Global Sourcing – A Scandanavian View

August 7th, 2007 at 07:04am David Bush - Iasta

Not too long ago, I summarized some of the key points from the CPO Agenda Debate World Class Procurement – The British Perspective that was run in their Spring 2007 issue. This has been followed by a summary of the How do you execute global sourcing quickly and effectively? debate that took place in Stockholm where Scandanavian procurement leaders were invited to share their experiences relative to the precent growth in low-cost country sourcing.

The debate included Edvin Bekkhus of Nycomed, Andrew Clough of Fast Search & Transfer, Philippe Courregelongue of EMEA/Emptoris, Johan Dingertz of Stora Enso, Johan Eriksson of Autoliv, Per Hill of AstraZeneca, Tommy Karlsson of Alfa Laval, Laurence King of Elekta, Henrik Larsen of AP Moller-Maersk, Christina Lundman-Lagerstedt of Telia Sonera, Marc Magistrali of Kone Corporation, Claes-Erik Noren of Assa Abloy, and Per Segerberg of Accenture, among others. In this post, I am going to summarize some of the key points from each contributor.

Edvin Bekkhus
Identify the people and the companies that you would like to see, go out there and have a look and meet them.

Andrew Clough
What we’re noticing now is that as the world flattens and we become global, we see that there is a lot of brainpower in lower-cost countries and there is an opportunity to get in there. We can keep our top-end engineers doing research and outsource a lot of the D in R&D. … Make sure your own house is in order first. We all know there are opportunities out there in global sourcing, but make sure you get buy in from the company, make sure that the people, processes and technology are matched up with the long-term strategy.

Philippe Courregelongue
You can alleviate the issue of being blacklisted by suppliers by making sure you understand the total cost of ownership associated with low-cost countries, that you compare terms in a sophisticated fashion with low-cost suppliers on a regular basis, and by bringing transparency to the process through RFQs.

Johan Dingertz
It’s also about what kind of relationship we would like to develop with our supply base. If you identify a supplier and say you are the low-cost provider, we don’t expect anything but low cost, that’s it. I think many Asian suppliers won’t accept that long term.

Johan Eriksson
It’s very easy to get quick wins, but you must not let those divert you away from your long-term strategy. You must also avoid it being a purchasing activity; it needs to become a company activity that all your colleagues understand and support.

Per Hill
I believe the best time to change a supplier is when there is an introduction of a new product or product generation.

Tommy Karlsson
You should go for local people and train them, then it’s a matter of doing your homework to make sure you have clear specifications and that you communicate clearly. You also need to have patience, because it will not happen on day one.

Laurence King
It’s really important to get commitment right at the top of the company to driving it through, and to keep everyone informed. … You need to keep internal people, and the old supply base, in the loop. Two or three years ago we got our existing suppliers in the same room and told them that we intended to source from low-cost countries, but that ideally we’d like them to go there. Very few of those have done anything about it, so now we are going back and saying that the next phase is the exit plan.

Henrik Larsen
You have to communicate the issue, engage in dialogue with stakeholders and harvest the ideas from them, because for a company our size, leveraging our global intelligence from our stakeholders is one of our finest tasks to do.

Christina Lundman-Lagerstedt
We will use the same processes, the same evaluation templates for suppliers in emerging markets that we would use for all other suppliers.

Marc Magistrali
Global sourcing has replaced purchasing and procurement terminology as it more accurately reflects the strategies and goals of forward-thinking businesses to succeed in a global landscape. … It’s about people first, setting aggressive but achievable targets, and acceptance that this is a journey with many bumps along the way that will require determination and resilience to overcome. Inspire and reward your personnel so that the right level of passion exists. And have fun.

Claes-Erik Noren
When we start up a new project we have a kick-off meeting with core teams, we look at success cases where we’ve done this before, and of course if something goes wrong it’s important to share that experience as well. … The relationship is all important, and I think we Westerners put too little emphasis on that. If you don’t you will have more problems; if you have good relationships it makes it much easier to solve them when they crop up.

Per Segerberg
One other aspect that’s important to be successful is to have a clear sourcing strategy and to communicate that to the supply base.

In summary, start with support, get your house in order, understand your costs, start with a strategy, preferably a long term one, look for long term partners and not just long term providers, evaluate low cost country providers as you would local suppliers, work with, and train, your suppliers, and constantly communicate. Sounds good to me.

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Entry Filed under: General, Supply Management Best Practices