Importance of local procurement in Asia

We have already talked about the differences between a central and easily to consolidate supply chain in Europe or US and the decentralized supply chain in Asia where the Fleet Manager needs to focus on the content of the service rather than on the supplier (https://www.globalfleet.com/en/features/how-include-apac-international-fleet-programme). We have also mentioned that, in order to come to good result in Asia, it’s worth spending time to go local and have a close look at your supplier’s operational capabilities before closing the deal.

These operational capabilities have also another consequence. It’s not just the tools or the service offering of your supplier that you’ll need to understand, it’s also the geography. Let’s start with an example.

Indonesia is a beautiful country and one of the world’s best holiday destinations. The weather is great, food is amazing and the Indonesians are extremely friendly and welcoming. And it’s the fleet manager’s nightmare.

The country is huge: land and sea combined, the 7^th largest country in the world. Half of the country’s 260 million population lives on the island of Java. The other half? On one of the 17.504 islands… Language doesn’t make it much easier. Next to Bahasa Indonesia, Javanese and English, there are about 700 languages spoken across the country. Did you ever think Belgium is a complex country? Try Indonesia with 34 provinces, each with its own legislature, divided into regencies that, on their turn also have their own legislatures.

Indonesia is complex, but it’s far from being an exception in Asia, especially when it comes to the importance of acting locally. India, China, Pakistan, Thailand, Vietnam and so many other countries deal with the same issue : it is not easy to find one supplier who can serve the entire country at the same level of quality.

As far as OEM’s are concerned, you’ll need to assess the repair and maintenance networks. Often well represented in the major cities, there are only a few brands that have representation across the country, such as Mahindra or Maruti/Suzuki in India or Toyota in Indonesia. Outside the main cities, it’s often difficult to find technicians and parts, especially for more complex and modern cars. On top of that, driving to the closest official dealer might take you a while, especially if there’s a sea between yourself and the next dealer.

Leasing companies tend to have their own repair network via agreements with local single or multi-brand garages. Here as well, you’ll need to match the geography of your employees with the spread of those networks, also for reasons of local language skills.

In terms of fuel, it doesn’t get easier. In most of the countries in Asia, the fuel network is a combination between the global players and a local, often state-owned, fuel company such as Petronas in Malaysia or Pertamina in Indonesia. It is no surprise that the global fuel suppliers focus on the urban areas, whereas the state owned companies have a larger coverage.

As a result, sourcing intelligently in Asia will sometimes require for very local procurement. We recommend to be well prepared and know where your employees are driving most of the time prior to selecting a supplier. A good deal with a mature supplier in the capital city might sound interesting from a budget point of view, but if it has an impact on the productivity of the employee and the idle time of the car, it’s better to abandon the hopes of finding one central supplier and go local and sometimes, very local.