Product characteristics affecting sustainablility

Much has been written and researched about the need for infusing sustainability in procurement , logistics and supply chain process. There is a common understanding and agreement about the increasing importance of sustainability for companies. However challenges like economic viability of being sustainable and availability of hands on tools for creating sustainability in organisational and functional processes remain.

This is an attempt to create tool for purchasing managers to identify sustainability based on the product characteristics. It includes characteristics like obsolocene risk and demand volatility which increases supply chain wastage, ease of disassembly/salvage, value density, packagability and product nature in terms of hazardous nature of product. The picture does not consider social and economic aspects of sustainability which needs to be infused in further development.

Sustainability & Innovations

When most of the developed countries are struggling for innovation

s to improve sustainability in operations, the developing countries - Fun pix

Calculate the carbon emission/person in this picture and compare it to the western world

Talking about reuse and Innovations for reuse

Value density of transportation

Environmentally friendly cars with zero emission

Environmental concerns in developing countries

The debates about how the developing economies of China and India are contributing to the increasing environmental concerns is never ending. However in this blog the intention is to put forward a few aspects in favor of the developing countries which I have seen as much more not evident.

@ the cost of economic development - India and China are possibly the two largest economies with a large capacity in recent times to purchase more automotive, expand their industries and "catch up" with missed boat of industrial revolution and economic development (Which the western economies have taken successfully taken - resulting in existing environmental concerns). Though the western world is fighting the issues of environmental sustainability, developing countries are fighting other priorities (Reducing hunger & poverty, wealth redistribution through employment creation). With increased pressure on just setting measures for developing countries to reduce environmental impacts western countries and international bodies should think about how to reduce environmental impacts without sacrificing economic growth. So the question for developing countries is not How to reduce environmental impact? but how to reduce environmental impact without sacrificing economic growth?

Screwed measures - One of the measure used on a global scale to measure environmental impact is the amount of carbon produced by each country. Even though China and USA comes at the top, there seems to be something fishy with the measure. Instead of the C02 emissions per country what would be an appropriate measure is the CO2 emissions per capita (meaning CO2 emitted per person in each country) in which developed countries would be having a higher environmental impact than developing countries.

Produced locally and consumed locally - In all the developed countries food comes from around the world for catering to the need for variety to customers. Its not uncommon to see in retail stores of Europe the Kiwi fruits from New Zealand, Meat from Australia, Grapes and other tropical from Peru/South America. The food miles travelled by these products are far higher than the food miles in developing countries. In developing countries food and grain are locally produced and consumed ( Thanks to the poor logistics infrastructure, lack of cold storage facilities and inability to industrialize food production), making them much more environmentally friendly.

Innovation is the key - concerns exists about waste water disposal, lack of clean water in the future, transportation infrastructure, product usage & disposal. When developing countries are in the process of improving or installing new infrastructure (transportation, building, waste disposal) developing countries have a better scope to be much more environmentally friendly than in developed countries (Given they understand and accept the importance of environmental friendliness).

It is everyones problem - Developing countries are increasingly made as the factories of the world. There will be little debate for the claim that "China is the factory of the world", "India as the IT hub of the world". While these global clusters are being formulated, developed countries naturally take the roles of supply chain orchestration, product & services development, technology development and customer satisfaction. Even though there are arguments that developing countries are substantially affecting environment, the impacts are global (like global warming). Hence the problem resolution has to be global rather than pushing the problem to specific developing countries/regions.

LCC sourcing - tips & tricks

One of the typical problem in sourcing from LCC is that , purchasers believe that the pilot batch or the sample batch has no quality issues whereas most of the production batch has quality issues. Here is what a purchaser did in sourcing from China.............

A purchaser has to source 10000 nos/month components from a LCC supplier, however is aware that the sample batches are always better than the production batch. 

So he orders 10000 samples/ month  ;-)

The idea behind the story is to emphasize that local presence is necessary in sourcing from China or in LCC sourcing to enhance control. 

Source: Managing director - Enkey Engineering, India

The world is flattening

There seem to be two contradicting opinion/school of thought about globalisation. One if the famous argument put forward by Thomas L. Friedman that the world is flat and the other argument that the world is not flat. Instead of religiously following a specific thought school, in this blog I decide to take a factual approach to this commonly addressed debate.
Now for the school that advocates that the world is flat - this school cites the new mobility of workers happening globally, increased outsourcing, offshoring, increased information technology adoption, access to information for all people, disintegration of the value chain globally and performing the value addition where it could be done best ( global search for optimal competence) as attributes suggest that the world is flat.
The world is not flat - this can be argued by a series of questions - why are the differences between the rich and the poor still very high? Why are innovations mostly still taking place in the silicon valley? Why are cities like Frankfurt, Hong kong, New York and London still in the height of activity than others? Why is agriculture still not globalised and integrated across economies?. Disparities between economies in terms of population, innovation, electricity, etc point to the direction that the world is not flat in fact it is argued as being spiky.

The truth lies somewhere in between - simply termed as the world is in the process of getting flattened at a faster pace than ever before, however we have still not reached there (The world being flat) and we will never reach there also.

Indian business network

Rajeev (father): "I want you to marry a girl of my choice."
Son: "I will choose my own bride!!!"
Rajeev: "But the girl is Bill Gates's daughter.."
Son: "Well, in that case... ok"
Next Rajeev approaches Bill Gates.

Rajeev: "I have a husband for your daughter...."
Bill Gates: "But my daughter is too young to marry!!!!!"
Rajeev: "But this young man is a vice-president of the World Bank."
Bill Gates: "Ah, in that case... ok"
Finally Rajeev goes to see the president of the World Bank.

Rajeev: "I have a young man to be recommended as a vice-president."
President: "But I already have more vice- presidents than I need!"
Rajeev: "But this young man is Bill Gates's son-in-law."
President: "Ah, in that case... ok"

Source: E mail forwards

Six step International Purchasing Office (IPO) set up procedure

There has been a sharp increase in the number of International Purchasing Office in recent times. What remains unfolded is the process of IPO setup and operation. Based on the research so far and the discussions with industry experts – I have charted a few steps that successful companies have done in regard to the IPO setup. 

(1)   Identify the opportunities of the Indian supply market

What remains a mystery is a documented approach towards understanding the supply market for foreign companies. Most multinationals stereotype India as an exotic country of snake charmers and national highways with elephants rides. IPO’s typically need to create knowledge about the nature of the Indian supply market and its potentials. 

(2)   Identify and select suppliers to partner with 

International sourcing involves long term association with suppliers to partner with. This is the case to build a sustainable supply platform from India hence the choice of the supplier and long term sustainability is important. 

(3)   Identify the internal and external coordination processes necessary

Successful IPO operations need good adaptation and integration of both external and internal coordination processes. Internal coordination includes coordination within the same function, across different functions and business units. External coordination includes coordination with suppliers and other service providers.

(4)   Hire, train and retain talent at IPO 

Given the challenges of IPO it is important to hire the right talent of people. Even more important is to train and retain the talent for IPO. Purchasing in IPO is much more of a balance between strategic skills and operational capability.

(5)   Set internal and external performance measures 

IPO’s in particular are service centres for global operations of Multi national companies, IPO’s are savings generators rather than revenue generators. It is important and critical to set the performance measures for IPO based on internal and external issues

(6)   Develop, monitor and sustain supply base 

Rather than selecting suppliers, supplier development is more essential for companies. This helps to sustain the savings from supply base. Monitoring the supply base and also constant feedback to suppliers will help improve the supply base.