International Procurement Strategies

International Procurement Strategies : Challenges and Opportunities

PurchTips Edition #442

International procurement has a host of complexities that must be effectively managed. The business case for international procurement is a superior price point or the availability of low-cost raw material inputs. The challenges include supply disruption, trade wars, cyber threats, delays, territorial warfare, piracy, bullwhip effect, cultural complexity, disruptive technologies, terrorism, traceability issues, and lengthy lead times.

International Procurement Strategies

Procurement Professionals must understand the business landscape in which their supply chains operate and in the context of customer requirements. The fact that the modern customer demands products and services delivered cheaper, quicker, and of higher quality poses another level of constraints on the international procurement function.

The following are strategies that can create opportunities for International Procurement Synergy:

  1. Leverage End to End Synergy. This requires Business Process Improvement and Optimization. The key is to clearly define supply chain problems, measure the degree of non-conformance to business and customer requirements, determine root causes of non-conformance and design cost-effective solutions to close performance gaps.
  2. Preserve and care about the Ecology and Landscape that provide raw material inputs. Procurement professionals must understand that there is a dramatic increase in demand for eco-friendly products and services. Strategies must be put in place to focus on doing business solely with eco-friendly suppliers who will facilitate this critical customer requirement. Buying organizations should stay abreast of developments related to climate change, global warming, and eco-friendly consciousness.
  3. Improve the lives of people in the international communities we purchase from. Many progressive companies provide educational, healthcare, and other social benefit programs to the international communities that provide raw material inputs they purchase. The key is sincerity!
  4. Leverage Common Interest into a solid Integrated Strategic Master Plan. This involves intense collaboration, information sharing, and innovation. The idea is to draft up a master document that draws on the basic strategic needs and requirements of all suppliers, customers, and buying organizations. The goal is to negotiate a synergistic strategic plan that maximizes benefit to all key stakeholders. The traditional procurement methods of beating up suppliers and focusing solely on price are losing ground. The key is to strengthen the entire supply chain by focusing on common interests and focusing on the collective needs, requirements, and interest of all key stakeholder groups.
  5. Leverage of Sophisticated Modern Technology. Artificial Intelligence, Blockchain, and other Digital Procurement Technologies can be leveraged to optimize procurement and supply chain processes. These initiatives can enhance the realization of point #1 of Leveraging “End to End Synergy”. These technologies greatly improve, transactional accuracy, visibility, error proofing, speed, and reduce the Total Cost of Ownership. Process Mapping, Value Stream Mapping, SIPOC Mapping, Root Cause Analysis, 80/20 and 4/50 Analysis, Input and Process Variable Analysis, Spend Analysis, Supplier Selection Analysis, Integrated Strategic Buying Plans, and Cost Savings Targets can be leveraged prior to technology deployment.

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Copyright 2019. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By David Millington, SPSM, SPSM2, SPSM3 - Director of Education (Next Level Purchasing Association)


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