Small- to medium-size companies can benefit
as much, if not more than larger corporations, from global purchasing. They could also use
global purchasing as a springboard for international business development, access to
distribution channels and product diversification through strategic alliances and equity
participation in foreign firms.
There are no theory nor system that apply uniquely to small- to medium-size companies when
it comes to global purchasing. Strategies defined for small- to medium-size companies draw
heavily from the experience of large corporations and the evolution of purchasing and
supply management, as well as from TMG experiences.There are so many methods being used all over the world that we need
to resolve questions of:
| - How do we make sense of all these methods? |
| - Which do we apply where? |
| - How do we make them compliment and
reinforce one another rather than compete and detract from each other? |
We will address some of the critical
issues of global purchasing for small- to medium-size companies, their interpretations and
significance to global sourcing as ingredients for success. We hope that you will gain
insights on the latest trends, initiatives, and strategies in purchasing and supply chain
management which will be useful to small- to medium-size companies’ leaders.
There was a time when we were limited only by how smart we were technologically. If we
could think of a way to do something, we could proceed with the assumption that the
resources would be there to do it.
During the last decade, however, we have been told more and
more frequently to go back and find another way to do it for fewer dollars, less energy,
fewer people, less material or in less time.
With the assumption that there are a hundred or a thousand
ways to do anything, what is the best way? … The best way in terms of best meeting
the objectives of what we want accomplished in relation to the resources required to do
it.
It is the process FOR GETTING MORE FOR LESS.
In a hardware product it is getting performance, better
quality and improved customer satisfaction for less cost to produce. Applied to an
organization or a service activity it is getting desired results faster with fewer
resources.
That what is demanded from modern day global purchasing and
supply chain management.
Leading Corporations throughout the world recognized that purchasing and supply chain management are
critically important strategic functions.
Because they are so important in today’s highly
competitive global market, a firm’s success depends upon its ability to fully
integrate its purchasing and supply chain management goals into its overall corporate
strategy.
Global purchasing presents the same complexities and
challenges found in "domestic purchasing" but with added opportunities
and risks.
Global purchasing does not just mean buying material from
overseas suppliers.
It means:
| - finding international suppliers which share
your short- and long-terms business objectives, |
| - integrating these suppliers deeply into
your business, and |
| - integrating these suppliers into the supply
chain. |
Your supply
chain starts at product research and development, and goes through to where you deliver
the product to customers. Supply chain efficiency is what it is all about.
In order to fully benefit from global purchasing, there is
a need of
| - closer and better relationships with
suppliers, |
| - mutual product development activity, and |
| - the mutual interest of two companies trying
to work on their long-term growth. |
Also, there is a need to be aware of the
complexities of purchasing decisions and supply chain management:
| * Purchasing decisions are complex because
they involve so many issues: |
| - price, quality, delivery times,
flexibility, and dependability; |
| - the need to address uncertainty in product
performance or reliability; |
| - the need to identify the best ways to make
rational decisions in the face of uncertainty; |
| - managing supplier relationships, a critical
component for a company to be competitive in cost, quality, and speed |
|
| * Supply Chain is complex because it involves
so many organizations: |
| - A supply chain is a network of facilities
and distribution options that performs the functions of procurement of materials, |
| - transformation of these materials into
intermediate and finished products, and |
| - the distribution of these finished products
to customers. |
Traditionally, marketing, distribution,
planning, manufacturing, and the purchasing organizations along the supply chain operated
independently. These organizations have their own objectives and these are often
conflicting. The result of these factors is that there is not a single, integrated plan
for the organization - there were as many plans as businesses.
Consequently, the purchasing and supply functions
will be part of integrated and cross-functional teams. And, in this evolution, the role
and importance of purchasing and supply management will emerge as a primary element of
business strategy and will span a broader range of activities than traditional
buying-related functions to include supplier qualification, certification, development,
strategic alliances, management of deliveries and closer coordination of inventories and
material flow.
Having introduced, in broad brush, the critical
issues of global purchasing which small- to medium-size companies will encounter, we will
now address each one of them in a more detailed way.
Some topics apply to all organizations, others apply
partly or in a combination form. And since there is no "method that fits all",
we will be raising a lot of questions and pointing out to the "how to".
It is recommended that an organization should start
by assessing its global purchasing readiness. Addressing management organizational issues
and financial/risk management issues is a good start.
What products or services to source should be the
next step.
In global purchasing, the process of identifying,
researching, evaluating prospective suppliers should also be applied to prospective
countries of supply.
Then we will cover the management of the global
purchasing business.
We will also investigate the alternatives of doing
global business without having your company directly involved in the process.
With Partnerships and Strategic Alliances we can evaluate
how your new venture into Global Purchasing can be a springboard for international
business development, access to distribution channels and product diversification and
equity participation in foreign firms. Remy M.
Mauduit
Comprehensive business literature at
the Business Bookstore (in association with
amazon.com). |
