Worldsourcing replaces outsourcing

VIEWPOINT
By William J. Amelio
Chief executive, Lenovo

Recent consumer safety scandals have brought home the inadvisability of manufacturing products or running any aspect of a business at the lowest possible cost.

Worldsourcing is a logic that dictates companies to focus on the best value and quality of products

So risky has it become, and consumer fears so widespread, that the European Commission and other governing bodies in Europe and around the world have ramped up initiatives to regulate product quality and safety.

It is a hard truth though that government regulators can't do everything.

Global companies must assume responsibility, and there is a powerful new force that imposes a more potent and far-reaching natural assurance of product quality from global companies - namely "worldsourcing".

By looking out for the best value all around the world, modern companies are building the strongest safeguards of quality - their brands.

Worldsourcing is based on the fact that for a company, its brand is the most valuable asset, more important than nationality or location.

By reaching out to the entire world in search for the best ideas and talent, a company not only refines its brand and nurtures its essence, but also exposes it to a multitude of probing eyes.

Globally, it is evaluated not by nationality, but by the quality of its goods, services, governance, transparency, environmental practices, degree of corporate social responsibility. And the level of value it delivers to customers worldwide.

Worldsourcing is a logic that dictates companies to focus on the best value and quality of products.

All aspects of business - including materials, human talent, innovation, logistics, infrastructure and products - are sourced wherever they are best available.

And then companies can deliver products to wherever demand is, anywhere in the world.

Necessity to worldsource

It is crucial to understand the difference between worldsourcing and outsourcing.

Worldsourcing ensures protection of consumers and manufactures everywhere

Outsourcing is about lowering costs by shifting non-essential operations to a contractor in order to cut costs.

Worldsourcing is about increasing value and quality, not just lowering costs.

All parts of a global enterprise are worldsourced to where the best resources, talent, ideas and efficiencies exist.

Senior executives can be based in London, marketing can operate from Mumbai and research and development (R) might be headed in Silicon Valley.

In a world united by internet and globalised language and culture, it becomes not a choice but a necessity to worldsource.

Everyone does it

By transforming the fundamental rules of global business, worldsourcing ensures protection of consumers and manufactures everywhere.

But how can this potential be realised?

The label on the outside simply identifies the last stop on a complex global journey.

Companies that operate globally and worldsource their goods and services around the world are exposed to probing light and criticism from customers and government regulators in all countries and continents they operate.

Only by adhering to the highest standards of governance, transparency and quality can companies hope to achieve a global trustworthy brand.

In a day when the internet allows information to flow freely, reporting on events as they happen, no organisation can bend the rules or adhere to subpar quality standards without damaging its global brand, which is the most important asset a company has.

• Nike, for example, performs surprise inspections to make sure its global manufacturers meet worldwide standards.
• Carrefour worldsources fresh produce by training its supplier-farmers around the world in the use of safe pesticides.
• McDonald's creates closed, proprietary supply chains on a global basis to assure product quality.
• BT has developed a "scouting" process with staff deployed around the world from bases in Israel, Japan, Korea, the U.S., Hong Kong and Taiwan to search for the best new technology to use in its products.

All the global companies understand, that a minor glitch in safety or sub-par standards can nearly destroy a brand, as one of the world's leading toy makers can attest.

Nationality not important

My own company presents another example of worldsourcing: I am an American chief executive based in Singapore.

Our European President is Dutch and based in Paris. Our chairman, who is Chinese, works from the USA meeting of my company's senior managers looks like the United Nations General Assembly.

We have just opened a global marketing hub in India and announced a new manufacturing plant and fulfilment operations center in Poland, to be operational in the third quarter of 2008, our European operations hub is in Paris, fulfilment centres in North America, and factories in China, India, and Latin America.

Europe can continue to have confidence in worldsourced brands because those brands have long earned consumers' trust by collaborating globally with the best minds on earth.

As Europe knows, the products of companies that practice worldsourcing may be labelled "Made in the UK", "Made in Switzerland", or "Made in France", but in the new world in which we all now live, they should truthfully be labelled, "Made Globally" or "Made on this planet".

The label on the outside simply identifies the last stop on a complex global journey.

William J. Amelio is the President and CEO of Lenovo, a global PC company with research, manufacturing, sales, and marketing operations on six continents.