complementary variables. You will be able to find out more about criteria, strategies or techniques if you join our group in the “Procurement” course.