Supply and Demand Chain Executive recently ran an op/ed by Charles Jackson, CEO of Quadrem, examining some of the opportunities and challenges of supplier enablement and development in second and third world regions. Last year, I had the chance to talk to a global sourcing executive from a mining company about their regional supplier development efforts. I learned that what he had to deal with from a supplier readiness standpoint would make most procurement professionals cringe. Jackson's op/ed hits home with this point, but also offers a solution to some of the challenges. According to Jackson, "the need to find and promote creative solutions to a diverse network of suppliers will intensify. Building 'digital bridges' within these markets can only be achieved by adopting solutions and strategies that meet local needs."
He goes on to cite the case of rural South Africa, a region where many smaller suppliers have limited access to computing power and bandwidth. To overcome the challenge of enabling and developing suppliers in these markets, companies have "built sophisticated systems that utilize high-speed, computer-generated communications to buy goods and services ... Now suppliers can use Internet kiosks, cell phones and fax machines to receive purchase orders and accept these orders in an automated way using smart data transformation techniques that 'translate' the fax images into the appropriate XML computer language and send the data directly into the multinationals' supply chain management systems."
Oceans away, suppliers in Peru and Indonesia are also evolving thanks to these types of approaches to enabling technology -- and everyone is benefiting as a result. Consider how "global corporations with operations located high in the mountains or on remote jungle islands are buying goods and services from small vendors who were formerly farmers or fishermen but who now have made the transition to become goods and service providers."
We can all agree that these activities are good news for multinationals and local suppliers alike. But in some cases, companies need to go beyond just technical enablement. They must lend social and cultural advice and support, changing behavior in the region. The gentleman I referenced at the beginning of this post told me that when his company put in a drinking well in one region in a particular developing market, they also had to hire guards so that thieves would not steal its various components to sell on the scrap market.
While the entire community benefited from fresh drinking water, the philosophy before the guards were in place was that "if I do not take it, someone else will." To overcome this type of mindset, companies -- not just governments -- must commit to supplier and regional development over the long haul, winning over the hearts and minds of local workers.
- Jason Busch