Mission Possible: Creating And Sustaining A Multi-national Sourcing Team
Claire S. Hauenstein, C.P.M., A.P.P.
Claire S. Hauenstein, C.P.M., A.P.P., President, Center for Purchasing Excellence, Pittsford, NY 14534 - 0697, Telephone: 716/381-1936, email@example.com.
83rd Annual International Conference Proceedings - 1998
Abstract. To effectively purchase equipment, parts, supplies, services and materials globally, many organizations are re-focusing their procurement process. One effective method is to establish a cross-functional, multi-national sourcing team. This presentation provides a blueprint, checklist, timelines, resource identification, as well as an assessment of opportunities and risks in such an undertaking.
Introduction. With the focus on cost reduction, supply chain management, supplier base rationalization and resource downsizing, purchasing functions are continually searching for ways to do more with less. One method to achieve these objectives is to purchase requirements and intangible commodities, such as services, globally by establishing multi-national sourcing teams. Mention of this to those unfamiliar with team sourcing sparks considerable interest but seems, on the surface, to be an overwhelming task. Our objective is to bring this activity into proper perspective and to provide a roadmap for starting the journey.
Understanding the team buying process, setting realistic objectives and achievable timelines, deploying resources appropriately and utilizing efficient purchasing procedures all are part of the framework which ultimately leads to success. This presentation provides a blueprint for effective cross-functional team establishment, a step-by-step checklist for identifying significant sourcing opportunities and qualified suppliers, time lines for effective contracting as well as in-sights into the cultural considerations of doing business with peer groups and suppliers globally.
Developing a few meaningful key metrics to measure progress and to keep management informed periodically is very important. Guidelines on how to select the key metrics and for meaningful, non-labor intensive management reporting will also be presented.
The Opportunity. Team sourcing on an international basis can seem to be a difficult and cumbersome process for those never involved with global purchasing or team buying. This presentation will convey that, with proper planning and organization, this can be done with considerable success in a reasonable period of time. With presentation of some of the "how to's" and some success stories, we hope to energize others to embrace this process.
Three objectives of the presentation:
- Understand what is meant by cross-functional team sourcing, particularly on an international basis. Areas to be covered will include:
- The importance of clearly understanding the company's strategy with respect to global sourcing
- Determining the skills required on the sourcing team
- Selection and training of team participants
- Roles and responsibilities of the team members
- Understanding cultural and ethical considerations
- Learn the importance of developing a well thought out process for identifying real sourcing opportunities and qualified suppliers.
- Selecting and analyzing the commodities to be addressed by understanding the internal customer's requirements thoroughly as well as the current suppliers' performance and capabilities
- Understanding where the commodity and industry are now and the outlook for the future
- Establishing competitive benchmarks by collecting and analyzing data, understanding best practices and determining significant gaps
- Developing commodity strategies to achieve the overall objectives
- Learn how to develop key measurements for guaranteeing progress against an agreed timeline
- Understanding mamagement's requirements for periodic review and process checks
- Institutionalizing a set of simple, well understand measures that are fact based
- Providing periodic status with required corrective actions in a pro-active, non-threatening manner
Special Challenges. The challenges of international sourcing for purchasing professionals who only conduct business within the United States need to be understood and addressed. This only serves to highlight the importance of advance planning to assure that objectives can be achieved.
Some of these challenges include those in the following areas:
- Language and communication
- Distance factors - lead times and inventory
- Pay terms
- Quality considerations
- Regulatory practices/government requirements
- Environmental considerations
The Role of Management. Another aspect of the process outlined here, and one that is not insignificant, is the role of management in fostering an environment where multi-national team sourcing will succeed. A key to success is the "charter" from management to implement the teams with clearly defined expectations with respect to deliverables and timeframe. Providing enablers for success is another important role for management including facilitation, if required; provision for staffing, if needed; travel budget; and systems/administrative support as required.
Summary. The benefits of global sourcing include not only the opportunity for competitive pricing, but also improved quality, technological advantage as well as assured raw material and component availability. These opportunities allow for true determination of the best balanced value for the company as well as improved "time to market" for their products and services. In this way, the "value added" provided by purchasing professionals can be clearly demonstrated. Multi-national sourcing teams are one way to accomplish this. Proper planning, preparation and implementation are the cornerstones of such a strategy and clearly are worth the time and effort to initiate in today's competitive environment.