Wednesday, February 03, 2010

Top differences between global sourcing today and 500 BC?

On a recent flight I was sitting next to the global sourcing head for Danaher corporation, a 13 B$ company focused on industrial and consumer products. We were discussing the challenges of global sourcing in the last couple of years. He was mentioning that as a Westerner, it is easy for him to pick up the conversation when it is in Hindi but really tough when it is in Chinese or the South Indian languages. That got me thinking about the historical parallels of trade between the East and the West.

2500 years back, the Romans were trading with the Indians (the southern trade route) and the Chinese (the silk road). Of course, they did not have all of the tools that the bargainers of today have - the fancy price comparison app on their cell phone. But what else was different?

Here is my humorous attempt at what was not there in 500 BC - in chronological order of adoption. Would love to get your ideas for addition to this list.

  1. Smartphone app to look up price across a bunch of sellers. Two ports south, they have pepper on sale!
  2. Vendor rating or product rating from Amazon or Overstock or Sampling and destructive testing were the only options to check on the goods.
  3. Demand planning - We have to put on the ship what we have with only last year's trip as guide for what might be hot. Once we reach the port, we buy based on what was needed 3 months back when we left the last port.
  4. Exchange Rate - of course, this was pre-"Bretton Woods system" days. Romans had their coins. The Indians and Chinese had their coins. As long as both were in the same metal with same purity, it would have been simple. If one set of coins are in Gold and another in Silver, go pack to challenge 1.
  5. Agility - Hey! What an opportunity.  We just heard from some folks that this year's monsoon in India was bad and they would pay more for grains. Oops, we have already left the port and we can't turn around anymore given the wind pattern.


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