Cultural sensitivity extends to relations with the very suppliers that your company is looking to work with in the local market. Kumaraswami, a former senior manager at Accenture India, urges procurement executives to avoid treating the supplier engagement process in Asia the same as they would for vendors back home. For instance, he echoes other industry watchers in suggesting that developing vendors in Asia requires more face-time than in the West. "Doing business in Asia has a lot to do with relationships," he says. "When you meet with the supplier and put a face to a name, it gives everyone a far greater comfort level."
The lesson: Sure you can speak their language, but can you see the world through their eyes? Operating seamlessly in a foreign environment requires the flexibility to adapt to new cultural norms — those that don't conflict with non-negotiable ethical standards, of course. At the same time, you must be able to be a flag-bearer for your own company's culture where appropriate.
Relationship-building with suppliers serves several purposes, Kumaraswami adds. First, it's part of the supplier development process, handholding that helps the vendor understand and meet your company's quality, performance and ethical standards. It also can provide you with a level of comfort about the supplier in a region still plagued by the so-called "third shift" problem — where a supplier runs the production line "after hours" to make goods that the supplier sells on its own — and where recent quality issues have sparked large product recalls.
In addition, engaging more directly with senior management at the supplier can help them to understand your company's long-term objectives in the market, making them more willing to take a strategic view of their relationship with your company. This is particularly important when a company is in the initial stages of establishing its presence in a developing market and is pursuing relationships with the top-tier suppliers in that market, Kumaraswami says. "When you're doing low-cost-country sourcing and you're meeting with the best suppliers who are already doing business with a number of Western companies, they have limited capacity and limited capability to ramp up," he explains. "So you need to ‘sell' why doing business with your company is more beneficial, and why they should make additional capital expenditure decisions to make sure that they grab this particular business."
The lesson: Make sure you have the background in supplier development necessary to turn new vendors into reliable partners, and brush up on your marketing skills to ensure that you can sell the benefits of working with your company to the top-ranked suppliers.
For executives looking to make a name for themselves by forging trails to new, lower-cost supply bases overseas, perhaps the most important quality is simply wanderlust or restlessness. The fact is, says Eqos' Chris Foulkes, that the enterprises with the most advanced low-cost-country sourcing programs already are looking further afield than the current markets in China and India. "Senior managers at the companies with more mature sourcing organizations are actually scouring the world for the next places to be sourcing from," Foulkes says. That could be farther inland in China, in other areas of the Far East or Latin America, or even in Africa — although infrastructure issues in many of these virgin lands remain a formidable hurdle. Either way, Foulkes says, "If you're sourcing just in Hong Kong, you're probably competing with everybody else."
The lesson: If you're contemplating going overseas, you've probably already been bitten by the expatriate bug. Just remember to keep the suitcase at the ready and your passport handy so that you can be first on the ground in the next low-cost El Dorado.