Global Sourcing – The need for a LPO

Global Sourcing has certainly been a trend in recent years and its benefits are clear…..increased cost savings being the primary.  As with most initiatives the key is in implementation and a strong recommendation has been to include a Local Procurement Office (LPO) as part of a Global Sourcing program.  The LPO is a procurement group placed in country and performs a variety of activities to ensure the supply chain is functioning within the local country. 

 A recent Accenture study, Global Sourcing for High Performance – Leading practices and the role of international procurement organizations in China highlighted not only the need for an LPO but for the LPO to be an integral part of the company’s procurement department.  This means this group should not exist in isolation doing their thing in some foreign land, but it should be involved in the day to day activities, projects, events, etc, just like the head procurement group.  The eSourcing tools and applications available today are a very effective method of facilitating the integration of these LPO.  These tools give procurement organizations the ability to share a wide variety of information and knowledge including:   standardized RFI/RFP/RFQ information, access to supplier information, and a record of past activities. 

Additionally, these tools are valuable for keeping an LPO up to date on the sourcing activities on going, which can lead to coordination of projects, spend aggregation, and standardization on specifications. 

As the sourcing world becomes more and more global, the ability to communicate, coordinate and share knowledge become more and more difficult.  Effectively using the technology available today can allow a global procurement group to operate as a cohesive team.

Be Sociable, Share!

2 Responses to Global Sourcing – The need for a LPO

  1. Hi,
    With regards to what you posted for LPO:

    “This means this group should not exist in isolation doing their thing in some foreign land, but it should be involved in the day to day activities, projects, events, etc, just like the head procurement group.”

    Could you elaborate more on this? I mean, how do you suggest the LPO be more involved if they are only stationed in a particular country to do the specific job of receiving orders for the head procurement group. Thanks.

  2. Hello Azmi,
    To be more involved an LPO should be part of team and not just taking direction from the head group. This can involve attending annual planning session, being given visibility into the planned projects of the head group, be able to provide suggestions (new suppliers, new capacity, etc), in other word functioning just like a member of the head procurement group. At the onset of a global sourcing program this may not be possible, but it should be the goal if the company has made a long term decision to pursue global sourcing.

Leave a Response