Category Archives: Uncategorized

Look Who is Buying From Bangladesh

It’s easy to say the right thing, but it’s not always easy to do the right thing as a recent investigation by The New York Times reveals.  The U.S. government, which encourages companies that buy goods overseas to use their spending clout to push for improved working conditions, is itself spending more than $1.5 billion each year to buy clothing from factories in Bangladesh, where hundreds of garment workers have died on their jobs.

The challenge of putting its money where its mouth is: how to spend the U.S. taxpayers dollars efficiently without supporting companies that abuse their workers. However, cities like Los Angeles and states like Maine have found ways, including requiring companies that bid on their contracts to publicly disclose the addresses of the factories where the clothing will be made.

The Sweatfree Purchasing Consortium maintains that similar requirements could work on a national level if federal agencies coordinate their purchasing decisions more closely and consider conducting joint investigations to ensure they are using only the best factories.  In other words, the U.S. government should use its own clout to make a difference.

 

 

 

 

 

Managing supplier relationships

We couldn’t agree more with Philip Hicks, procurement manager at Northumbrian Water, who said the key to his company’s supply chain sustainability is getting out and meeting with its top suppliers. As he points out, companies expect their suppliers to help them achieve their sustainability goals, and it’s only through personal engagement that suppliers will come to understand the role they play.

A Sedexglobal report, however, encourages companies to go a step further into the supply chain and meet with as many suppliers as possible, whether they’re Tier 1, 2 or 3. It points out that the “greatest and most critical sustainability risks are found deeper down the supply chain.” Unfortunately, only a third of companies are actively seeking transparency below Tier 1 in their supply chain.

How deep into the supply chain are you managing your supplier relationships? Are you going far enough?

Takin’ it to the street

Frustrated with Procter & Gamble’s lack of urgency in finding sustainably sourced palm oil, Greenpeace literally took to the streets in Cincinnati and London in protest.  The activists, including two dressed as a tiger and an orangutan, unfurled banners on the side of P&G’s Cincinnati headquarters and erected barricades in front of its advertising agency’s headquarters in London.  At the same time, Greenpeace posted a video on You Tube mocking the “Thank you Mom” ad campaign and focusing on the plight of orangutans.

This is a good example of how non-governmental organizations like Greenpeace are ramping up their mass communications efforts to raise people’s awareness of important environmental issues and change their behavior, while governments lumber along, taking years to initiate and enact news rules and regulations.

While Procter & Gamble may have their dander up at the bad press, Unilever executives may be smiling for the way they stayed ahead of the curve. As we wrote in September 2013, Unilever’s goal is to source 100% of its agricultural raw materials sustainably.  In the way they managed their message about palm oil, Unilever stands head and shoulders above P&G.

Conflict minerals reporting deadline approaches

The first deadline for companies to publicly disclose their use of conflict minerals that originated in the Democratic Republic of the Congo (DRC) or an adjoining country is fast approaching.  Justmeans.com reports that nearly 6,000 companies will have to provide these disclosures by May 31, 2014, and they’re finding it’s a complex process.

Any company that uses tin, tantalum, tungsten and gold for the functionality or production of its products now must disclose specific information, including the source of those products, according to the “Conflicts Mineral Rule.” It’s part of efforts to raise awareness of and change the human rights abuses in the DRC mining industry, and the financing of armed conflict from the sale of the minerals.

Less that a year ago, a PriceWaterhouseCoopers survey found that almost half of the executives surveyed were still in the initial stages of their compliance efforts, while 16 percent hadn’t begun gathering information and 32 percent were still trying to determine if the rule even applied to them.

We’ll host a half-day Mega Session on this rule and its long-term implications for companies and their suppliers at the ISM Conference May 5-7 in Las Vegas.  We hope you can join us.

Managing supply chain sustainability at Target

On the heels of Mary Barra’s appointment as CEO of General Motors, we can’t resist sharing this GreenBiz.com interview with another female executive in the supply management world. Kate Heiny leads the enterprise-wide sustainability strategy for Target, a Fortune 50 company and one of the most important retailers in the US with the more than 1,700 stores in 49 states.

Early in her career Heiny recognized that industries would need radical transformation in order to be successful in the future, and she views sustainability as the business strategy critical to the long-term viability of Target.

She and her Sustainability Team are responsible for helping Target’s guests and team members live more sustainable lives and minimize Target’s impact on the environment.

For example, Target is a founding member of the Sustainable Apparel Coalition, a trade organization of brands, retailers, manufacturers, government and non-governmental organizations and academic experts who are working to reduce the environmental and social impacts of apparel and footwear products around the world. Target uses the Coalition’s Higg Index to gauge its environmental sustainability performance and make changes for improvement.

With its grocery items, Target is making long-term commitments to offer food that will be GMO-free by year-end 2014, increase its organic food offerings by 2017 and replace farmed salmon with wild salmon.

Collaboration, creativity and sharing are three words Heiny uses frequently to describe how her team is working to imbed sustainability into their team members’ day-to-day work at Target. “Sustainability needs to be a holistic way of working and operating, not just one initiative or team,” Heiny said.

New rules of the road from field to fork

Time is running out for farmers and others to comment on new FDA rules covering produce farms, food processors and importers of foreign food products. The shock waves from outbreaks of food-borne illnesses led Congress to enact the Food Safety Modernization Act. The FDA was charged with turning the law into regulations, and the comment period for the proposed rules ends November 15.

The rules are creating significant headaches for growers because it is very difficult to anticipate the huge variety of conditions that actually prevail in farms across the country. For buyers the law, and the rules coming from, it demonstrate a significant shift from a system that reacts to an outbreak of an illness to a system intended to prevent the problems in the first place. That idea makes a lot of sense, but as the FDA points out — it is not just relying on more of its own involvement, but active participation from the food industry.

For instance, it requires in some situations that food importers verify that their foreign suppliers have had food safety audits. In other situations, where importers sell to other food processors, they will be responsible for monitoring their customers as well. All this underscores the wider role supply managers are fulfilling as consumers, and therefore, governments are demanding accountability throughout supply chains.

Here’s Food Safety Modernization Actfor the proposed new food safety rules.

Keeping the planes flying, faster.

U.S. Military procurement often takes a rap for inefficiency — true or not — but here’s evidence the brass are trying to “smarten up” their supply chain. According to Boeing, the U.S. Air Force has signed a master supply contract with Boeing that covers purchases for spare parts at all three Air Force repair facilities. Find the release here.

Negotiating a master agreement reportedly saved months of time and will create efficiencies delivering spare parts to fix or rebuild military aircraft. Of course, if these three operations have all been working on Boeing aircraft since the Air Force started buying from Boeing, one might reasonably ask, “what took so long to figure out one contract for all Boeing supplies was better than three?”

I expect the process was a lot more complicated than it might appear. These are huge operations in three different parts of the country that are responsible for about a dozen different kinds of transports, bombers and fighters deployed around the world. So we should give the Air Force it’s due — especially in this week when we honor our veterans. But it does beg the question for all of us – what obvious inefficiencies do we have in our own supply chains that we have lived with, ignored, perhaps whined about, but never addressed head-on, regardless of how intractable it might seem?

No matter what what it is, perhaps it’s time now to finally tackle that “elephant in the room.” Or perhaps we should say “C-130.”

What will it take in Bangladesh?

Nine more garment factory workers died in a recent fire in Bangladesh, reminding us that conditions in the industry are still challenging. According to some reports, the factory may be associated with several major retailers.
Two different clothing industry alliances have formed to address the safety of Bangladesh garment factories. This tragedy underscores the urgency of the situation. If retail companies are hoping they can regain consumer confidence by simply announcing a program, with only weak commitments for implementation, they could be badly mistaken. It’s way to soon to expect any results from the alliances’ efforts, but the clock is ticking.
Meanwhile, it’s interesting to see that some organizations are proposing to collect information directly from workers as a way of monitoring compliance to safety rules. The Guardian.com posted a report on those approaches. If reliable information direct from the factory floor becomes available, it would be a powerful tool to ensure compliance to safety and other work-related standards. The challenge there will be generating information that is, in fact, reliable and relevant. We use online survey tools in our consulting and professional development practice, and it takes careful thought and significant effort to design and implement those tools. It’s not a simple solution, but certainly an approach worth watching.

No way to run a business

It’s a safe bet that if any of us ran a business where people didn’t compromise or negotiate, one of two things would happen: the leadership would go, or the business would cease to exist. Unfortunately, that’s what is going on with our government this week, and about 800,000 of its employees are not working as a result, and one million are expected to work without pay.

Right now, some industries like tourism and federal government departments and bureaus, are getting hurt more than others. The longer this goes on, however, the greater the impact, including the ripple effect of the unemployed and unpaid not having money to purchase goods and services.

Economic consulting firm IHS Global Insight estimates the shutdown will cost about $1.6 billion each week, or $300 million per day. How long it will go on is anyone’s guess at this point.

As annoying and inconvenient as the government shutdown is, it’s just that — an irritant. The greater danger for industries and for our economy is the debt ceiling. No one knows what will happen if we don’t increase the debt ceiling because it’s never happened before. Speculation is the government could run out of cash to pay its bills, causing severe financial turmoil.

It’s time for those in Washington who espouse “my way or the highway” and delight in shutting down the government to come back to the table to listen, negotiate and compromise. Our country deserves better from those who serve us in Washington.

General Mills and Its Partners Help Small Farmers in Peru

It’s a pretty good sign that sustainability is going mainstream in the food supply chain when General Mills gets into the microloan business with Peruvian artichoke farmers, and that is happening right now.

General Mills and its supplier/partner AgroMantaro are providing the loans so small farms can buy artichoke shoots and seeds, helping them to increase yields and improve profitability.

The breakfast food giant says it is building on its long history of working with farmers around the world  by identifying very specialized methods — and partners — to help small farmers advance sustainable practices.

In Peru, these farms are typically one to two hectares, or two to four acres, and are run by women who lost their husbands during the civil unrest in the 1980s.

General Mills sources its artichokes from the Sierra region of Peru for its top-selling brand in France, Green Giant or Le Geant Vert.  While the crop has a strong export potential, farmers have struggled to capitalize on it because of lack of capital, training and education, and access to export markets.

The four-year joint commitment between General Mills and AgroMantaro will provide more than $1 million to help the farmers with training on crop management; microloans to buy shoots and seeds; training on starting farm cooperatives; and financial planning education to put together business plans.

The two companies are joining with the international humanitarian organization CARE, which specializes in facilitating community governance and local connections, and will work side-by-side with the farmers and AgroMantaro to meet the project objectives.

It’s just a guess, but $1 million over four years sounds like a pilot project for a corporation that has $18 billion in annual net sales. In the short term the benefits are likely to come primarily from maintaining a good corporate reputation. General Mills does have a well established set of responsible sourcing policies, so even a small project helps to keep its practices aligned with its stated policies.  It is also possible that General Mills is taking a long view of the situation and sees potential cost savings coming from better yields, more consistent products and lower risks from its micro-investments.