Editor's Note: I wrote this column originally for Eye For Procurement's November newsletter.
Without a doubt, global sourcing -- or low cost country sourcing, as many call it -- is here to stay. Whether the popular "flavors" of the day will remain China and India in the future is certainly open to debate. But without question, companies of all sizes will continue to embrace global sources of supply for material and services alike both to reduce their cost structure and reach new markets. At the same time, however, this permanent global shift should raise as many red flags for an organization as it elevates the chance for bottom line improvement. For example, companies must weigh the increased logistical and business challenges and risks of global sourcing relative to its potential benefits. But most important of all, companies thinking about or engaged in global sourcing need to rethink the skills required on their team to make their efforts a success.
Building the right base of skills to operate in a global environment is not easy. Procurement organizations, especially, need to think outside of their comfort zone in terms of building and hiring the right type of talent. For example, professionals that come from a global trading background are often ideal candidates to lead global sourcing efforts because of their ability to focus on a total cost perspective (including tax, tariffs, and logistics) as well as handle intercultural negotiation and relationships issues. But these types of candidates are often not on the list of senior hires for companies who often rigidly look for a certain number of years in procurement or consulting before making Director and VP level candidate decisions.
In addition to global trading types, candidates with logistics and customs backgrounds can be essential as part of larger global sourcing teams. Going back to the importance of total landed cost in global sourcing -- and not just from a number crunching perspective but from an implementation one -- it's often the "non-procurement" skills that can make or break the difference in realizing the benefits from sourcing offshore. And logistics and customs professionals bring very specific skill sets to help companies not only make better decisions from a strategy and network design perspective, but from an implementation and management one as well.
I've found that it is the rare that candidate from a management consulting background -- even with expertise in supply chain and procurement -- that can make for a good senior low cost country sourcing practitioner if they lack on the ground expertise already sourcing from global countries. But that's not to say that consulting skills are not critical to make global sourcing work. From soft-selling concepts to get the rest of an organization on board with global sourcing decisions to creating analytical frameworks that can help determine optimal sourcing decisions (e.g., on a make / buy or total landed costs basis), senior consulting-types often introduce both an analytical / intellectual rigor and internal relationship management type of capability that are often challenging to find outside of the professional services world. The best ex-consultants are often good and quantifying risk and opportunity, walking colleagues not only to the right answer to a given question, but through the thought process and research that goes into making the right decision. This type of thinking and communication skill set is critical when it comes to quantifying such areas as global supply risk and sniffing out an organization's risk tolerance when it comes to global sourcing activity.
Aside from hiring right, it's often possible to develop skills internally. Here, it is important to realize that traditional certifications (such as the CPM) matter little in molding global sourcing professionals. Rather, it's the development of both soft and hard skills and knowledge (e.g., global tax, tariff, customs and logistics knowledge) which is so critical. Often times the best global sourcing professionals will be those willing to learn and dedicate themselves to what is necessary to succeed in a global environment, rather than relying on an existing title, knowledge base and level of accomplishment within procurement or operations. Above all, those organizations that treat global sourcing as a new discipline -- rather than a mere extension of procurement -- will be those who are most rewarded from a results perspective, assuming they prioritize skills and knowledge development within their teams.