The World of Supplier Diversity and Global Sourcing
October 14, 2008
Part one of two
Supplier diversity and global sourcing are perhaps two trends in strategic sourcing that continue to gain popularity and positive impact among corporations and the federal government. As key components of the supply-chain management, supplier diversity and global sourcing are procurement processes that seek to improve a company’s purchasing activities, with the goal of sourcing for the lowest total cost and creating immediate and long-term savings to improve the bottom line.
As a strategic business process, supplier diversity has become tantamount to equal opportunity, aimed at providing companies owned by minorities and women the leverage to become suppliers to major corporations and the federal government. For buyers, this process has become rooted in their mindset that, as responsible corporate citizens, they should purchase their goods and services from a diverse base of suppliers, just as they ask a diverse group of consumers to purchase their finished products.
Global sourcing, on the other hand, is strategic sourcing within the context of today’s increasingly global marketplace. Because this process essentially takes advantage of global capabilities and efficiencies in the delivery of a product or service, most major corporations now have it as part of their procurement strategy. And this process is perhaps on its way to becoming ubiquitous, as it is prevalent in call centers in India, manufactured goods produced in China and IT-related work in India and Eastern Europe, all with one common denominator: lower cost.
Trend Toward Optimization
Until recently, it was common practice for corporate buyers to play suppliers off against each other, offering only limited, short-term contracts and frequently switching suppliers. Today, however, major changes have occurred by which companies approach and manage their supply base. Most notably, companies in the manufacturing industry have streamlined the total number of suppliers they maintain. They now rely on larger, full-service suppliers to design and build products, eliminating many suppliers providing varying components of the product.
From a corporate perspective, the shift toward increased reliance on fewer suppliers could arguably be viewed as practical. There is a need to control or reduce unit cost, as well as total procurement cost, to the point where suppliers are now involved early in the process (e.g. design of the product), which in turn creates benefits, such as lower costs and faster time to market. However, a ripple effect from this consolidation effort could adversely affect minority suppliers who have been trying to compete with other traditional suppliers in an already crowded field.
Filling the Gap
This is where the U.S. Pan Asian American Chamber of Commerce (USPAACC-EF) fills the gap. As part of its steadfast commitment to help its members establish successful contracting relationships with Fortune 500 companies and the federal government, USPAACC-EF continues to seek out and identify world-class products and services by top-caliber Asian American suppliers. They also provide these suppliers access to supplier diversity programs through matchmaking and networking sessions and educational summits and workshops.
Susan Au Allen is the National President & CEO of the U.S. Pan Asian American Chamber of Commerce Education Foundation.
Comments
One Response to “The World of Supplier Diversity and Global Sourcing”
Got something to say?
Dear Susan Au Allen:
Congratulations!
On keeping “abreast” of the global financial “bubble”, but . . .
Here, on the “home front” of prodigious, prodigal, and presumptuous predatories, methinks you are behind the times.
Here in these benighted states of amurrika, odds are that barter, and swap, and services for goods, or vice versa, may well be the order of this new day.
Maybe even co-ops and outright sharing and caring and splitting the overhead and the supermarket costs of subsistence.
Whatever, it’s a good thing that seniors don’t need to eat as much as their wont, and their wants begin to match their pocketbooks, that is, if they still have one.
Frank Eng