- 23
- MAY
- 2011
Procurement GPS: Globalisation - local is the new global
Author: Ian George - Categories: Global Sourcing, Procurement Strategy
In the 1980s business grasped the concept of globalisation and the great migration began. First, manufacturing migrated to locations such as Mexico and Eastern Europe. It then moved on to India and China. Now migration is occurring to the likes of Vietnam and Cambodia. However, some businesses are returning to their original countries. What is going on? Why do they keep moving? Simply put, these companies are price-focused. However, this approach can lead to impoverished outcomes and short-term, sub-optimal results. Service industries appear to be following the same path.
For some, 'globalisation' has been the solution to all ills; for others it has been the embodiment of all that is wrong with the current world order. As with everything, the truth is probably somewhere in the middle. The challenge facing businesses is to find the right model for their own situation. If we hold our nerve and stay as we are we might get left behind; if we go for broke we might be able to take the market.
To work out where the balancing point comes requires us to look at our own organisations first. We need to consider what our core competencies are and what we should divest. We need to understand the impact of outsourcing and globalisation on our customers. We need to think about our obligation to be socially responsible in what we do. We need to think about risk versus potential reward. What do we do if it goes wrong?
A few years ago a study of the Fortune 500 companies showed that those companies that ran their operations on financials were consistently outperformed by those that focused on their core activities and customers.
Globalisation is an opportunity to find and exploit the best that the world has to offer. The lesson is that opportunities need to reflect the culture, structure, priorities and ways of working of the business. If that means going halfway round the world then so be it. But don't forget that the best solution for your business might actually be on your doorstep.
