Partnering to lower localization system costs
By Ken Klein, President, Omnilingua
If you’re a stakeholder anywhere in the localization supply chain, there is no doubt that cost is a point of discussion, even when the topic of the day is “quality” or “service levels.” Localization is not special in this way. The modern day supply chain wars are seeking to lower the cost of just about everything.
Many global companies view the procurement function as one of the greatest levers for increasing profitability. In some companies procurement is considered more important than technology leveraging and product innovation for improving profitability. Unfortunately, many LSPs are still experiencing last century’s approach to lowering cost. That approach is to “stress” your suppliers, ask for concessions, and pit them against each other. We see this in the form of eBids and clients bidding out every project and awarding to the low cost supplier. All too frequently these eBids and RFPs do not provide enough specification detail, nor do they promote system-wide discussion in order to design the best solution and therefore the best price.
In contrast, we also see a modern approach to procurement coming from some of the fastest growing and most profitable companies in the world. This approach is to partner with suppliers and those further downstream to lower system cost. In other words, companies collaborate transparently with strategic partners to shift activities to the entity with the highest value proposition. For suppliers, this can mean losing revenue on activities where it doesn’t provide the greatest value, but also creates opportunities to increase revenues by shifting other activities its way.
If you’re an LSP, do you believe it’s possible to deliver localization at a lower price AND at higher margins?
Keep in mind that single sourcing, hoping to gain something through economies of scale, is not the same as partnering. In fact, single sourcing can sometimes increase system cost. When partnering, the entire supply chain should be viewed as a system and full optimization is an aim that will never be fully achieved. Too many supply and demand variables exist which require excess planned capacity to meet turnaround requirements. Resources, content strategies, accuracy requirements, service level requirements, localization workflows, and continuous improvement activities all need to be considered when seeking optimization. Some functions will be more mature than others, so improvement initiatives need to be decided upon through planning. Each entity must know the value it provides and must not be afraid to bring in new partners. At the end of the day, the strongest supply chains will flourish while the others wither and fade away.
Ken Klein has 14 years of business experience including international business, sales and marketing, product development and implementation, team leadership and market competitive analysis. Ken is an organizational development expert who has provided strategic planning and implementation consulting services to a wide range of industries. As President of OmniLingua, Ken has harnessed his focus to re-imagine the client solutions strategy, leading him to develop the localization “Cascade to Quality” framework for aligning localization processes inside the supply chain. Ken believes that while the localization industry is succeeding at creating structured translation specifications, a gap still exists for assessing quality against these specifications. Ken will be speaking at the TAUS QE Summit on October 9th and the TAUS annual conference on October 14th.
NOTE: The views expressed here are those of the authors and do not necessarily represent or reflect the views of GALA.