August 1, 2013

“Oh, the Places You’ll Go!” in Supplier Management

Today’s multinational corporations, those that register and operate in more than one country at a time, compete in a very different climate than most. Dealing with different cultures of employees, partners, suppliers, customers, and local laws/regulations is daunting.

Consider one particular customer’s makeup: 957,986 suppliers, across 153 site locations and 66 different countries. Oh, the places they went…

  • Off to the LDC (Less Developed Countries), where 29% of their suppliers reside, for factory audits.
  • Off to the BRIC (Brazil-Russia-India-China) countries (amongst others), where 10.5% of their suppliers reside, for elevated FCPA/Anti-bribery education and scrutiny.
  • Off to Central Africa, where 54 of their Tier-1 suppliers, and an unknown number of n-tier suppliers, reside, so they can comply with the Conflict Minerals Reporting required to ensure no conflict minerals originate from a smelter or mine in the Democratic Republic of the Congo or bordering country.
  • Off to collecting FFI (Foreign Financial Institution) info, for those non-US suppliers doing business with the US entity (7.8% of suppliers), to ensure their W-8 BEN-E is FATCA compliant.
  • Off to the latest weather-related incident to ensure that a volcano, tsunami, or other, does not impact the supply chain and related revenue, and where 13.3% of their suppliers reside in the counties claiming a disproportionate level of natural disasters.
  • Off to the “extreme risk” countries for child labor, where 10.1% of their suppliers reside, to enforce Code of Conduct standards.

Oh, the places you’ll go too. According to Dr. Seuss, “Will you succeed? Yes, you will indeed. 98¾% guaranteed.” But will it be easy – and will 98¾% be good enough?

Without a full understanding of your supply network, and the ability to quickly overcome these challenges, no, I’m afraid it won’t be easy. And 98¾% often won’t be acceptable. Consider Mattel, which delivered more than 98¾% of their toys without lead paint, but the remaining small margin (less than 1%) cost them: $14.3 million in fines and 21 million toys recalled, resulting in a 43% drop in stock price.

Simple it’s not, I’m afraid you will find, for a mind maker-upper to make up his mind.” For those that do, however, and leverage the Supplier Management solutions that can travel with you: “You’ll be on your way up! You’ll be seeing great sights! You’ll join the high fliers who soar to high heights.

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