Gear up for globalisation

20 June 2007
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21 June 2007

Only a third of buyers have a clear strategy for purchasing from aborad. So why aren't buyers taking international action? Paul Snell reports

José Manuel Martin Basas, global IT purchasing director at Santander, says buyers should not think of globalisation as simple geography. "Cost reduction is a way of life. But it's not important if it is local or global. It is what is important for the company. How can we do it better in terms of cost efficiency?"

The financial services firm operates in 40 countries worldwide, managing global sourcing with just four purchasers in Madrid who direct local buying teams around the world.

He adds buyers should take a standard approach. "You cannot try to globalise everything. Fix similar rules worldwide for provider selection, as it will give more transparency and solvency in the process."

How things have changed. A few years ago, many workers considered globalisation a monster, threatening to take away their jobs and shaking up the world's economy.

But as the initial frenzy over the "new world order" died down, so did the hostility. And (with the exception of G8 protesters) it seems most of the public now see globalisation as a positive force (Web news, 1 May).

And buyers are no exception. The straw poll taken at the CIPS Premier Conference this month showed 56 per cent of buyers see globalisation as an opportunity, with only 3 per cent now considering it a risk.

But opportunities will remain just that, unless buyers begin to take action. Even those at the top of the profession believe purchasing has failed to take full advantage of globalisation.

"We are good at talking, but we are failing to act," says Gerry Walsh, CIPS president and CPO at Associated British Foods. "We need to get out of that mindset because the rewards for doing this are huge."

Indeed, only a third of buyers in the poll had developed a clear sourcing strategy for purchasing from abroad.

Perhaps buyers do not believe globalisation is an issue of consequence for their role. If so, this is short-sighted, according to Wendy Becker, principal at consulting firm McKinsey.

"The internal focus is playing in people's mindsets. Things are going to happen to other people, but aren't going to happen to us. But companies ignore the long term at their folly."

Perhaps low international activity is indicative of a lack of support from other parts of the business. Only 17 per cent of buyers say they have been given full funding to explore the benefits of globalisation, and a further 39 per cent say they are allotted funds on a case-by-case basis.

Walsh insists purchasers should take the issue to the board, rather than wait for approval. "I am sceptical if we are delivering as much value as possible," he says.

"We are staying away from being strategic. But what's the worst that could happen? That the CEO will reject your good ideas?"

The primary concern for buyers at the Premier Conference was a lack of procurement capacity and capability. Some 32 per cent think their firms do not have the right skills to perform international sourcing.

But Walsh believes it is time to stop complaining and try to solve the problem internally. "Have we really competed with other professions to earn the best talent?" he asks.

"We are often quite poor at publicising our value, but this matters in a challenging environment."

SMjun2007

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