Supply Excellence — The Toughest Place to Manage Global Supply

The Toughest Place to Manage Global Supply

July 18th, 2007 · by Tim Minahan · No Comments · LCCS and trade, supply management, supply market dynamics, supply risk

What’s the most challenging place in the world to negotiate and manage supply?

If you listen to the news media and blogsphere lately, you would likely answer China. (This response would be a lock if you’ve been reading SpendMatters’ PBS-like 27-part series on the hazards of China sourcing. For today’s guest blogger on the subject, I think Jason has found a Shanghai street vendor claiming that his kebob business was shut down after he received a shipment of bad chicken from Purdue.)

Yet, regarldess of your news source, your answer would be wrong.Early findings from a new IACCM study found that purchasing and supply chain professionals rate Europe as the most challenging region to negotiate and manage suppliers.

In sharing a preview of the findings with me earlier this week, IACCM President Tim Cummins reported that “Europe emerges as the geographic region that is most complex to do business with - in many cases, even for Europeans.” By contrast, “North America is seen by professionals from all geographies as by far the easiest and lowest risk trading partner.”

IACCM’s ongoing Challenges in Global Supply Chain study, which has already surveyed experienced procurement and supply chain professionals from all regions of the world, uncovered other unexpected and less publicized issues that add to the costs and risks of sourcing and managing supply globally.

One finding that might surprise Supply Excellence readers: North America companies reported more challenges managing global supply than companies in other regions. Cummins says that this may be the result of North American businesses having “less familiarity and experience with the realities of international trade - and perhaps being ’spoilt’ by the relative ease of trade within their domestic region.”

Bolstering this claim were findings that rated Europe as the toughest region within which to negotiate and manage supply. North American supply managers find it more challenging to do business with Europe than with Asia-Pacific suppliers. Even European supply chain execs name their own region as the most challenging within which to negotiate and manage supply relationships.

The harsh reality is that, despite its claims of a Eutopian pan-European trading community, the European Union still operates like an amalgam of distinct countries. This issue foces supply managers to navigate the cultures and regulations of multiple jurisdictions. Says Cummins: “On topics such as negotiation, labor issues and costs, Europe poses significantly greater difficulties.” (Hear Cummins recommendations on managing global supplier and contract relationships on this Supply Now podcast.)

For the record, Europeans say North America is the easiest locale to do business. Cummins doesn’t project why this is the case. But it is most likely because of the favorable U.S. trade rules, quality suppliers, solid infrastructure, and, more recently, the weak U.S. dollar.

Tune in here tomorrow for more early findings from IACCM’s latest investigation into the challenges of global supply. In the interim, take part in this ground-breaking benchmark study by completing this 5-minute survey. All participants will receive a complimentary copy of the final report.

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