Entries from October 1, 2007 - November 1, 2007
Rhetoric Followed Up By Action in Beijing
Despite all the adverse publicity surrounding the ‘made in China’ label so far this year, all we’ve really heard from Beijing is rhetoric – now, for the first time, it seems they’ve followed this up with action.
Yesterday officials in China revealed that 774 people had been arrested over the past two months as part of a nationwide crackdown on counterfeit and sub-standard production.
Headed by Chinese vice-premier Wu Yi, the arrests are an illustration that China is finally prepared to take action to protect their battered reputation, although the US in particular will remain skeptical if the “special battle” can be ever be won.
There are 626 criminal cases currently open as a result of Yi’s campaign and speaking to the Xinhua news agency at the weekend, she said: “Local governments of each district, county or city should make sure there remain no dens producing or selling fake products in the region.”
As you would have read on ELP in recent weeks, however, the reality is likely to be very different.
Local government in China is more than keen to protect businesses that bring-in much-needed tax revenues and employment in their region, and if this means turning a blind eye to rouge operations then that, it appears, is a price they are will to pay.
According to the Chinese authorities 180 food manufacturers have been closed down since July, with 667 tons of unauthorised or fake food products also having been destroyed.
Yi’s campaign has another two months to run and negotiations for closer co-operation between the EU and the US are seen as a keen part of her strategy.
All of which means we should have a much-clearer idea of what lies in store for global supply chains leaning heavily on China by the turn-of-the-year.
Frenzied Pace of Construction Illustration of Dubai’s Offshoring Ambitions
Could Dubai soon be the hub of the economic world? Well, anyone who has visited a place where building work seemingly never ceases will not be surprised to know that the world’s most ambitious former fishing village is embarking on a project that could soon see it luring more businesses – and procurement operations - to the Emirate than ever before.
Never a place to do things by halves, Dubai is currently in the process of building an airport the size of Cardiff (no, honestly) in an attempt to make itself an indispensable offshore location for businesses across the globe.
The airport, which in a typically understated manner will be known as Dubai World Central, will boast six runways and will be capable of handling 150 million passengers a year. All of which, should enhance Dubai’s appeal as ‘the’ place to do business over the next few years.
The construction of the airport is all part of Dubai’s grand plan to market itself as a link between Europe and Asia. Whether it takes flight or not one thing is certain – it won’t be through a lack of effort or, more importantly, money.
Blue Card to Provide European Procurement Boost?
On Monday the European Commission published plans for a ‘Blue Card’ for skilled immigrants in an attempt to make up for a shortfall of labour that the EU thinks could stretch to 20m over the next two decades.
The plans have been greeted with skepticism by many states but across Europe there will doubtless be an acceptance, certainly within the procurement community, that the current scheme could be just what procurement needs.
The Blue Card would be based on the US Green Card system, although members states were understandably keen to stress that the European equivalent would be more restrictive.
Critics have already slammed the initiative as another attempt by the West to take the best talent from poorer countries, but with the US having benefited from skilled migrants for many years why shouldn’t Europe make itself a more attractive proposition for those looking for employment beyond their borders.
Certainly the thought of graduates from China and India looking to Europe for a career in sourcing is a mouth-watering prospect for many companies struggling to recruit and attract the talent they need.
Why not tell us what you think – is the proposed Blue Card going to give procurement recruitment in Europe a much-needed boost?
Pushing too Hard for Procurement Perfect
Is your procurement organisation striving for world class? Well, if it is, as I imagine most are, don’t push too hard for perfection. That’s the message from the 2007 ELP Forum chairman, Christopher Barrat.
Using the analogy of “the perfect plumber” – an oxymoron if ever there was one, Barrat told delegates in his opening address that being world class didn’t have to necessarily mean doing anything out of the ordinary. “If you’re doing everything you should be then the chances are that you are already world class,” he said.
He pointed to the example of Northern Rock – who set out to deliver world class standards but who eventually ended up stretching themselves too far – as an example of what can go wrong when companies try to go the extra mile without thinking of the long-term consequences.
Sustainable targets and a sustainable strategy is key. There’s no need, as Barrat memorably put it, for CPO to start wearing their pants outside their trousers (in classic superhero style) just yet.
Nice landing for 2007 ELP Forum
There’s something timelessly calming about flying in over the Alps and seeing the Med stretching out in front of you – although with the runway at Nice airport obscured from view you always, for a brief moment, think there’s a better than average chance you’re going to land in it.
Luckily for us, we landed safely and before you could say “ELP” had hopped in a taxi and made our way along one of the world’s most beautiful stretch of coastlines. Looming on Nice’s seafront is the Hotel Negresco – its neon lights guiding delegates towards the second ELP Forum of 2007. And with the event just hours away the excitement, both amongst my colleagues here at ELP and the attendees filing into the magnificent dining room for the networking dinner, is tangible.
Tomorrow brings presentations from some of the continent’s leading procurement figures and discussions around a range of topics that will strike a chord with everyone involved in the discipline.
It promises to be a great couple of days.
No Shelter From Soaring Metal Prices
The soaring price of raw materials is having repercussions that may surprise some of those working in procurement.
And whilst the high cost of oil is nothing new – the rising cost of crude drove up input prices by 3.2 percent in September, more than double the expected figure – global metal prices have also surged since the turn of the year, attributed, in main, to China’s insatiable appetite for metals such as copper.
In the US, the price of copper has leapt by 60 percent since February and is currently trading at around $4 - a four-fold leap in just five years. Now, the increase is leading to a worldwide crime waves as unscrupulous thieves look to cash in.
Last week in Detroit, six people were left dead after being electrocuted whilst trying to steal copper wires for a couple of hundred dollars. Meanwhile, police forces in the UK have also said that the country is experiencing a massive increase in incidences of metal theft, with nothing too big (or too small) for a new generation of scrap metal “dealers”.
In one case an entire bus shelter was seized, an audacious heist that has left police baffled. Some estimates claim that a select band of thieves specialising in the metal’s market are now making as much as £200,000 a week, all of which would seem to suggest that this new trading place is unlikely to close down any time soon.
Chinese Enjoying a Wealth of Opportunity
If proof was needed that the extraordinary growth of the Chinese economy was benefiting not just foreign investors and companies exploiting its global sourcing potential, but also entrepreneurs inside the country, then figures published this week provided it in spades.
According to a list published by Shanghai-based accountant Rupert Hoogewerf on Wednesday, 2007 has seen a seven-fold increase in the number of billionaires that call China home.
China now has 106 billionaires – up from 15 in 2006 – with 26-year-old female property developer, Yang Huiyan, on the top of the pile with a cool net worth of 130 billion yuan ($17.3bn). After the release of the Hurun rich list, only the US can boast more billionaires within its borders.
The growth seen over the past 12 months even seems to have taken Hoogewerf by surprise.
"We all know that China is developing very rapidly,” he said in a statement. “But the speed is so fast that it shocked all of us. It's much faster than the US and Europe."
Wal-Marts CSR Push Surely For The Greater Good
As reported by ELP in September, Wal-Mart is intending to extend the reach of their corporate responsibility practices into their supply chain.
Wal-Mart’s pilot program, which will initially include 30 companies, will, the company claims, encourage suppliers to lower power consumption and waste, but whilst their plans have been widely greeted with positive coverage in the media and even appear to have got the ‘green’ thumbs up from environmentalist, not everyone is happy.
As Tim Minahan pointed out on his supply excellence blog last week ‘Wal-Mart Eco Plan Sparks Supplier Revolt’, opposition to the pilot scheme appears to have been forthcoming from a rather unlikely source.
“Lobbyists representing Wal-Mart suppliers claim the program runs afoul of corporate ethics.” Minahan says, before adding with tongue firmly in cheek, “How’s that for irony?”
The problem is seems is that Wal-Mart’s apparently well-meaning plan will result in eco-friendly suppliers winning more business than their gas-guzzling, carbon emitting counterparts – something that concerns The National Legal and Policy Centre (NLPC).
And their fears appear well-founded, with Minahan using comments from Wal-Mart’s SVP of Transportation, Tim Yatsko, to back up the point. “We made it clear that all things being equal, we’ll give business to operators who show they’re fully engaged.”
Not that Minahan (or me for that matter) are losing any sleep over the NLPC’s posturing - surely if Wal-Mart’s position forces the hand of their 60,000 suppliers then their plans will have served their purpose.
Supermarket Suppliers Set For Boost From Competition Commission
According to a report in this weekend’s Sunday Times, the uncertainty facing many suppliers dealing with the UK’s biggest supermarkets could soon be at an end.
The report, written under the headline “Supermarket ‘bullies’ face crackdown”, suggests that the Competition Commission could soon call on supermarkets to offer suppliers fixed-term contracts so they know how much they will be paid, and when they will receive their money.
All of which must be music to the ears of suppliers, 23 percent of whom, according to a report by Grant Thornton, said that supermarkets were unwilling to offer them a written contract. Almost half also said that they had no pre-agreed order-cancellation notice period in place.
It’s thought the voluntary code of conduct that currently exists between supermarkets and their suppliers – which was introduced after an earlier investigation into supplier relationships – will also be toughened up.
All of this follows a series of scandals – the most high profile of which involved alleged emails between supermarkets and their suppliers, in which suppliers were threatened with blacklisting unless they offered discounts.
We await the Commission’s findings with interest.





