What pitfalls should companies watch out for while setting up a global program?
There are problems on the customer side and on the supplier side. Let me begin with the customer side. Taking the example I used before of all these procurement managers talking about the different prices they pay, let’s suppose that the average price across all the countries is $100. And they think, if we go to global procurement, we’ll probably get that down to $80. The countries that are paying $120 or $130 think that’s great. The countries that are paying $60 might not be very happy about global procurement. It’s the same sort of issue on the supplier side. If I’m the general manager of Argentina and I’m getting sales revenue out of one of these global customers, and now in comes some other unit that’s going to have responsibility, that’s cutting into my direct authority and responsibility. So there are a lot of internal problems, shifting from this very well entrenched geographic structure into some other structure that’s dealing with customers on a global basis. Basically, organi
