Across the pond, Geraint John and his upstart procurement journal, CPO Agenda, have been doing a fine job of late of examining topics that are not just of interest to European procurement and supply chain executives, but global Spend Management leaders of all shapes, sizes and authority. In a recent article, the magazine examined the rise of Asian-based procurement headquarters for multinational organizations. The article notes that it's not just IBM who is capturing headlines moving procurement executives to China. For example, "last year, telecoms equipment maker Nortel appointed John Haydon as CPO and announced that he would relocate to Hong Kong, where he is responsible for an annual spend of around $7 billion. And in January, the world's biggest retailer, Wal-Mart, announced that Shenzhen-based Jeff Macho was being promoted to senior vice-president of global procurement, replacing a US-based executive."
What are the reasons companies are moving their top procurement and supply chain executives into the region? The article cites a consultant, Ben Schmittzehe, who notes that "the trend to shift sourcing to Asia has created a number of factors that mean companies need to have a substantial procurement presence in the region, which could stretch to relocation of the CPO." Why? "It's very difficult to get beyond the obvious suppliers if you don't have people on the ground ... There's a huge amount of fluctuation where suppliers are all trying to compete against each other and you need to keep track of that. Chinese companies are also setting up shop in Thailand and Vietnam and vice versa, so unless you're out there managing all that, it gets very complicated."
Complicated indeed. But in my view, there's another reason why companies are choosing to locate their top buying and operational executive in Asia. And that's because the region represents such a large growth and revenue opportunity as well. After all, supply chain localization is much more complicated -- and potentially rewarding -- than cost-based sourcing arbitrage. Here, feet on the street are not just important. They're essential.