Mind the Gap. A story of international trade in economic downtimes

Anyone who rode the "tube" in London would certainly recognize this phrase. You have to mind the gap between the station platform and the metro wagon when entering or exiting the train in order to avoid falling in between. We can easily use the same phrase when it comes to sourcing, selecting suppliers and buying goods from overseas companies. Why? Because there is a huge gap of supplier performance data for companies overseas that no technology can bridge today. The problem is especially acute when we are talking about small and medium size companies that cannot afford spending countless dollars on supplier selection but are faced with the tough realities of dwindling customer demand and the push to reduce prices.

As Tom Friedman explains the surge in global trade over the past 20 years driven by the technology innovation in his book "The World is Flat", the current economic crisis exacerbates the need for supplier performance data more then ever. While factories are closing in China, American and European buyers are faced with the stark reality of their supplier landscape rapidly changing. In a situation like this the demand for finding new supply sources and stabilizing supplies is growing exponentially.  And hence -  "Mind the Gap".

So how do we address this gap? Unlike in many other situations before, today we have the power of knowledge accumulation and sharing that was not available a generation ago. And even more importantly, the power of community has been dramatically unleashed by variety of social networks and the new wiki world. The answer to the Gap question lies in the ability of buyer community to help itself and win. While every company is facing the issue of supplier selection individually, in today’s world the answer can come in a surprisingly collective way. Sharing the data on supplier performance among the peers can dramatically help everyone involved.

In my process reengineering days I was shown many times that if a company recognizes their competitive advantage and really focuses on what is the main added value the customers will recognize it as well and will pay premium for such products. From Cisco to AMD to Compaq the list goes on and on. In a manufacturing or integrator scenario 80% or more of the components that end up in the final product are manufactured by third parties and do not represent the actual competitive advantage. Moreover these components are often times shared and private labeled by the competitors. And despite this fact most companies do the supplier research and qualifications individually.

In retail business this would be even more relevant. I can’t help but notice the "made in…" tag really changed over the last 10 years. More and more we see China, Philippines, Indonesia, Ukraine etc. in place of these 3 dots. And yet finding a reliable, financially stable supplier that produces goods we need with the quality we need remains an issue.

I believe that the answer lies in ability of the buyer community to efficiently exchange the supplier performance data. With 1000000 buyers in supply chain companies and uncounted number of retail buyers this community can really help each other by driving a peer to peer information exchange. And this is why we created SupplierEvaluation.com, the peer to peer supplier performance information exchange.