global sourcing perspectives from a small danish company october 18 th, 2010
TRANSCRIPT
Global SourcingGlobal SourcingPerspectives from a small Perspectives from a small
Danish companyDanish company
October 18th, 2010
The perspectives in this lecture The perspectives in this lecture are focused on practical are focused on practical
background and experiences background and experiences from Nor-Feed A/S from Nor-Feed A/S
– – not on theoretical inputnot on theoretical input
Nor-Feed’s definition of Nor-Feed’s definition of ”global sourcing””global sourcing”
““Global sourcing is the Global sourcing is the procurement of products and of procurement of products and of services from global markets”services from global markets”
Introduction to Nor-Feed A/SIntroduction to Nor-Feed A/S• Since 1988, Nor-Feed has worked with natural
feed additives that improve animals’ production parameters and general health
• The products are alternatives to conventional antibiotic and chemotherapeutic growth promoters
• Nor-Feed aims at developing products which are safe to use for animals, workers, consumers and the environment
Company missionCompany mission
To develop, manufacture, intellectually To develop, manufacture, intellectually protect and market internationally protect and market internationally
natural additives for animals’ feed and natural additives for animals’ feed and drinking waterdrinking water
Location of officeLocation of office• Nor-Feed A/S is
located in metropolitan Copenhagen – part of the Danish/Swedish Medicon Valley area Nor-Feed
A/S
Company structure (I)Company structure (I)• Internal organization
– Six full-time employees – Four part-time student assistants
• Co-operation with Nor-Feed Sud in France
• Co-operation with key distributors
Company structure (II)Company structure (II)• Outsourcing of manufacturing to external partners
– Toll manufacturing at facilities in Denmark and in France
– License production at certain other facilities
• Outsourcing of quality control– of raw materials– of finished products
Distributors and strategic partnersDistributors and strategic partners• A network of international distributors
– Primarily in Western Europe and South East Asia
• Strategic partners from various industries– Feed additive companies– Feed manufacturers– Food ingredient companies– Life science companies– Pharmaceutical companies
Practical reasons for sourcing globally (I)Practical reasons for sourcing globally (I)
• Costs vs. efficiency– The classic reason: ”you get more for your money”
• Reduction of risk by spreading activities– E.g. avoid shortage of supply– Always have at least two sources in different locations,
by different owners
Practical reasons for sourcing globally (II)Practical reasons for sourcing globally (II)
• Accessibility of resources– Raw materials may not be physically available in
Denmark, or not at a competitive price and quality– Know-how may not be available in Denmark or not
available at a competitive price and quality
Areas of global sourcing (I)Areas of global sourcing (I)– Some general considerations –– Some general considerations –
• Inspiration for development of new products– From customers, suppliers, academic institutions and
other partners and contacts
• R&D– E.g. knowledge on ”traditional medicine”, which is
widespread in other parts of the world
• Raw materials– Many raw materials used are simply not available in
Denmark, or even in Europe
• Academic partners– With specialized knowledge
Areas of global sourcing (II)Areas of global sourcing (II)– Some general considerations –– Some general considerations –
• Verification trials – In vitro (trials conducted in a controlled environment)
and in vivo (trials conducted on live animals)– A need for verifying effects of products under local
conditions
• Manufacturing– Better and/or cheaper production outside home
country
Areas of global sourcing (III)Areas of global sourcing (III)– Some general considerations –– Some general considerations –
• Analyses at external laboratories– Laboratories in different countries have specialized
knowledge
• Logistics
Areas of global sourcing (IV)Areas of global sourcing (IV)– Some general considerations –– Some general considerations –
Why does Nor-Feed source globally? (I)Why does Nor-Feed source globally? (I)
Classic reason•Lower costs outside Denmark/Europe
– Raw materials– Services– Manufacturing– Etc.
Physical necessity•Availability of raw materials
– Most of Nor-Feed’s raw materials are not available in Denmark
– Mainly raw materials from the subtropics– Security of supplies
Why does Nor-Feed source globally? (II)Why does Nor-Feed source globally? (II)
• To circumvent trade barriers– Raw materials from one country may not be permitted
into another alternative local or regional raw materials must be used
Why does Nor-Feed source globally? (III)Why does Nor-Feed source globally? (III)
• Legal aspects– Raw materials permitted in e.g. the EU, may not be
permitted in countries outside the EU acquire assistance from local advisers in specific countries
Why does Nor-Feed source globally? (IV)Why does Nor-Feed source globally? (IV)
• Competences are, in certain fields, better and more professional elsewhere– Local knowledge may differ from “Danish” knowledge– Sourcing of staff with backgrounds from other
countries gives additional quality to local organization
Why does Nor-Feed source globally? (V)Why does Nor-Feed source globally? (V)
• Manufacturing conditions are different– From one geographic area to another– From country to country– Different legal situations
Why does Nor-Feed source globally? (VI)Why does Nor-Feed source globally? (VI)
Challenges (I)Challenges (I)
Keep our secrets, or we will be copied…Keep our secrets, or we will be copied…
We sell products – we do not sell We sell products – we do not sell knowledge about how to copy our knowledge about how to copy our
products, and especially we do not give products, and especially we do not give knowledge about how to copy our knowledge about how to copy our
product, away for freeproduct, away for free
Challenges (II)Challenges (II)• Cooperating with partners
– Information and knowledge sharing
• Risk of imitation– Protect your inventions with IPRs
• Patents • Utility models• Trademarks
Challenges (III)Challenges (III)• Poor infrastructure
– Factories, raw material suppliers– Communication systems– Institutional constraints
• Ensuring proper quality– Documentation– Quality control
Challenges (IV)Challenges (IV)• Cultural distance• Differences in business practices• Language barriers• Different time zones• Travel time and travel costs• Costs of telecommunication