Entries from May 1, 2008 - June 1, 2008

Motorway protest sees Government move up a gear

Posted on Thursday, May 29 by Registered CommenterRichard Edwards | CommentsPost a Comment | EmailEmail | PrintPrint

Nothing stirs a Government into action faster than the threat of a fuel strike, as recent events here in London have demonstrated.

Yesterday the M4 corridor – the motorway linking Wales in the west to the capital – saw hauliers down tools and up hand-brakes as part of a demonstration aimed at averting a hike in fuel tax, due in October.

Their engines had barely cooled than Gordon Brown and Chancellor of the Exchequer were knocking on the door of the oil giants to discuss the issue.

No-one was awaiting the outcome of these talks more keenly than those in procurement and supply chain management, although, sadly, the message from the meeting hardly gave cause for excitement.

The beleaguered Prime Minister (who needs a fuel strike like most of us need root canal surgery) urged oil companies to up production in an attempt to bring down prices but, as oil flies over the $135 a barrel mark, there appears to be an increasingly dim light at the end of an ever-darkening tunnel.

What happens next is anyone’s guess.

Cocktails and Dreams - Procurement's finest take centre stage

The very top individuals in European procurement, sourcing and supply chain management congregated in London on Wednesday night for a glamorous celebration of team and individual achievement.

The event began in the glorious May sunshine at Lords Cricket Ground, with guests in celebration style sipping champagne and cocktails. Before the dinner commenced, the evening's host Ian Lovett, Chairman of Dunbar Bank and Director of Zurich Financial Services   whipped the crowd to a humerous frenzy with a series of unforgettable (and a few forgettable) anecdotes. The crowd also welcomed David Rae, the new editor of Procurement Leaders magazine to reflect on the exciting plans for the magazine and network in 2008.

pl_awards.jpgIt was then the turn of the real stars of the show - the finalists and winners. The event resembled more of a Champions League Final (no link intended) as cheers rang out for North West Collaborative Procurement Hub, Southern Water, HSBC, Marks and Spencer, Mark Edwards from BP and finally Deutsche Post who all scooped the winning prizes in each of their respective categories. Highly commended and finalist organizations were also given a fantastic reception for their achievements.

The night drew to a close in style with more exotic drinks, live music and some cocktail flaring that even Tom Cruise in Cocktail would have been proud of. Those wanting the night to never end, moved on to the after show party at cuban nightspot Floridita in Soho and celebrated into the early hours. This is where this story ends… and another begins.

All in all, a fantastic evening and congratulations to the winners and all who took part. We can’t wait for 2009!

For all of the details, visit the website here.

Reasons to be (fairly) cheerful

Posted on Wednesday, May 21 by Registered CommenterRichard Edwards in | CommentsPost a Comment | EmailEmail | PrintPrint

Over on Spend Matters Jason Busch recently unveiled his predictions for the summer season and, after so much doom and gloom since the turn of the year, it’s refreshing that he is predicting a little more sunshine for procurement over the next few months.

From a stabilising of inflation to the comeback of the Greenback, Busch gives two good reasons for procurement executives to loosen their ties and breath a (albeit) short sigh of relief.

However, after sunshine must come rain (something that certainly seems to be the case here in London), and his prediction that three new major supply risk catastrophes will make the headlines over the next few months should be enough to leave people checking the location of their umbrella, if not reaching for it.

McDonalds makes a meal of ethical sourcing

Ethical sourcing has moved on. Earlier this week we covered a story concerning the ditching of Tetley by McDonalds because the tea-giant wasn’t a member of the Rainforest Alliance.

An entirely understandable decision in the modern era you would think, until it transpires that although Tetley (owned by Indian company Tata) isn’t a member of McDonald’s preferred sourcing programme it is a member of the ethical tea parternship – one of the UK’s three recognised tea sourcing initiatives.

All of which suggests that McDonalds has set a dangerous precedent, given that it no longer seems enough to simply source your product according to ethical guidelines (the conclusion in this case appears to be that some guidelines are more ethical than others).

Tetley themselves brushed off the decision, with Percy Siganporia, managing director at Tata Tea, describing the decision as “disappointing”, before reiterating that Tetley retained its “commitment” to the Ethical Tea Partnership.

But whilst every ethical sourcing programme has a distinct set of priorities - the tea partnership, for example, was set up to improve the lives of the millions of people working in tea plantations around the world – it’s their shared goals that really make a difference.

Decisions such as the one seen by McDonalds this week could, in the long-term, prove counter-productive.

Aftershocks likely to expand well beyond Asia

In humanitarian terms, it has been a truly terrible week in South Asia. The cyclone in Burma is reported to claimed over 100,000 lives (the real figure may be some way higher), whilst conservative estimates now place the death toll after the earthquake in China’s Sichuan province at 20,000.

These shocking figures give an indication of the scale of the rebuilding task facing two of the world’s most secretive countries and, in a truly global business world, their impact is likely to be felt for some time to come.

Many supply chains now lean so heavily on suppliers based in South Asia that it’s inconceivable that these two tragic events won’t have a serious impact on delivery lead times and production. Intel, for example, has already shut down a chip packaging factory in Chengdu, sending ripples of concern throughout the global PC industry.

"While the current situation is dynamic, we hope to resume operations as soon as possible pending the completion of a seismic assessment of our facilities and restoration of infrastructure in the region," the company said in a statement.

Intel, however, are far from the only company looking nervously East at the current time and, as the increasingly desperate rescue operation continues, the aftershocks are likely to extend well beyond Chinese and Burmese borders.

Viral marketing hones in on supply chains

A s reported by Procurement Leaders, the sourcing policies of one of the world’s biggest companies – despite its protestations to the contrary – have been influenced by a well-financed, but highly effective, ‘viral’ marketing campaign by a leading pressure group.

Greenpeace’s objective was to ensure that Unilever checked the environmental credentials of its palm oil suppliers as part of an ongoing campaign to prevent deforestation.

And although Unilever insisted that their rapid about-turn was already under discussion, the move merely serves to illustrate the power of new media such as the internet, and seems to suggest that the more savvy pressure groups are looking beyond the normal means of protest to achieve their aims.

Another high profile company, Marks and Spencer, has also recently felt the wrath of these new ‘viral’ campaigns after the union, Unite, (somewhat unsuccessfully) attempted to use Google AdWords to highlight what it perceived to be poor employment practices within the company’s supply chain.

This particular campaign failed to achieve its aim, but the growth of viral marketing is likely to spread – and, if companies have anything to hide then, like Unilever, they had better be prepared to have their dirty linen washed in public.

Andersson gearing up for sourcing revolution

Firstly let us start with a warning that anyone who is baffled by procurement phraseology should look away now.

Supply Chain Digest last week featured a story on comments by General Motors’ vice president of global procurement and supply chain operations – the immaculately coiffered Bo Andersson.

Speaking at an i2 user conference across the pond, Andersson enthusiastically trumpeted a new creation, known (bafflingly) as “Centralised Decentralisation”.

Despite the name, the concept is remarkably simple, and works on the basic premise, to paraphrase SCD, of “centralising the purchasing of individual materials and components to leverage buying power and scale.” Nothing too ground breaking in that, except that, at the current time, GM is doing this for different components across the world, not just out of its central headquarters.

Under the banner of centralised decentralisation (we’re sure that a more catchy name will replace this rather cumbersome phrase in the near future), Andersson argues that sourcing technology will allow his teams to operate at their optimum, wherever they are in the world, and whatever they are buying.

“One day, I decided to just do it,” he said. “We were buying seat belts in a number of locations around the world. We had some people in Mexico who were very good at buying seat belts, so one day I just decided I would have them buy seat belts for all of GM. That’s how I made it happen.

“I told all of our seat belt suppliers worldwide, ‘If you want to sell seat belts to GM, starting now you need to go to Mexico.’”

“In the past, it always seemed to turn out that local buyers for some reason found it necessary to source from local suppliers. Now, buyers and suppliers must take a global view.”

Today it’s seatbelts but tomorrow it could be, well, just about anything. Buyers at GM had better strap themselves in, under Andersson, it seems, they’re going places.

Everest scales heights to debunk offshore myths

Posted on Thursday, May 1 by Registered CommenterRichard Edwards in | CommentsPost a Comment | EmailEmail | PrintPrint

Everyone loves a good myth but, when it’s perpetuated by the media, it doesn’t take long for fact and fiction to become intertwined - which is why Darryl Conley’s recent presentation to delegates at Global Sourcing Live event offered a breath of fresh air.

Using evidence compiled by the Everest Group, Conley set about debunking some of the myths surrounding offshoring that had built up an almost unstoppable momentum over the past 12 months.

Firstly he reported that, despite recent headlines, labour arbitrage would still deliver significant cost benefits for at least the next ten years.

Secondly, Conley attacked exaggerated media coverage of decisions by the likes of Lloyds TSB, Philips and Aviva to bring offshore operations back home, claiming that it offered a “distorted” version of offshoring’s true picture.

He then set about dismantling the claim that only low value work was being offshored. “There is a fair degree of activity right across the value added stack,” he said, before using the example of knowledge process outsourcing as an area of potentially huge growth to further hammer home his point.

All well and good, but what about the bottom line? Everest’s research showed that 70 per cent of buyers were achieving savings of between 30 and 50 per cent. A further two-thirds of respondents also reported improvements in productivity (although on the flip side just 50 per cent noted any enhancement in quality).

Finally, tackling the myth that offshoring is only about India, he told delegates that the growth of areas such as Canada, the Philippines and Mexico (helped by their proximity to the US) meant that these countries were now posing a genuine threat to South Asia’s traditional dominance.

As a piece of myth-busting it was hard to beat.