I interviewed Mark Trowbridge who discussed The Evolution of a Marketplace – Trends Around the World.

 

 

 

 

 

How are procurement groups operating internationally?

 

A number of trends in the global marketplace. One of those is that the two primary, leading outsourcing countries—China and India—both are reaching some challenges that are perhaps going to change the direction of their value to the global procurement community.

 

The nation of India has, for a long time, been a leader in the outsourcing of labor-based services, such as call-center operations, computer programming, information technology, offshoring. The nation of India is running into problems and constraints with the nation’s infrastructure. It’s trucking and shipping infrastructure, as well as things like telecommunications infrastructure, data-networking infrastructure, those types of things are restraining the ability of leading firms to expand their India Operations.

 

There are clearly pockets of expertise and development in India, but there are also a lot of variants where the nationwide infrastructure is reaching some limits, which are constraining the ability of suppliers there. Historically, infrastructure constraints have constrained India from being a primary outsourcing location for manufacturing and have been really leading it more in the direction of Web-based services and other services that don’t rely as much on that same type of national infrastructure.

 

And the country of China, is experiencing labor shortages, some of those being brought about by the long-time effects of the one-child policy, (which is being revisited), but also because of the increasing need and demand for skilled labor along the Eastern seaboard in key cities like Beijing, Shanghai and Guangzhou, where it is becoming more and more difficult for manufacturing employers to find skilled workers at the same labor rates. Thus, the cost of labor has been increasing at a fairly dramatic level.

 

These sets of challenges for these two countries are now driving many global buyers to look elsewhere for low-cost resources; such as labor, manufacturing capabilities, et cetera. We’re seeing a lot of movement or redefinition of what a low-cost country is, now including areas like Vietnam or Indonesia or Malaysia, and moving some of those volumes away from China or India. These are some large-scale changes we’re seeing.

 

Can you talk about the mature marketplaces, what’s happening in those markets?

 

Sure. At the opposite end of the spectrum from the low-cost country regions of the world are the more mature marketplaces, especially in Europe and in the United States. Many of those marketplaces are beginning to undergo changes and challenges from the firms that are operating here. Typically, higher governmental taxation, grater sets of regulations, and constraints on their operations are making it more difficult for small- and entry-level suppliers to enter different market channels. We’re seeing a lot of consolidation through mergers and acquisitions of organizations and combinations of firms that used to compete against each other.

 

A classic example of a competitive marketplace was in the United States where, going back seven or eight years, we had five major players in the office-products industry. We had Corporate Express, we had Boise Cascade, Office Depot, Office Max, and we had Staples. Those have now all been consolidated through different mergers and acquisitions to the point where we have Office Depot and Staples controlling somewhere around 48 percent of the total office-supply sales in the country. And Staples is currently in merger discussion with the US Government's anti-trust officials to buy Office Depot!, which would leave one remaining industry leader.

 

We also have up-and-comers coming on, like the Walmarts and the Costcos that are beginning to play a major role in that sector. We always have a resurgence of some of these standalone office-supply dealers, but the marketplace is changing greatly. It’s just interesting to see what’s taking place there.

 

There’s a quote that I like from billionaire Warren Buffet, who once said, as he talked about the evolution of the marketplace, he used the three I’s. He said, “First come the innovators, then come the imitators, and then come the idiots.” There’s some truth in what he says.

 

An example of this trend was IBM, which was one of the innovators in the PC industry. A decade ago, the CEO of IBM announced that IBM was an "innovative company" and PCs were becoming a "commodity", so they were going to exit out of that particular industry and they sold off their PC division to a very well-established firm, which is Lenovo. IBM got out of that industry because that’s not where they wanted to position themselves.

 

What’s interesting is, we see similar types of trends taking place in many different segments, like information technology, where innovative firms come up with innovative solutions, software products, or hardware products, But then they eventually get bought out by larger firms and the unique, innovative nature of their products starts to disappear as they get morphed into the standard product lines that the larger firm is producing.

 

Just interesting to see what is taking place in different regions of the world. Today’s procurement professional really has to be sophisticated as they choose different strategies to work in different market segments around the world.

 

Thanks.

 

 

 

 

About Mark Trowbridge


Mark Trowbridge, CPSM, C.P.M, MCIPS has worked in procurement leadership roles for nearly 30 years.  His corporate career began as a Buyer for the third-largest global builder of pleasure yachts and continued with roles at Delta Airlines, the world’s largest airline and then through a series of financial services enterprises.  His final corporate position led three-quarters of strategic sourcing and all contracts management for Bank of America, one of the world’s largest financial services enterprises.  During his final two years with that company, Mark’s areas of responsibility generated more than a Quarter Billion Dollars in cost benefits for the enterprise’s global operations.

 

Mark’s career progressed as he entered the consulting arena, with roles in two SCM consultancies before co-founding Strategic Procurement Solutions, LLC (www.StrategicProcurementSolutions.com) in 1999.

 

During subsequent years, his firm has been privileged to work with many client organizations, including Apple, BP, Intel, Delphi, Kraft Foods, Excellus Health Plan, Allstate, Nationwide, Johnson & Johnson, Colgate-Palmolive, Intermountain Healthcare, State of Oregon, Oceaneering, Volvo North America, American Family Insurance, PacifiCare Health, State of Colorado, State of Massachusetts, Newmont Mining, MetLife, Constellation Energy,  Secure Horizons, SanDisk, Vision Service Plan, Adobe Systems, Sybase, Cooper Tire & Rubber, State of Maryland, Limited Brands, State of Minnesota, Sterling Jewelers, HollyFrontier, Canadian Ministry of Health, etc.

 

Mr. Trowbridge trains corporate, governmental, and conference audiences around the world on many SCM topics.  His business travels have taken him throughout North America, Europe, Asia and the Middle East.  His is among LinkedIn’s Top 1% Most Viewed Profiles.

 

He frequently authors article about supply chain management principles, with featured articles appearing in publications like Supply Chain Management Review, Inside Supply Management, eSide Supply Management, and Strategic Procurement Solutions’ own Best Practices in Supply Management Journal which is distributed bi-monthly to more than 13 Thousand procurement leaders around the world.

 

 

 

 

 

About Mark Trowbridge

 

 

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Mark Trowbridge


Principal at Strategic Procurement Solutions, LLC


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