A recent article on the Shared Services & Outsourcing Network on What Drives a Best Practice Sourcing Strategy contained an interview with Karen Mansell, the Head of Corporate Procurement and Business Process Outsourcing at AstraZeneca. While most articles of this sort don’t get my attention, as I already know what should drive a best practice sourcing strategy (just like you, as a regular reader of leading supply chain blogs), there was one paragraph that did get my attention as I was skimming through it.
Six questions in, the SSON asked about changes in sourcing behaviour as a result of AstraZeneca’s new outsourcing strategy, and related deployment methodologies, which puts everything on the table as an outsourcing candidate, including R&D. The response referenced AstraZeneca’s low cost country strategy and their presence in China and India. A low cost country sourcing strategy to India and China normally wouldn’t get my attention, as just about everyone is still jumping on that bandwagon whether it’s the right choice or not, but the article noted that AstraZeneca is looking at growing capability in all their emerging markets, especially from an original delivery centre point of view.
As a result, AstraZeneca is re-evaluating what supplier management looks like coming out of those areas and trying to put some supplier management on the ground, alongside the preferred supplier relationship. They’re trying to get closer to the supplier base, understand what innovation and insights look like, marry them up to business requirements, and drive aggressive supplier development programs.
This is the foundation for emerging markets done right! Get on the ground, get close to your supply base and improve their capabilities so you can manufacture for, and sell into, the local market. Then it’s not just outsourcing, it’s emerging market development, and that will be much more profitable in the long run. Logistics costs are only going to run-up again and labor costs are going to keep rising as the “emerging” markets of India and China take their place as the second and third largest global economies as the century progresses.