Procurement: Facetime, how important is it in Asia?
Face-time, how important is it in Asia?
Anyone working in a company that participates in the global economy is very aware of the time commitment required to make the sales or procurement relationships work. It is common practice for manufacturers to meet their local materials suppliers one-on-one at least once per year and sometimes more often. In addition the manufacturer will tour a supplier’s facility to learn about any new products, processes and programs that they are working on and that they can leverage to grow their business. Why then do many small and medium enterprises (SMEs) building and developing international supply relationships not include this as part of their global procurement strategy? In my years of working with manufacturers and Asian based materials suppliers I can summarize the reasons for the lack of face-time to the following:
- Expensive to travel
- Extensive time commitment required effectively execute
- Do not know or understand that there may be payback in the practice
- Do not realize that other potential suppliers can be investigated and setup as secondary supplier or as a replacement supplier
Regardless of the reason, once a company involves itself in the global economy it should include in its plans at minimum an annual trip to visit and meet its global suppliers, take the opportunity to expand the materials it purchases by visiting new or competitive suppliers and share with the suppliers mutual strategies for growth from the relationship.
Facetime with North American suppliers can usually yield cost decreases or delay cost any increase so why not apply the same logic to a global supplier. Negotiating face to face is far more effective in managing costs and usually based on the volumes of materials used, the cost of the excursion pays for itself. Most importantly, it is very possible that additional payback opportunities from developing relationships for other materials required by the facility to produce its products can also be developed. It is important to note that it is easier to contribute hard savings to the company’s bottom line through cost reductions than it is for the company to get the same contribution from the sale of finished goods to its customers.