About SPX

More than twenty years ago, UNIDO created the Subcontracting and Partnership Exchange (SPX) programme to support local enterprises, especially small and medium sized enterprises (SMEs) in developing countries identify the opportunities for supplying components to large company clients. The original network of SPXs provided an information portal with the following objectives: 

  • Collection of technical information on the manufacturing capabilities and capacities of their member enterprises in selected sectors;
  • Establishment of a computerized databases of enterprise-level information from SPX member countries based on  established nomenclature systems;
  • Match-making services to link subcontractors with contracting enterprises seeking qualified and reliable partners to manufacture their products or provide them with services—in effect acting as a clearing house between those seeking and those providing industrial subcontracting, supplies and partnerships;
  • Organization of international promotion events, such as partnership days, reverse fairs, where large outsourcing firms exhibit their products, and subcontracting fairs.

 

In response to the changing dynamics of international business operations, UNIDO has revised the SPX programme to augment the SPX service proposition to buyers and suppliers in the various countries and complement the matchmaking function of the programme. The new approach involves active engagement with the procurement and local sourcing departments of large companies, identifying and mapping requirements and generating needs analysis emanating from these procurement strategies and plans. Potential local suppliers, in turn, benefit from rigorous profiling and benchmarking assessments, both exercises based on specific UNIDO tools.  Benchmarking assessment through a team of trained facilitators (to ensure uniformity and comparability) is provided to local firms as a service to help them assess their own competitive position and understand their weaknesses and gaps with respect to buyer expectations.  This clear analysis can be used to develop specific upgrading and investment plans required to become competitive suppliers. The benchmarking exercise provided to a large group of local enterprises also provides a mapping of local capacities for both national development agencies and other stakeholders. Furthermore, the new generation of SPX Centres can rely on a newly established management information system which includes a comprehensive database of supplier profiles from all SPX member countries.

 

The value proposition of the SPX Programme to suppliers can be summed up in the following:

  • SMEs receive SPX services aimed to assess their supply capacity and their upgrading prospects;
  • SMEs gain access to a management information system which directly links them to international buyers 

On the other hand, the value proposition to buyers refers to the following:

  • The SPX Office acts as a clearing house between buyers and suppliers and therefore saves buyers cost and time to maintain supplier data and in undertaking supplier audits. In addition, buyers do not need to deal with multiple institutions but can use the SPX Centre as one single point of contact for subcontracting and FDI opportunities on local and global level;
  • Buyers benefits from potential reductions in long-term procurement cost through collaborative supplier development partnership programmes;
  • Buyers can mitigate their business risk through ongoing visibility on a broad supplier base and further emphasize their role as vehicles for effective social responsibility procurement.

 

Depending on the institutional set up of each country, the SPX Centre is located either in a private sector association (Chamber of Commerce, Manufacturer’s Association, etc.) or a public sector institution (Investment Promotion Agency, SME Development Agency, etc).

 

Changing dynamics of international business operations

 

In the context of globalisation, transnational enterprises (TNCs) and large companies are looking for outsourcing and supply opportunities worldwide, in almost all sectors of industry and related services, in a continuous search for increased competitiveness In this environment, only the most efficient and productive businesses survive. Competitiveness enhancement though restructuring, upgrading, and continuous improvements are thus the foundations for success.

 

Over the last two decades the industrial system has shifted from model of production, based on highly vertically integrated firms implementing mass production and maintaining a limited role for suppliers, to a pattern of production based on flexible and interacting networks of firms and organizations. This new model of production emphasizes cost competitiveness and high quality levels to be achieved through growing cooperation with suppliers within the global value chain through deepened partnerships. Productivity growth for sustainable economic progress is now based on flexibility and specialization, with higher inter-firm interaction. At the same time, firms are becoming increasingly global and are establishing international networks of production. Within this scenario the development of international supply networks represents a critical issue for developing countries.

In short, several key trends of supply chain strategies of transnational corporations (TNCs) can be identified:

  • Large TNCs increasingly seek to rationalize on suppliers in order to simplify their manufacturing and supply networks;
  • TNCs increasingly require suppliers of an international scale that are able to manage demand requirements across national borders;
  • TNCs and original equipment manufacturers (OEMs) lack knowledge of the upstream supply network structure in developing countries;
  • As Tier 1 and Tier 2 suppliers develop their value chains they become increasingly adept at penetrating the traditional territory of OEMs;
  • TNCs are continuing to globally outsource and off-shore their operations.