The complexity of global supply chains requires a constant effort of readjustment and re-evaluation, and in the months following the outbreak of the COVID-19 pandemic, those global connections have become even more tenuous.
Companies require multiple assets to succeed, including ever-greater amounts of data and analytics, end-to-end supply-chain visibility, and a new level of optionality and risk prevention that can help them to weather the next disaster. Among the most important components of a successful global supply chain, however, is one that’s often least mentioned: access to a local guide.
An understanding of local cultures, customs and ways of doing business is even more important this year, as companies realign their supply chains and forge new partnerships to replace old ones that were broken during the lengthy pandemic-driven shutdown. Much of that realignment is likely to involve expanding sourcing in other areas. Whereas previously a company might have focused much of its sourcing on a single region of China, a newer model of de-risking will build in options from other regions as well. Some of those Chinese suppliers may be supplemented by, or replaced by, those in Southeast Asia, or Central or South America, where the supply-chain manager might have less familiarity. Courting new suppliers in different countries presents more than just a logistical challenge; it presents a cultural one as well.
Managing a global supply chain is at once easier and more difficult in today’s environment. Easier because we have better tools at our disposal, more data and analytics, and more sophisticated automation driven by artificial intelligence. More difficult because, with more global connections, there’s a greater risk of putting those connections in jeopardy due to a lack of cultural misunderstanding.
“Going into a new country to build your supply chain has always been a challenge, but fortunately for us today, we have new tools at our disposal,” says Ash Sobhe, international businessman and founding partner of ThinkPeeps.com, a search engine that locates and connects subject-matter experts over live video conferencing. “Understanding a trading partner’s business and social culture is every bit as important as understanding their product and their manufacturing processes. As companies continue to reach out across the globe to constantly re-evaluate and re-bid their supply contracts, one of the biggest risks is in either not getting the deal due to cultural misunderstanding, or, even if the contract is signed, the future disintegration of corporate culture and mutual understanding, which may cause the value of the contract to be diminished.”
Supply-chain managers speak of the need for insight into the supplier ecosystem. The ability to view each supplier’s inventory in real time and compare multiple options, taking into account shipping costs, time to delivery, and countless other factors, is now available. Companies that avail themselves of these tools will have a stronger supply chain than those who do not.
But while such tools promise the intelligence needed to keep the wheels of commerce moving, they fail to deliver insights into softer issues that might prove equally important to the flow of goods across borders.
“A robust supply chain requires regional experts who are familiar with not only local business customs, but also will be on top of local or regional events that may impact the free flow of goods,” says Jeff Sutich, partner with ThinkPeeps. Adds Sobhe: “Finding those regional experts is not always easy.”
The key lies in being able to input a set of parameters into a search engine and be connected with the appropriate regional expert, says Sobhe. “If you want to conduct business in Thailand, for example, you might search for a regional expert in a specified industry who is fluent in English and Thai, located in Bangkok, and familiar with local cultural customs. That person would be able to tell you that you shouldn’t expect to shake hands with your Thai counterpart unless they offer their hand first. They can inform you of business customs, how long to expect the decision-making process to take, and who is likely to be involved. And they can help you navigate the difficult waters of local and regional government compliance and licensure, keeping you abreast of political developments that can impact your business.
Company culture is among the greatest drivers of success, and in a global supplier ecosystem, there are bound to be cultural clashes. In such cases, local guides can prove essential in building and maintaining supplier relationships. At a time when most of the world’s consumers and two-thirds of their purchasing power reside outside the U.S., a global supplier focus is more essential than ever. A deeper and more meaningful understanding of foreign cultures and ways of doing business will become an increasingly important part of maintaining a successful supplier ecosystem.
Dan Blacharski is president of Ugly Dog Media.
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