February 28, 2019
Managing business partnership risks in international procurement
By: Pierre A. David

Don't let your foreign suppliers hurt your business

After five years of experience as an assistant international logistics manager at a large home appliance retailer, you have recently accepted the position of supply chain manager at a company called PlugMix. The company has recently expanded and now sources most of its manufacturing abroad—and it has been experiencing some growing pains.

For example, last week, PlugMix received a shipment of coffeemakers from its Malaysian supplier that was not made to specifications. The color of the plastic shell differed from specifications. This was the third time in six months that a foreign supplier did not deliver products that met PlugMix specifications. Another incident happened when one of its new suppliers copied a PlugMix design and started selling the counterfeit product in Asia. Your boss is not happy with the current situation and expects you to take charge and correct these issues.

You are now faced with a supply chain that has rapidly grown in the last few months and recognize there are several questions you must address before you can start making changes in your new company’s procurement policies, including:

  • What are the current quality-control requirements that your company imposes on its international suppliers?

  • What methods can be put in place to ensure that these requirements are met?

  • What possible changes in Incoterms® rules could you make to have more control over your company’s costs?

  • What measures can you take to ensure that your company pays for the correct freight charges and services?

  • What policies and procedures should your company consider given the increase in products that it procures from overseas suppliers?

As the supply chain manager, coordinating these aspects of business partnership risk is an essential element of your work. Your company can make better use of its supply chain before the holiday season and its sales peak, which is six months from now.

Would you like to sharpen your skills for managing business partnership risks? Are you prepared to tackle international procurement risks your company faces? The Accenture Academy courses Business Partnership Risks in International Shipments, Preventing Supplier Risks in International Procurement, Preventing Payment Issues in International Procurement, and Managing Communication Issues in International Procurement will show you how you can manage business partnership risks by anticipating and preparing for them and by implementing policies that allow your management team to reduce or eliminate those risks.

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