Now you have a purchasing office in China but the spend with low cost region suppliers doesn't pace your expectations. Your China team was able to get very favorable quotations, but no business materializes. Why?
It is all about communication. How was the cost advantage communicated to purchasing in headquarters? How was it communicated to engineers who are not very eager in changing suppliers? Managing internal customers is much more difficult than managing suppliers. It requires excellent communication. The local purchasing team is usually very successful managing local suppliers, but falls short in managing internal customers in headquarters to drive changes. Language barriers, cultural differences, multiple time zones and relationships with internal customers all contribute to the challenge. Having the right local purchasing leader who can communicate well can make or break your low cost region sourcing.
That's why you want to hire a trilingual who communicates well in Chinese, English and the language of supply chain management. Ideally this candidate should have worked a few years in a Western country, and is familiar with how business is conducted in Western culture. Such ideal candidates are a rare commodity and highly sought after in China. The recent economic crisis balanced the demand and supply a little; however, the balance won't last long as global economy recovers. More and more trillinguals moved back to China. For example, CSCS was talking with such a candidate. He got his MBA from a top supply chain program in the U.S., worked for Whirlpool and Tyco for multiple years and moved back China recently. It is very rare to have the unique background like his in both high volume (Whirlpool) and high mix (Tyco) industries. Sure he didn't stay in the job market for long before landing a job in Shanghai.
Communication is not only about language. It is more about understanding how things get done and addressing issues that way. For example, we are all human beings and human beings do business with human beings they know and trust. Engineers are no different. Ray Xu, MBA in supply chain and a typical trilingual who moved from the U.S. to Shanghai recently, shared his experience. When he was developing low cost region suppliers for a Fortune 500 company in the U.S., he often invited his engineers to China to meet with suppliers face to face. They solved issues during work day, had dinner together and sang Karaoke after hours. Such team building activities shortened the distance between suppliers and engineers, and improved engineers' confidence tremendously. In engineers' mind, the suppliers are no longer just suppliers who deliver goods; they are the same human beings just as engineers are. Gradually, engineers' concern went away and China suppliers got designed into products.
About the Author
Bob Liu, C.P.M., CPIM, is Managing Director of CSCS International. He is stationed in Silicon Valley and travels frequently to Greater China to help clients build their local supply chain organizations. Bob got his MBA in supply chain management, and has been managing global supply chains for over 10 years in the U.S. and China. He can be reached at bob.liu#ChinaSCservices.com (substitute # with @).
Bob Liu, C.P.M., CPIM, is Managing Director of CSCS International. He is stationed in Silicon Valley and travels frequently to Greater China to help clients build their local supply chain organizations. Bob got his MBA in supply chain management, and has been managing global supply chains for over 10 years in the U.S. and China. He can be reached at bob.liu#ChinaSCservices.com (substitute # with @).
