E merging markets offer so many potential benefits that they seem irresistible. Fast-growing emerging markets dangle the proverbial carrot of huge savings, but how can you realize that value without increasing your risk? Procurement, sourcing, and HR professionals who want to understand and succeed in an emerging market have a lot of responsibility.
At Beeline, we want to help you achieve global expertise, which is why we decided to share some of the lessons we learned during our recent expansions into emerging markets. Imagine reaping the benefits of an expanding footprint in emerging markets without the hassle of stumbling through the expansion on your own. It is entirely possible. In fact, because of our expanding presence in fast-growing emerging markets, such as Latin and South America, we are in a unique position to share what works and what does not. First, it is important to talk about some of the potential risks and how to avoid them.
What about the risk?
Despite the opportunity to tap into the massive savings available in emerging markets—places like Brazil, China, and Colombia—many procurement professionals remain hesitant to learn about procurement in emerging markets through trial-and-error. As excited as you may be to tackle expansion challenges on your own, you know it is not cost- or time-effective. Even though procurement success in emerging markets isn’t as easy as you may think, you can get a leg up on the competition by learning from Beeline’s experience.
Michael Magevney, Beeline’s VP of Global Strategy, shared some insights and lessons learned from Beeline’s recent expansions into Latin and South America in an effort to help procurement practitioners as they navigate the challenges of expanding markets.
Two Common Mistakes Can Cripple Your Expansion
Rapidly changing regulatory landscapes and infrastructure bottlenecks aside, unlocking the savings in emerging markets is an inexact science. Beeline has active programs in 69 countries, with 21 programs localized. Our experiences have taught us a lot about the challenges and successes of expanding into other countries. Part of what we have learned is this that you can enter emerging markets with confidence if you avoid these two common mistakes.
- Don’t Assume. The biggest risk is assuming that what’s going to work in the United States is going to work in other markets. According to Magevney, “The consistent theme that we see is that there are two big mistakes being made. One is ‘I want to replicate exactly what we have in the U.S. in that market.’ That kind of “lift-and-shift” attitude, where companies assume that ‘Everything I’ve done in the U.S. is going to work exactly the same in these countries’ is not the case.
- Don’t Go It Alone. The second biggest risk is deploying with no stakeholder engagement. This is a big mistake. You will need help because you are going to need the change of management, training, and education required to roll out your program successfully. Speaking from experience, Magevney said, “You may have successful deployment, but six days later you realize you didn’t do the change of management and the training, so that the data is staying up to date and everyone is using it. Change of management is important.”
Some Success Secrets
According to Magevney, “Some of the competitive advantages to sourcing that we’re seeing in these emerging markets and with a SaaS solution is it’s all web-based, so with the use of technology, you’re able to leverage that. The other piece is that these markets are growing markets…so you’ve got some opportunities for contractors, not only to play a support role in terms of helping run the business, but also we’re seeing people use contractors and consultants to grow their business in these countries.”
Other lessons learned from Beeline’s recent expansions into Latin and South America
How else can you take advantage of the explosive growth in these markets?
Magevney observed that the primary driver for expanding Beeline Services Procurement into these markets is compliance. “Clients want to ensure that they know who their contractors are in these countries and ensure that they’re onboarded and offboarded correctly and have the proper background checks, which vary by local laws.” There are other reasons for expansion as well. Many companies with a larger number of contractors in these markets use the VMS to automate the procurement process. According to Magevney, “They’re leveraging our technology to automate their approval and selection process. Those with fewer contractors may just want to make sure they’re compliant.” In a recent article from HRO Today Global Magazine, Magevney speaks more about how vendor management systems (VMS) can help to automate global workflow processes and better manage international workers.
4 Bonus Tips for Procurement Success in Emerging Markets
Here are few more tips to help you with your emerging market procurement strategies.
- Create an expansion roadmap before you start to expand into a new market. It’s important to create a roadmap before you start to expand into a new market. Magevney notes, “It’s important to understand where you’re expanding, strategically.”
- Get educated and take the time to understand the nuances of these markets. Every market is different. Magevney cautions, “You just can’t assume that just because I’ve saved this money in the U.S. market and it’s gone this way, that we can just take this and ship this into these other markets.”
- Tap a VMS/MSP partner to help identify risks and opportunities in the global supply chain. Let your partner fill in the knowledge gaps. According to Magevney, “both partners should have a good understanding of those markets and have access to that information to share with you that you can compare with your own company’s notes and research.”
- Prepare for Software Localization, internationalization, and globalization changes when expanding into emerging markets. Another area where your VMS/MSP partner can help is adjusting to these changes. For example, Beeline has a lot of international reference guides and other resources available for our customers.
Well, that’s an introduction to emerging markets from a “been-there-done-that” perspective. Have you expanded into emerging markets? Are you planning to? You don’t have to struggle or figure it out alone. Discuss your procurement challenges by starting a dialogue with us on Twitter at @BeelineVMS.