Daily Archives: November 12, 2009

Have You Figured Out Where Your Cash Went Yet?

About a year ago, Bob Matthews of Paladin Associates penned a great post over on e-Sourcing Forum.

It’s the Fourth Quarter … Do You Know Where Your Cash Went?.

It’s a good question … and one that is as poignant as ever. Do you?

If you don’t, now would be a really good time to find out. There are a number of sourcing service providers with expertise in spend analysis that can quickly get you on the right track and, if you don’t already have one, help you get a spend analysis solution that will allow you to answer this question whenever you need to ask it.

Here are just a few of the service providers you can call (who are on the list because I’ve talked to them recently and/or verified recent wins for their customers):

Claro Group

iq West

Lexington Analytics

Mitchell Madison Group

MPower Group


Paladin Associates

Power Advocate

Source One

Treya Partners

Some Companies Will Move To China, Others Will Move Closer To Home

As noted in this recent Supply Chain Management Review article on the short tail, analyst Jeff Rubin estimates that the cost of transporting imported goods into the United States is now equivalent to a 9% tariff on imports. Nine Percent! That’s a significant cost considering it’s supposed to be “low cost country sourcing”. In addition, the cost of fuel is now about 40% of carrier operating costs — it used to be about 15%. And the U.S. dollar has significantly decreased in value against the Yuan, Yen, and Euro over the last three years, close to 20%. In fact, the decrease is so significant that, as I noted in a recent post, the United Nations Conference Is Calling For A New Global Currency.

When you put it all together, near-sourcing is starting to look pretty good, and a lot of smart companies are going to do it. And they’re going to win big.

Furthermore, so are a number of other companies as well. Who’s going to benefit, besides the companies that near-source to save transportation related costs? The SCMR article points out three types of companies who can win big with the coming shift:

  • Near-Sourcing Transportation & Service Providers
    Truck and rail is poised for growth, and so are 3PL firms that manage near-sourcing transportation.
  • Warehousers and Packagers
    Companies that can offer warehousing and packaging services to near-sourcing companies are also poised for growth.
  • Domestic Raw Materials & Manufacturing
    Near-sourcing means local production, and that means local manufacturing and raw materials.

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Overcoming Cultural Differences in International Trade with India

Today’s post, which is partially based on materials from Dick Locke’s seminars on International Purchasing, is edited by Dick Locke, Sourcing Innovation contributor and President of Global Procurement Group.

This post is going to examine some of the cultural differences that you may encounter (as an American or Canadian Sourcing / Procurement Professional) if you are doing business with India. We start by discussing each of the eight key cultural considerations outlined in our introductory post and highlight a few other points that you should be aware of.

As per our initial post, this discussion is high-level and general in nature and, as Dick Locke points out in his classic text on Global Supply Management, while it is too easy to stereotype a country, individuals in each country will vary from the stereotype. You need to take time to get to know the people you will be dealing with because their behavior may be nothing like the usual behavior of the country in which they reside and there is always a chance that you might run into people who are trained to act like you … while in your presence.

India is the 7th largest nation by area and the 2nd largest by population, with over 1.1 Billion residents. Furthermore, its population is growing rapidly and it is expected to be the most populous nation by 2030. It’s middle class is constantly growing, and, at over 300 Million, roughly matches the entire population of the United States.

It also has a long cultural history, like China, with roots that go all the way back to the Indus Valley civilizations in 3,000 BC. However, unlike China, where Mandarin (standard Chinese) is spoken by over half the population, India, with its dozens of languages, and hundreds of dialects, has five languages in the top 20 (Hindu, Bengali, Telugu, Marathi, and Tamil) compared to China’s three (Mandarin, Wu, and Yue [Cantonese]). It makes for a bit of a fractured society. However, thanks to its colonial history (the British Raj), a large percentage of the upper class, and a growing percentage of the middle class, speak English. Over 10% of its population speaks English as a first, second, or third language … so there is a very good chance you will be able to conduct your business entirely in English.

  • Power Distance
    India is based on the caste system (which you should never discuss) and its values are still strongly held. They accept a hierarchy of responsibility and duty and, as such, they have a large power distance.
  • Uncertainty Avoidance
    Many Indians are risk-takers and experimenters. Overall, they have a moderate tolerance for uncertainty.
  • Individualism
    Despite the caste system, and the fact that tasks are a collective exercise in India, I’ve always found them to be very individualistic, once you get to know them. But there is a duality at work between the harmonious culture prescribed by the caste system and the major religions of Hinduism, Buddhism, Jainism, and Sikhism and what I see as a fundamental need to be themselves, especially after the colonization by Britain in 1858.
  • Polychronic vs. Monochronic Time
    While there is a strong tendency towards monocrhonic time in their business dealings with the west, they are historically a polychronic culture that does not work by the clock.
  • Personal / Impersonal
    They tend to be personal and open, probably because privacy is rarely indulged in or sought. That being said, within India at least, personal relationships may be dictated by the caste they belong to.
  • Buyer / Seller Rank
    Equality, more or less. In India, relationships are more important than they appear and the deal, if any, will ultimately depend on whether or not you build a relationship. (But remember that in negotiations, price comes last. When you agree on a price, the negotiation is done. All terms and conditions that you require must be agreed on first.)
  • Importance of Harmony
    Harmony underlies many of their major religions, and is important. Tasks, and decisions, will normally be group efforts. In addition, you may find them reluctant to criticize as they believe that business failure can be attributed to bad karma.
  • Importance of Face
    Always give them face. Although they may make little attempt to conceal their true feelings, face is very important to them.

Finally, as I strongly recommended in my first post, if you plan to start doing business with any new international country, including India, you should do a thorough job on your homework. You can start with:

  • Dick Locke’s course on the Basics of Smart International Procurement (which is offered through Next Level Purchasing and counts towards the SPSM2 certification or ISM Continuing Education Hours), or
  • a customized seminar from Dick Locke’s Global Procurement Group. Dick Locke and his associates each have decades of experience doing business with over two dozen countries, including the fifteen biggest importers and exporters to and from the United States, and India. A single day with an expert like Dick Locke could save you months of headaches.

Again, a big thank you to Dick Locke for serving as editor for this special series of posts and providing some up-to-date materials and information for the purpose of this series.

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