As global economies recover,  Asian CPO’s must raise their teams game to orchestrate change strategies for the challenges and opportunities ahead:

During the past decade, the thirst of the western consumer, fed by global sourcing from low cost countries (LCC), has helped Asian companies embed themselves into the ecosystem of the west. Now, as the world’s economies recover from the recession, western CPO’s are reviewing sourcing strategies to address issues raised after a number of high profile safety, and corporate responsibility concerns. Whilst at home, their domestic customers appetite for consumption is stifled by debt. In this new economy,  Asia’s CPO’s will need to demonstrate leadership, confidence and raise  the skill levels in their teams.

Asian CPO’s must use the recovery as an opportunity to build capability in procurement by reviewing legacy decisions, current approaches to cost management, and the associated processes, policies, and tools for managing the increasingly complex, ‘socially responsible’ supply chains  for the next economic cycle and beyond:

Reputation & Brands

In the early days of low cost country sourcing (LCCS), price was often the driving factor for western buyers. Now in the aftermath of recession, serious and sometimes dangerous quality concerns, and not to forget the humanitarian horror stories, western companies will increasingly expect Asian companies to maintain compliance to strict quality, intellectual and humanitarian practices necessary to protect their reputation and brands. To meet these increased demands, Asian CPO’s will increasingly have to demonstrate robustness and integrity in their supply chains to satisfy western customers.

Deeper Collaborative Relationships

The necessary supply chain integrity can only be achieved through a more collaborative relationship between customer and supplier than has been the case when ‘price’ was the driving factor. Only by defining quality and service level requirements, negotiating sustainable margins, and sharing risk appropriately, can partners begin to build supply chain integrity. This collaboration will also serve to increase innovation, provide early warning systems for potential disruption and support increased agility to recover should disruption occur.

Rise of Consumerism  Brings SC Complexity

With the western consumer likely to play a reduced role in global economic growth,  Asian companies will need to both increase domestic demand beyond their major urban areas into the smaller cities and towns and also into other Asian economies, which will create additional distribution and service challenges.

As this trend gathers pace, increasingly the needs of domestic consumers will start to dictate the flows of goods and services. Complexity will rise through increases in the number of suppliers, stock-keeping units, production locations, geographies and demand channels served. Asian CPO’s will therefore need to invest in the tools and capabilities to manage this complexity.

The Brave CPO’s – Growing Self-belief and Confidence

Asia’s growing self-belief and confidence needs to be matched and in part lead by its CPO’s. Demands on them are increasing significantly requiring CPO’s to deal with the changing economic context and demonstrating agility to adopt appropriate strategies within this context.  Brave Asian CPO’s must:

• Constantly seek alignment with the wider organisation
• Actively promote the achievements of procurement to build credibility
• Ensure dialogue takes place to ensure decisions are made within a fact based framework which translates longer term business benefits
• Build coalitions of interest inside and outside of the organisation to drive procurement-led business solutions within their organisation
• Mentor the talent pool to develop the next generation of CPO

The next decade will be both exciting and challenging for Asian CPO’s, who will be well served by listening to the Chinese saying – that the wind and water will take turns to change path (feng shui lun liu zhuan). The underlying meaning in this is that power and fortune also swing with time and that the weak can one day become strong.

Brave CPO’s will need to orchestrate the change.

Nuff said …