Supplier selection - complexity on the global stage

| 0 Comments
Supplier selection 2.jpgAs emerging economies place successful, fast-growing, and culturally different companies onto the global stage in the coming decade, the process of selecting suppliers will become riskier, more complicated, and more fluid. This is the consensus among Procurement Executives who responded to an Ariba survey on Procurement in 2020.

“I believe we are going to see a significantly more diverse and complicated business landscape emerge in the coming decade,” observes Tim Cummins, President and Chief Executive Officer of the International Association for Contract & Commercial Management (IACCM).

“We are already beginning to see some of that complexity as organisations from emerging economies — Mexico, India, the Philippines, for example — succeed at moving into the global trading arena.

“These organisations are not coming to the global economy with the same business models as Western organisations,” Cummins notes. “Their expertise, for example, is quite often around building brands in emerging markets. In a sense, they are attacking the big Western players from very different directions.

“Many of the emerging global players are, in fact, conglomerates. And, while that business model went out of fashion some years ago in the West, it appears to be giving newer global players some very real advantages particularly in areas like innovation and cost control.”

For procurement, Cummins suggests this will dramatically affect commercial relationships with suppliers. “The range of supplier choices is going to get much broader, so we are going to have to become a lot more sophisticated in our supplier discovery and selection processes. We will still look for opportunities to lower costs, but I believe we will become far more focused on quality and innovation.

“We will also emphasize versatility, agility and flexibility in our trading relationships, dispensing with older business models in which we sought to guarantee supply or prices in return for committed procurement timeframes or spend volumes. For example, the whole idea of long-term commodity supply agreements has already disappeared from global metals markets.”

“the whole idea of long-term
commodity supply agreements has already
disappeared from global metals markets”

Greater supply-market complexity and less stability in trading relationships are going to demand more creativity and different thinking from procurement, Cummins suggests. “Procurement will need to rethink how it hedges and manages volatility and risk. With some suppliers, it is going to mean we go for a greater degree of collaboration. And I think—for some businesses—the trend may lead them back to more vertical or horizontal integration. We have seen it happening already in areas like mining.

“As we become more sophisticated in our supplier selection processes,” Cummins adds, “we will get much better at understanding the importance of things like cultural fit between organizations. Far too many sourcing decisions have been made on a cost-only basis without considering the importance of cultural fit. The result has been far too many important relationships that fail.”

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

 

Career opportunites

Commodity Manager

  • <500 000 Commodities Permanent Procurement Management Western Cape
R700 000 - R850 000 per annum,Location: Western ...More

National Supply Chain Manager

  • <500 000 Across borders Permanent Procurement Management Supply Chain
R750 000 - R1 000 000 per annum,Location: ...More

Industrial Engineer

  • <500 000 >500 000 Industrial Engineer Operations, Planning & Inventory Permanent Western Cape
R450 000- R500 000 CTC per annum,Location: Western ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Management
Category: Procurement,Salary: R700 000 - R800 000 per ...More

Supply Chain Manager

  • <500 000 Gauteng Permanent Procurement Management Supply Chain
Category: Consulting,Salary: R750 000 - R800 000 CTC ...More

Logistics Manager

  • <500 000 Across borders Logistics & Warehousing Permanent Procurement Management
Category: Logistics,Salary: R900 000 - R1 000 000 ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Area of Specialisation: Planning,Salary: R500 000 - R650 ...More

Industrial Engineer

  • <500 000 Analyst Gauteng Industrial Engineer Permanent
R800 000 - R850 000 CTC per annum.Location: ...More

Security Manager

  • <500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
(Total Cost to Company R350K - R550K).This is ...More

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R650k - R750k) excluding

Commodity Manager Raw Materials

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
(Total Cost to Company R980k - R800k) excluding ...More

Commodity Manager Logistics

  • <500 000 Commodities Gauteng Logistics & Warehousing Permanent
(Total Cost to Company R1mil - R900k).Industry: Engineering

Procurement Consultant

  • <500 000 Gauteng Permanent Procurement Consultant Procurement Management
(Total Cost To Company 550K - 450K) includes ...More

Commodity Manager MRO &CAPEX

  • <500 000 Commodities Gauteng Permanent Projects / Category Management
(Total Cost To Company 900k - 750k) includes ...More

Commodity Specialist - IT Hardware and Software

  • <500 000 Commodities Gauteng Logistics & Warehousing Permanent
(Total Cost to Company R550k - R650k) including

Sourcing Specialist

  • <500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
(Total Cost to Company 500k - 650k)Experience and ...More

Supply Chain Manager

  • <500 000 Gauteng Permanent Procurement Management Supply Chain
(Total Cost to Company R850k - R1mil) includes

Senior Consultant

  • <500 000 Gauteng Permanent Procurement Consultant Strategic Sourcing
(Total Cost To Company 500k - R750k) includes ...More

I.T Procurement Specialist

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
(Total Cost to Company R350k - R450k) includes

Logistics Manager

  • <500 000 Gauteng Logistics & Warehousing Permanent Procurement Management
(Total Cost to Company R700k - R550k) Including ...More