Anniversary Publication Series | Part 1/3: Sourcing in 2022 & Beyond
This year marks an important milestone for Fiducia Management Consultants – our 40th anniversary. Since 1982, we live by our core values of collaboration, trust, and dedication, which have shaped the dynamic and effective organisation that we have become.
While recent turbulences have resulted in unprecedented levels of disruption to business operations, at the same time they brought about opportunities to implement bold operational changes.
In our series, we reflect on such changes and how we can continue to support your growth in three key business areas: Sourcing, Manufacturing and Sales.
Today we begin with Sourcing: while activity rebounded in some regions, sourcing managers face continued disruptions in weakened supply chains. Which strategic changes should businesses implement to help build long-term agility and resilience?
1. Rethinking Your Sourcing Strategy
Pre-Pandemic Challenges Remain
China’s COVID lockdowns are inflicting a heavy toll on businesses and have disrupted supply chains. While we expect restrictions to ease over time, other challenges remain.
Even before the pandemic supply chains faced geopolitical and environmental disruptions as well as growing requirements to comply with environmental, social, and corporate governance (ESG) goals.
Developing a dynamic sourcing strategy must be a strategic priority for European-based companies operating in the APAC region.
Taking Advantage of the RCEP
Many of our Clients are shifting their gaze from China as a single-sourcing solution to alternative markets and suppliers in the region amid concerns around trade tariffs, rising labour costs and sustainability. Trade agreements such as the RCEP will enable companies to make use of a “China+1” sourcing strategy more systematically.
Multiple sourcing locations can help spread risk by:
- Building flexibility into supply chains, allowing companies to pivot in response to unforeseen disruptions or changing consumer demands.
- Enabling faster resolution of regional issues, with local managers better placed to react to changing market conditions.
- Encouraging healthy competition between sourcing organisations.
However, diversification brings potential problems. As supply chains become more complex, developing a strategy to ensure streamlined operations and compliance is crucial. Each sourcing location is separated not only by location but by different regulations and priorities. It is vital to introduce digitisation across the supply chain to increase transparency and facilitate collaboration between all APAC offices and company headquarters.
New Sustainability Standards
From 2023, large SMEs and MNCs based in Germany should comply with the German Supply Chain Law(GSCL). Similar laws are expected to be introduced in other EU member states.
Directly affected companies have to ensure that suppliers across all tiers of their supply chain remain compliant. This means establishing effective risk management strategies and reporting processes.
Fiducia can help you identify how the new regulations will affect your company and provide advice to minimise compliance risks.
2. Optimising Your Supply Chain
Many companies do not have the internal resources to design and implement a transformative sourcing strategy – but a proactive approach helps companies to gain a competitive advantage and secure long-term resilience and agility.
Driving Organisational Transformation
Internal and external analysis:
- Define organisational priorities e.g.:
– Increased customer-centricity and agility
– Risk diversification
– Operational excellence
– Greater supplier collaboration
– Sustainability - Collect supply/sourcing market intelligence and compare findings against current sourcing practices.
- Identify new business opportunities and internal gaps.
Target formulation:
- Design a central sourcing strategy and the quantitative/qualitative objectives for sourcing teams; prepare a business case and plan.
- Define and set up a structure with clear roles and responsibilities.
Implementation:
- Adjust sourcing strategy and integrate newly identified optimisation potentials.
- Explore options for new sourcing pools, strategic partners and suppliers.
- Provide administrative support.
Outsourcing Support Functions
Continuous supply chain evaluation must be a key component of a company’s sourcing strategy to:
- Monitor suppliers’ performance.
- Check business objectives are being met.
- Communicate quickly with suppliers to resolve any issues.
Doing so requires on-site presence and on-time action – something that remains a challenge for companies headquartered in Europe in the current business environment. Outsourcing, therefore, brings many advantages.
With cross-industry knowledge of sourcing best practices and technology, we act as an extended arm for our Clients in the region by taking care of non-core activities such as:
- Accounting
- Payroll
- Order processing
- Communication with suppliers
- Customs clearance
Digitising Your Business Operations: The Fiducia ERP System
As a key part of our service offering, our ERP and Trade experts can discuss how digitisation can be integrated into your supply chain to improve efficiency and compliance.
Built upon Microsoft Dynamics 365 Business Central, the system gives Clients a 360-degree view of essential supply chain functions and enables Clients to collaborate with us while maintaining full control over data, decisions, and processes.
- Accelerate time to market with centralised product information management.
- Predict demand using AI and make inventory decisions in near-real time.
- Streamline procurement processes and improve cost management.
- Build agile manufacturing processes using the Internet of Things (IoT).
- Expedite delivery times by optimising inventory & automating warehousing operations.
- Perform proactive equipment maintenance to sustain operational excellence.
3. Client Success Stories
Over the past decades, we advised many leading sourcing organisations on how to improve operational efficiency and ensure compliance across supply chains in Greater China and APAC. In our two Client case studies, we highlight how our long-standing support enabled shared success.
European Retailer
We helped our Client streamline sourcing processes and increase cross-office collaboration across multiple sourcing offices in Asia and buying teams in Europe leading to significant cost savings. We achieved this by:
- Analysing the current model’s performance based on market trends and discovery interviews with industry experts.
- Defining scenarios for the target sourcing model and the design of a target sourcing strategy, organisation, and processes.
- Implementing the new model and strategy in several phases, as set out in a transformation roadmap.
“Fiducia is able to cover our entire business model with their local experts. Fiducia’s ERP-System has provided our company with a common language across all of the subsidiaries, which makes the consolidation of our accounts much more consistent.”
— Thomas Paroubek, (former) Managing Director, Migros HK Ltd.
Power Tools Manufacturer
A market leader in the development and distribution of power and garden tools, our Client processed sales orders valued at more than USD 500m in 2021.
As part of a partnership spanning over 25 years, we support our Client with non-core business processes like order and shipment handling, AR/AP, and money collection.
We lay a constant focus on improving operational efficiency by jointly reviewing existing processes and digitising systems. By adopting Fiducia’s end-to-end order management service, the Client benefited from:
- Highly efficient, lean operations.
- Minimal offshore company management effort.
- Flawless execution of instructions.
- Unbiased professional service to all parties.
- Continuous access to specialised HR services.
“The cooperation between Einhell AG and Fiducia has been a great pleasure from its very beginning in 1993. We are particularly pleased with the correctness Fiducia has shown and exercised from day one.”
— Josef Thannhuber, Board of Directors, Einhell Germany AG