As economic nationalism starts to gain hold of international trade many are calling to our leaders in an attempt to try to keep trade free (and fair). Unfortunately, many of the voices championing global trade are as single-tracked and close minded as their protectionist counterparts.
The strange thing is that both parties are just as far from the mark; because a one sided free-trade economy is often just as bad as a one sided protectionist economy. One side is blinded by the shiny cost per part savings, the other is blinded by local/regional opinion.
So what’s the solution?
Well, instead of joining the shouting game, purchasers can start to pave the way by focusing on the full cost of their contracts; awarding contracts to suppliers that offer best total value as opposed to lowest cost per part. It’s in line with the evolution of purchasing as a profession; and it’s in line with what corporate management is expecting from purchasing today. It’s about understanding the demand; and then going out to a global market (and let’s remember that local suppliers are just as vital a part of the global market as any other business) and getting a contract that satisfies that demand.
Given the amount of functionality available in e-sourcing software today; awarding the contract to a supplier based on more than just cost per part is the simplest part of the job. The real trick is to fully understand the real demand. Unfortunatly, this is where many purchasing organizations fail, by focusing too hard on external issues, they forget (or lack resources to manage) their internal responsibilities.
