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International Sourcing – Is Globalization Just A Buzz Word? |
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It seems the mainstream media has consistently placed globalization in the category of “done deal” but, as anyone that has tried to source common business commodities globally will attest, it is not a simple task.
Recently, a client wanted to source IT and Travel globally using established top tier suppliers in each industry. We prepared and sent out the RFP and received excellent responses. We grouped countries by region, EMEA, North America, ACPAC etc. as the client did not want to administer or manage these commodities by country. They realized that this approach may leave savings on the table, but our TCO models and their own preferences drove a regional solution. Both the Travel and IT companies quoted us regional prices for specified configurations. This is great, everything is fantastic, right? Wrong. After the down select to two suppliers in each category and during final negotiations, we started getting the real story. Negotiating country by country, they really couldn’t agree to the prices they quoted, as there were internal hurdles when working internationally within their companies.
After a long drawn out legal negotiation, our client finally received the pricing and terms proposed in the RFP responses, but it took many months to get there. Fortunately, we stated in the RFP that the prices would be effective at the start of the final negotiations, so we were able to get rebates back from the suppliers during this period. Otherwise, the savings realized from the sourcing process would have been diminished.
Globalization is not just a buzzword. The world is shrinking but don’t assume that, even working with established large multi-nationals, buying on a global basis is easy.
Good Sourcing!
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