May 2013
Samsung has the first certified sustainable smartphone

Samsung's new Galaxy S4 is the first smartphone to be certified sustainable by TCO Development, an organization that promotes sustainability in the electronics sector. 

Smartphones are evaluated for the length of their product lifecycle and energy efficiency. The criteria for TCO certification includes requirements for socially responsible manufacturing practices and reduction of hazardous materials. According to Sustainable Business, some of the sustainability requirements for smartphones include the following:

  • All surfaces that come into human contact must be nickel-free
  • Phthalate content must be minimal, since it is a health and environmental risk
  • Must contain no beryllium because it is a category 1 carcinogen
  • Batteries cannot contain lead, cadmium or mercury. Batteries need to be easily replaceable to extend the life of the device.

The goal of certifying smartphones and other electronics as sustainably manufactured is to place higher demands for sustainable sourcing on electronics companies and giving consumers more choice. TCO announced the new smartphone certification in April. 

Large companies with sustainable procurement goals seek this certifications as a way to drive sales as consumers become more environmentally conscious, according to Sustainable Business. Smartphone purchases have dramatically increased in the past few years, and it has brought sustainability issues to the forefront. Sales are expected to reach one billion in 2014, and the rapid replacement rate of mobile devices can significantly contribute to waste. As smartphones increase sales, procurement of raw materials used to manufacture them, such as metals and fossil fuels, will become more difficult to source, Triple Pundit said. 

Consumers have expressed greater demand for sustainably manufactured products, and companies are responding. Electronics manufacturers have sought to reduce hazardous substances, lengthen product life cycle, decrease e-waste and improve working conditions in facilities. 

Nearshore manufacturing could lead to increased freight sourcing demands

Nearshore manufacturing will have many benefits for production firms, and freight logistics will also see an increase, Fleet Owner stated. In addition to heightened demand for cargo transportation, the transition to domestic logistics would be facilitated by the access to inexpensive energy in the U.S. 

While not all manufacturers are in a hurry to move operations back to the U.S. from other countries, the trend is on the rise. Many firms are strategically reshoring some or all production due to difficulties with offshore suppliers, delayed deliveries or issues with quality, according to Spend Matters. Moving production closer to where products are sold enables firms to have greater flexibility in filling orders, and new technological advancements such as additive manufacturing are enabling companies to reduce costs and stay productive. 

The rise of domestic manufacturing will place extra demands on the freight sourcing industry. Products made with chemicals, plastics and rubber may be among the first to be reshored to the U.S. because they require natural gas for production, Fleet Owner said. Increased production in the U.S. will require additional logistics. Direct material costs make up the bulk of manufacturing costs of goods sold, so the industry is highly dependent on access to affordable resources. If certain product categories can be produced and shipped for less than other countries, it will be a driver for manufacturers to move operations. 

Reshoring manufacturing could drastically reduce transportation costs and time to market, which firms may see as an advantage. The energy boom has lowered manufacturing costs as well as shipping. The trucking industry is gradually shifting to natural gas engines, and the accessibility of the resource is expected to keep costs low for the next five years, the source stated. 

Ford to close Australian manufacturing plants

Ford announced it will close its Australian manufacturing facilities in October 2016 due to decreasing sales and the growth of the local currency, according to Nasdaq. An engine plant and a vehicle assembly facility will shut down, although the company will retain its parts, service and support operations in Australia. 

The Australian dollar has traded higher than U.S. currency for most of the past two years, meaning vehicles manufactured in the country cost more than imported automobiles. Since the lower sales were preventing Ford from keeping up with indirect manufacturing costs, the company was forced to cut production and make fewer vehicles in Australia, the source said. 

The news comes at a bad time for Australia because the mining boom appears to have cooled off, and Ford's departure will have a significant impact on the country's manufacturing industry, CNN reported. There are growing concerns that Australia's economy is too reliant on the mining industry, which is its primary export. Mining profits are down due to lower commodity prices. The country's manufacturing sector has been in decline for several decades with manufacturing contributing to only 7.2 percent of GDP and a smaller share of employment as workers have moved to other industries.

The government attempted to fund the auto industry to keep foreign manufacturers in the country, and subsidized GM's Australian operations so the company would agree to keep producing vehicles there for another decade. However, Ford reported it could not remain competitive in the small market with inflexible cost structures. The Australian dollar appreciated too much for Ford to remain profitable in the country. Annual automobile sales in Australia are close to 1.1 million units, and its automotive manufacturing industry employs 55,000 workers and supports 200,000 positions in other industries, Nasdaq stated. 

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Whether speaking with clients, customers, suppliers, or your internal team about where and how you will host software, applications, databases, storage, websites, etc. you might find yourself impeded by the challenges presented by the variety of terminology. But it's not because it's a rather technical subject matter that is difficult to understand, it's because individuals and organizations often can call the same thing a few different names, inadvertently call different things the same name, or apply the same set of names to the same set of definitions but in a different arrangement than others. So confusing. But it doesn't have to be. The reality is that these things boil down to a few categories and subcategories and once you have them structured, you can create a definition set that will act as the Rosetta Stone for subsequent conversations.

So, let's start with a definition. In simplest terms, hosting provides a place for your digital stuff -whether it's storage, applications, or websites- so it can be accessed and/or utilized by those who you would like to access it. There are a few different ways you can accomplish this, so we need to define some categories: 1. Data Center (In-house, Third Party, Colocation), 2. Dedicated Hosting, 3. Cloud. Again, everyone has a different take on this, but if we stick to these three categories, we can find a place to put just about every subcategory. So, some more definitions:

1. Data Center: A place for customers to store their own, physical hardware. For an in-house datacenter, the organization is responsible for managing its own hardware, and all ancillary considerations such as real estate/space, power, climate control, and hardware maintenance. Third party data center providers allow customers to own and manage their equipment but take over the rest of the considerations mentioned above. Colocation would also land in this category alongside third party data centers with the key differentiator being that network and/or Internet service and connectivity is available within the same space.

2. Dedicated Hosting: Also known as Dedicated Hosting Service, Dedicated Server, or Managed Hosting Service is a type of hosting in which the client leases an entire physical server not shared with any other customers. The customer typically has either limited (Managed Hosting) or full full control over the specification, administration, and management of the physical server(s). Allows the customer to focus solely on its applications, by placing responsibility for managing space, power, climate control, hardware ownership, and maintenance on the provider.

3. Cloud: Combines capacity of multiple physical servers. Hosting requirements can be readily met on demand facilitated by the elasticity and scalability of a virtual server environment. The cloud hosting environment can be offered as a private, public, or hybrid of public and private infrastructure. Providers typically share the underlying, physical infrastructure with other customers.

With these primary categories identified and defined, hosting discussions become much simpler. The set of questions, concerns, and other considerations is filtered through these buckets and can be quickly focused in upon. For example, if there is no capital budget for equipment, in-house data centers will not be a good option. The a highly flexible and on-demand environment is needed, cloud will be the direction to head.

Further, this categorization provides a means to understand other, similar offerings like Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). There are a wide variety of flavors and hybrids of these types of offerings, but understanding their underlying nature is key to understanding how costs will work and how contracting will be managed. In some cases, the "as a service" offerings are exactly like what they sound like, services for which you pay for what you use. In other cases, software may be provided but the hosting element is separate and can be purchased from the software licensor. In those cases, it's important to understand how that relationship works and what the technology provides. Is it cloud and therefore be easy to grow? Is it on dedicated hardware and therefore may have better security but is less scalable? Of course, the list goes on, but at least you know which questions to ask with this basic understanding of what the environment might look like.

There is a lot of confusion and uncertainty in the world of hosting and what is often sold as software (or otherwise) as a service. Mostly, this is due to the variety of marketing terms we are barraged with all of the time, but in reality it all comes down to the methodology of making the applications, data, web content, etc. available to users. The best fit approach to accomplishing that should take each of these methodologies into consideration. For assistance in developing a hosting strategy or sourcing equipment and/or services related to your hosting needs, visit Source One's website at
In its role of a Supply Chain Center of Excellence, Source One serves as an incubator for the development of new ideas and best practices in the fields of supplier management, category management, and Supply Chain/Finance integration. This type of incubation relies on strong communication channels and the free exchanging of ideas. We accomplish this through plenty of official channels: emails, IM, a sophisticated office telephone system combining desk phones with laptops and mobile devices, and HDTV/printer/phone/table-equipped"collaboration stations" situated throughout the building, so random hallway encounters can become productive brainstorming sessions with minimal fuss. But communicating through official channels during official business hours is inherently limited, and Source One looked to get its team talking through unconventional channels.

Enter the pool tournament.

A regulation-sized pool table made a surprise appearance in a first floor multi-purpose room during Source One's first week in its new headquarters, and it quickly became the go-to place to hold an impromptu meeting-of-the-minds over a game or two. The Source One Pool Tournament is pitting teams of two employees, paired together at random, against one another for office bragging rights, prizes, and a donation by Source One to the charity of the winner's choosing.

Begun on Friday, May 24th, and continuing through the summer, the tournament will feature teams like Ballers & Shot Callers, SEO Speedwagon, Two Shoes & Man Ray, and the Stickmen playing best-of-three series to determine which of a laundry list of charities, including Make-A-Wish, the Bucks County SPCA, Planet Aid, and Wounded Warrior Project will receive a donation from Source One.

Last week's matches saw the Chalk-o-Holics triumph over Team Diego & Joe, and K-Money & The Heartbreak Kid eek out a win over the Ballers & Shot Callers. Stay tuned for the results of this week's!
Rising manufacturing labor costs in China are causing firms to move production

China is losing a great deal of its price competitiveness for manufacturers as direct labor costs continue to rise. Offshore production in China significantly increased the country's GDP and led to a labor shortage, which is making some firms look elsewhere to reduce manufacturing costs, according to the latest PIERS Report. 

"China's strength in labor-intensive export manufacturing is waning as factory wages rise at a double-digit pace and labor shortages deepen," said Mario Moreno, the author of the report.

Changes in the labor market are being driven by economic improvements and educational gains among Chinese workers. Wages for Chinese workers increased by 15 percent per year between 2008 and 2010, which means the country is losing its cost-competitive edge for manufacturing. The country also implemented stricter workplace regulations in 2008 regarding working conditions, timely payment of wages and overtime work limitations.

When companies outsourced production to China, managers often considered only the cost per unit and did not account for high transportation costs, inventory time or the loss of quality control, according to San Antonio Express. Oil prices have risen, leading to much higher shipping fees, and with the increased time before a product can reach the market, some manufacturers are choosing to move operations out of China.

The PIERS report found Vietnam, Mexico, India, Thailand, Brazil, Pakistan, Bangladesh, Poland and Cambodia were all countries that may have an advantage over China. Manufacturing made up 15 percent of those countries' GDP and manufacturing labor costs were lower, although not all of the countries were experiencing benefits from production moving out of China.

Firms were looking to manufacturing destinations with a geographic proximity to the U.S. as a way to reduce shipping costs, Supply & Demand Chain Executive stated. Switching to local suppliers can be a more sustainable business model for some companies, especially for products with rapid lifecycles. 

We’ve all heard of or shopped at Walmart before -- unless you’re Paris Hilton -- as Walmart is always getting bad press and is somewhat known for it. The trend continues as Walmart has been found guilty of improperly disposing of hazardous waste in California and Missouri and has agreed to pay $81 million in penalties as part of its guilty plea. The plea agreement was announced on Tuesday.  The violations occurred between 2003 and 2005 and involved employees dumping pollutants from stores into sanitation drains.

In 2010, Walmart agreed to pay $27.6 million to settle with California authorities on similar charges and then in 2012 it paid $1.25 million in Missouri.

Walmart’s pollution, and other improper disposal of harmful chemicals, contributes to the creation of  “dead zones”. As pollutants and toxins are indirectly or directly dumped into a waterway, they facilitate the growth of algae blooms that deplete the oxygen from the area. This kills marine life and forces fish to leave the area.  What is left is effectively a biological deserts.

According to Walmart’s spokeswoman, Brooke Buchanan, “We have fixed the problem. We are obviously happy that this is the final resolution” in response to the guilty plea.
Procurement will have greater emphasis on sustainability

Sustainability is gaining importance in procurement. According to a recent PricewaterhouseCoopers study, 42 percent of respondents were highly concerned with adopting more sustainable procurement strategies. Of those focused on sustainability, 87 percent wanted to optimize their organizations' carbon footprint, and 81 percent saw collaboration with suppliers as a way to achieve greater environmental responsibility. More than two-thirds of executives reported sustainability would play a greater role in future business plans. 

The study revealed executives in the pharmaceuticals and life sciences industries were more concerned with sustainable procurement. Although sustainable initiatives will become much more important to executives, they still ranked behind delivery performance and cost reduction. Respondents in the industrial sector were less interested in sustainable procurement. 

As businesses move toward more sustainable models, corporate responsibility reporting is gaining traction, Sustainable Plant stated. Companies previously announced profits, losses and liabilities, but consumers, investors and stakeholders have greater interest in products that are sustainably sourced. Firms are announcing their efforts and goals to adopt more sustainable procurement practices and reduce waste. There is a greater emphasis on reporting environmental responsibility efforts, such as water use, emissions and waste management. Consumers also are interested in social impacts and indirect economic effects. 

Announcing sustainability efforts is a significant change for most manufacturing firms, but the trend has grown significantly. In 2012, 57 percent of Fortune 500 companies published sustainability reports, which increased from 20 percent in 2011, according to the source. 

Companies that were early to the sustainable reporting trend may have sought to gain an advantage as consumers grew more environmentally aware. Organizations that did not report sustainable procurement practices were trying to catch up. Some businesses may be responding to suggestions from stakeholders or changing regulations, the source said. Reporting sustainable procurement strategies could give certain organizations the added benefit of increased investment.

Natural disasters and economic concerns are top risks for businesses

U.S. manufacturers are facing heightened concerns over rising costs and tightened operational regulations, according to a recent report from BDO USA, a professional services firm. Many manufacturing firms were also concerned about changing Environmental Protection Agency compliance and environmental risks. New and changing risks for manufacturers underscore the importance of adequate risk assessment procedures.

Small-business manufacturing firms saw the uncertain economic climate as a risk. The industry is considered a driver of job growth, but some companies saw underfunded pensions and retirement benefits that lead to rising costs as risks, and some manufacturers were facing a shortage of skilled workers. 

"While many manufacturers want to expand or even bring back U.S. operations, there are still significant challenges," said Howard Sosoff, manufacturing and distribution practice leader at BDO USA. "Manufacturers are looking long and hard at their cost containment practices to offset the rising price of conducting business in the U.S., while also exploring opportunities to expand abroad - likely in locations with attractive corporate incentives."

Some of the top risk management concerns for U.S. manufacturers were the following:

  • General economic conditions
  • Federal regulations
  • Market competition
  • Decreases to demand
  • Threats to international operations
  • Commodities and raw material costs
  • Local and foreign supplier and vendor disruptions
  • Data security breaches

Manufacturers were particularly worried about international suppliers being vulnerable to natural disasters, terrorism and shifting foreign currency exchange rates. Firms were highly focused on improving efficiencies, reducing costs and maintaining access to raw materials.

Are small businesses prepared for risk?

Small-business manufacturing firms expressed natural disasters as a top safety concern, but 60 percent have not reassessed risk management procedures, a recent Staples survey revealed. The study found there was a disparity between firms' perception of risks and strategies for emergency preparedness. Less than half of companies were prepared in the event of a natural disaster or other emergency. Small businesses were at a much higher risk of an operational disruption due to lack of preparation than larger companies. Many firms were not reassessing their plans despite significant natural disasters within the past year. 

After Superstorm Sandy last year, more than half of New York small-business owners suffered significant business disruptions. Entrepreneurs lost revenue and were forced to temporarily close businesses. Despite the large impact from the storm, many New York owners reported they would be prepared to handle another unexpected natural disaster, according to a Bank of America Small Business Owner report. Some owners said they would be able to sustain their organizations without outside financial assistance for up to four months after another natural disaster, extended power outage or significant staffing change. Small-business owners in the areas affected by Superstorm Sandy were more prepared than others to manage a potential operational disruption.

Data security can be an important risk management concern

Small-business manufacturers may face a greater risk of data breaches than larger firms because they often do not have the IT infrastructure to support security, reported. Many companies use multiple data security solutions, and this can create IT complexity and raise costs. Smaller manufacturers may not take data risks into account because they may not believe they would be targeted by a cybercriminal. As technology continues to change, the risks facing smaller manufacturing firms could increase. Employees who use data systems within the company should be educated on potential data risks so they can take an active role in prevention.

In preparation for a potential business disruption, smaller firms need to be sure to back up data, according to the Staples study. Extended power outages can cause important information to be lost, and backing up regularly can ensure data is protected and accessible in the the event of a natural disaster. 

RFID will be key to omni-channel retail sourcing

The invention of the barcode allowed for retail sourcing to become more efficient. Barcodes are prevalent in nearly ever industry, and they are scanned more than 5 billion times per day worldwide, according to Supply Chain Digital. Global standardization of barcodes has allowed organizations across all industries in many different countries to achieve greater efficiency and scale. GS1, the nonprofit standards organization for barcodes, intends to adapt identifications within a product's barcode to allow for customers to enter codes and learn more information about a product online.

Barcodes will need to continue to advance as retailers increasingly move toward omni-channel approaches. Omni-channel retailing involves creating a seamless shopping experience for customers across all channels, such as internet shopping, mobile searches and brick-and-mortar store locations. United Kingdom retailers are making the transition to the omni-channel model, and it is expected to dramatically change retail logistics and sourcing, Supply Chain Standard reported. The trend is being bolstered by increases to online shopping.

Some retailers are implementing radio frequency identification (RFID) programs to improve retail sourcing, including Bloomingdale's and Macy's. RFID has received a great deal of buzz for being revolutionary technology for retail management, according to California Apparel News. RFID sensors can be embedded in hang tags for individual items and scanned by sales associates. The information for each item would then be entered into an inventory index. However, RFID technology was prohibitively expensive since it was created because it requires a great deal of hardware and software.

Another issue preventing RFID technology from reaching wider use is it can only function in a closed system where retailers have control of sourcing, the source said. Retailers with multiple vendors cannot achieve the promised efficiency results. RFID could allow retailers to keep track of inventory instead of performing tedious cycle counts twice per year. 

Economic losses due to natural disasters are worse than expected

The United Nations cautioned global businesses that economic losses due to natural disasters are at a high level, and the threat of profit loss will rise until risk assessment procedures become a core component of company strategies. 

"We have carried out a thorough review of disaster losses at a national level, and it is clear that direct losses from floods, earthquakes and drought have been underestimated by at least 50 percent," said Ban Ki-moon, secretary general of the UN. "So far this century, direct losses from disasters are in the range of $2.5 trillion." He added that risk management should receive more focus in business schools.

The UN 2013 Global Assessment Report on Disaster Risk Reduction analyzed urban development, agribusiness and coastal tourism and found that current business models in each sector continue to drive disaster risk. As the world continues to urbanize rapidly, the chances for economic losses are even higher. The report revealed executives were taking precautions to improve organizational adaptability and strengthen risk management strategies. In the private sector, risk analysis in strategic sourcing can reduce uncertainty, reduce costs and create value. 

Natural disasters directly impact business performance and can affect long-term competitiveness and sustainability. Companies suffer operational disruptions when crucial infrastructure is cut off. Executives in disaster-prone cities in the U.S. expressed losses of electricity, water supply and telecommunications as top concerns, according to the report. More than 90 percent of damage to these infrastructure networks occurs from natural disasters. Small and medium companies are at particularly high risk from natural disasters, and this could affect larger organizations that rely on them as suppliers.

Disaster risk is often ignored in economic forecasts and growth predictions. Regulators and investors are beginning to demand companies disclose hidden risks, especially natural disaster vulnerabilities.

Sustainable sourcing is important for seafood supply

Mackerel has been put back on the list of consumable fish by the Marine Conservation Society (MCS) in the United Kingdom. Consumers can occasionally eat mackerel without endangering the species as long as it is sustainably sourced, The Guardian reported. The MCS recommended fish caught by hand-line or that was raised in sustainable fisheries. Consumers were cautioned not to buy mackerel originating in Iceland and the Faroe Islands because fishers had increased quotas too much to maintain sustainable practices.

The fish's rating was revised because the restrictions were increasing mackerel stocks. The MCS advised consumers to purchase fish from local sources. Hand-lining is a labor intensive fishing method and results in high quality catches. Fish caught by unsustainable methods or from poorly managed fisheries drive down the price and quality of the fish available in the market. 

Seafood is complex to purchase because availability and price of particular fish tend to fluctuate, according to Nation's Restaurant News, a food service publication. Restaurant owners may have to vary menus based on the availability of fish. Chefs may need to work with their seafood suppliers to get the best quality fish since strategic sourcing can be complicated. Seafood stock can be impacted by bad weather and changing ocean temperatures, so restaurant managers may need to make adjustments based on the supply. 

There has been a trend of origin labeling for seafood, and it can boost restaurant sales, NRN stated. Consumers have expressed growing interest in where food comes from, and labeling makes them feel seafood is coming from a high-quality source, particularly if the fish was caught locally. Seafood sourcing from a single local supplier may be easier for smaller chains. Large restaurants and retailers may not be able to meet demand with one supplier.

GM opening a new logistics center in Lansing

General Motors plans to invest in a new $44.5 million logistics center at its Lansing Grand River assembly plant. The company will add 200 new jobs when the facility opens next year, according to the Lansing State Journal. 

The new logistics center will be used to sort and deliver parts to the assembly line, which is intended to reduce costs and transportation times between local suppliers. GM expects the project to streamline the flow of materials to the manufacturing plant, reducing part handling and transportation needs, while cutting costs in the process, said. The ultimate goal was to increase efficiency and improve product quality for customers. 

The new facility will keep parts in sequence as different models move down the assembly line, which often does not happen in the same order, the LSJ stated. GM is not certain what impact the logistics will have on local parts suppliers. The company felt that moving the parts facility closer to the assembly plant would significantly improve efficiency and reduce operating costs. It could also prevent supply delays and disruptions. 

The Lansing Grand River plant currently manufactures the Cadillac ATS and CTS, and it is a contender for production of the Chevrolet Camaro when manufacturing of the vehicle is moved from a Canadian factory to Lansing in 2015, according to the source. A coupe version of the ATS may also begin production in the Lansing plant. This is the latest in a series of investments in GM facilities in the area. When the Cadillac ATS was launched last summer, GM spent $190 million and added a second shift with 600 jobs. The company also spent $88 million when the CTS was retooled. The Lansing Grand River plant currently employs approximately 1,350 workers.

United Parcel Service Inc. (UPS), also known as Big Brown, will have a new look to its air fleet as it plans to install winglets to its Boeing 767s to reduce fuel cost and carbon dioxide emissions. UPS said the winglets will save more than six million gallons of fuel annually and reduce emissions by more than 62,000 metric tons. The winglets will save the company 4% in fuel costs on each flight due to the reduced drag.  Another benefit of the winglet is the reduction of noise emissions by improving take-off performance.

These winglets are attached to the tip of each wing, are 11 feet tall, and will add about five and a half feet of wing span. The weight of the aircraft will increase by 3,000 pounds due to the weight of the winglets and reinforcement of the wing structure.

UPS currently operates 54 Boeing 767s, with another five on order. Winglets are already installed on its 747s and MD-11 fleets, and the A300-600 has a similar device on its wings called a wingtip fence. UPS plan to have all winglets installed on its 767s by the end of 2014.

UPS has been a leader in logistics and currently operates the youngest and most fuel efficient air fleet.
However, it strives to continue its goals by reducing carbon intensity by an additional 20% by 2020 from
its baseline established in 2005.

“We believe there is always some way you can improve, and we're applying that spirit to our environmental
efforts," said UPS Airlines President Mitch Nichols. "This is a great example of how we can use existing
technology to save money, lessen our impact on the environment, and serve our customers more efficiently."

When UPS says, “We Love Logistic”, they really do! Maybe underneath all that brown, it’s Green.

Sustainable sourcing will become a greater concern for businesses

Sustainable sourcing efforts have been increasing in popularity as industries with large carbon footprints have grown. Organizations have recognized the need to commit to more sustainable practices because population growth, natural resource consumption and climate change cannot be maintained at their current levels. Sustainability "megaforces" will impact every company's performance and profitability within the next 20 years, according to a study from KPMG International. While unsustainable practices could put companies at risk of disruptions and profit losses, making the transition to greener sourcing could provide many corporations with opportunities. The switch is not easy, but businesses can ultimately achieve cost savings.

Old notions of corporate responsibility were mainly centered around reputation management rather than making a positive environmental impact. Sustainability certification is expanding into new markets and more companies are committing to sourcing 100 percent of products sustainably, according to GreenBiz. Even cattle ranching is becoming less resource intensive.

Agriculture presents challenges for sustainable sourcing because some crops such as cocoa and coffee impact climate change. To increase crop yields to meet the rise in global food demand, farmers might have to encroach on nearby rainforests. In order to prevent this, some major corporations like Nestle are working with coffee farmers to provide training on raising yields and incomes, GreenBiz said. There is also a trend of companies collaborating to increase sustainability efforts. 

While many organizations are taking steps toward greener practices, the challenge in the future will be to complete sustainability projects. Consumers are more concerned with environmental impact and may avoid interacting with companies that do not commit to sustainable strategic sourcing, according to KPMG International. Organizations that harness the trend toward sustainability may have an advantage as the market continues to evolve. 

Orders for durable goods increased in April

Although there have been many reports of manufacturing slowdowns, orders for U.S. durable goods, products meant to last three years or more, increased more than expected in April, Reuters reported. The U.S. Commerce Department revealed long-lasting product orders rose by 3.3 percent. The economy is demonstrating resilience despite fiscal austerity measures. The reports were mixed since output decreased, but manufacturing activity was boosted by durable good orders. 

Bloomberg predicted the growth in durable goods would only be 1.5 percent. Earlier data showed factory output decreased for the second straight month from the European debt crisis leading to drops in demand. The economy is expected to continue growing slowly with foreign government austerity detracting from some of the strength. Despite government regulations and tax increases, consumer spending has remained high. The outlook was positive for business growth as well. Orders for non-defense capital goods such as computers, engines and communications equipment increased, indicating businesses are investing for future growth. Transactions were off to a slow start in the second quarter, showing companies were focused on spend management during economic uncertainty. 

Automotive manufacturing was a bright spot for the overall outlook. Ford is responding to increased demand by adding more workers to increase capacity to build an addtional 200,000 vehicles per year in North America, Bloomberg stated. U.S. sales of cars and pickup trucks have risen, and the increase of manufacturing is coming from a slowdown in inventory. 

The predictions that businesses will invest in new equipment for growth and suggestions of improvements to the housing market indicate the economy will continue to grow, though progress will be slower, Bloomberg stated. Federal government spending cuts, fewer exports and increased payroll taxes will most likely impede growth. 

Import delays could cause business profit loss

Due to budgetary restrictions, importing delays for fresh produce are expected to continue at U.S. borders, The Produce News reported. Although numbers of imports have risen, there has not been a similar increase in inspectors or facilities. Fruit imports have doubled in the past decade and are continued to grow. Fruit sourced from other countries accounts for almost 50 percent of U.S. consumption. The increase in imports has led to further delays at the border. Accounting for import delays, particularly with fresh produce, may need to become part of risk analysis in strategic sourcing.

Produce imports face stricter new regulations from the Food & Drug Administration, and the food industry may experienced a rise in costs from delays that come from the lack of inspectors, the source said. Fruit shipped from South Africa can take up to 24 days to reach Miami, and if it experiences a delay of three or four days, retailers will not be able to sell it. Logistics planners time ships with promotional opportunities, but retailers are hesitant to schedule promotions if they are uncertain supplies will pass FDA inspection on time. 

While import delays can severely impact food companies, small businesses can also suffer when goods do not arrive on time, Entrepreneur magazine said. Ever since 2001, tighter anti-terrorism regulations have made it more difficult to ship products to the U.S. Small companies can end up having to pay customs fees themselves, which increases merchandising costs, and this can be a challenge since they typically have less capital than bigger corporations. Importers need to ensure they have complete and accurate paperwork for all shipments because small errors are a major cause of border delays, and it can hold up a shipment for an additional five to seven days.

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Memorial Day weekend is almost here and while our nation’s focus should be remembering those who made the ultimate sacrifice for the freedom we enjoy in the United States, there is also the uniquely American ritual that takes place on the last Sunday of every May. 

The Indianapolis 500, “The Greatest Spectacle in Racing”, as it is known, brings 33 of the world’s fastest cars and drivers together for a 200 lap race on a 2.5 mile oval track with cars running at average speeds of 230 m.p.h.

From the weekend warrior running a local dirt track in an old Camaro, to the sleek technological marvels of Formula 1, all levels of racing are expensive. But if you are thinking of participating at Indy, you better have a particularly fat checkbook. The cost of running the race will set you back somewhere in the neighborhood of a cool million dollars.

Let’s break down the numbers:

Car – The centerpiece of your Indy 500 dream of sipping milk out of the glass jug in Victory Lane will be your car. If money isn’t a consideration, you can buy a state of the art Dallara Indy Car, but if you have to stay within a budget, you can buy a used car from last year’s race for $300,000.

Engine – You won't get your car very far down the track without an engine. You have a choice of either Honda or Chevy power, and it will cost you $125,000 for one engine. However, engines that turn over 10,000 RPM over hundreds of miles of practice and qualifying tend to break. So it may be worth it to have a backup engine ready. The second engine will cost you another $100,000.

Tires – Good news! The rules state that teams are not allowed to buy more than 33 sets of tires during the weeks leading up to the race. The bad news is at $2,600 for a set of four Firestone racing tires; your tire bill will add up to $85,000

Wheel guns and other assorted parts – Since your pit crew will have roughly 8 seconds to change tires and fuel your car at each stop during the race, they’re going to need air guns to remove and replace the old rubber. Total cost for 4 guns and a spare, $20,000. Gears for the transmission run about $44,000. Setup tables, which will allow your team to balance and setup the car, cost about $12,000.

Team – No one can get up to speed at Indy without a top-notch team. And those folks don’t come cheap. A team engineer can cost $15,000. A chief mechanic and a telemetry specialist will cost $7,500 each. Fill out your team with a tire specialist, a gearbox specialist, and some general mechanics and other support staff, and you have a payroll of around $50,000 for about 20 days of work.

Driver – Driving down the front straightaway at Indy at 250 M.P.H. and then having to turn left may not be something you are willing or able to do. No problem. There are plenty of capable drivers willing to drive your car. For $150,000 you will get an experienced veteran.

Fire Suits – Everyone participating in the race (driver, pit crew, engineers) will need a fire suit. They go for about $1,200 each and figure on needing 12 of them for race day.

Odds and ends – Fuel for your ride, $1,500. Shop supplies, $1,300. Feeding and housing your crew, $7,000.

The entry fee – After gathering your car, your engine, and all the assorted people and parts you need to go racing, you’ll still need to pony up a $12,000 entry fee to compete.

And finally, since fast cars driving in circles with other fast cars sometimes crash, you will probably want to budget another $250,000 for repairs just in case a wreck in practice means you need to put your car back together just in time to take the green flag at Indy.
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Eight years since the release of the original Xbox, Microsoft is coming out with a new version that boasts all kinds of bells and whistles.  Set to release later this year, Xbox One was unveiled Tuesday in a fancy on-stage demo that showed off its cool features, like the Blu-ray player, built-in Wi-Fi, 8 GB of memory, and HDMI connector.

The demo particularly highlighted the nifty voice and movement tracking capabilities that are enabled by Kinect, a feature incorporated into previous versions but improved upon for this generation.  Instead of detecting stick-figure representations of people in a room, the new Kinect detects details of the figure’s entire body, down to the finger tip. This enhanced sensitivity enables improved monitoring of how users are moving their joints and applying force, to better pick up gamer’s super-fast punches and deadly kicks for their mortal combat style competitions. 

Xbox One goes way further, though.  The audio capabilities are cleaned up, to supposedly cancel out general background noise and focus in on voice commands. It can also monitor the faces of people in front of the sensor and determine which controllers they are holding and if their expressions are happy, sad, or neutral.  Yikes!  The super wild n’ crazy part is that it monitors the heart rate and uses color cameras to measure skin flushness and infrared cameras to track blood flow under the skin. 

These high-tech body-censoring capabilities take the gamer closer to a fully-immersed experience where their body is the ultimate controller.  This is the direction gaming has been moving in for some time, and the Xbox One keeps the community advancing down that path. 

What the Xbox One also does, is try to include people less interested in gaming, into the Xbox experience. The device has DVR-recording and Skype capabilities, allowing for easy communication between Grandma and little Timmy amid rounds of Halo 4.  Microsoft hopes these additional features will make its newest device appealing to the non-gaming members of the family, making them willing to pay the not-yet-disclosed asking price when Xbox One hits stores.
With the increasing emphasis placed on utilizing smartphones and tablet devices as one of the main means  for web searching, companies should begin exploring mobile strategies to determine which options would be best fit for the consumer base.  According to Forrester, online retail sales are expected to grow at a 10% compound annual growth rate from 2010 to 2015.  Marketing efforts have been focusing on increasing innovation to drive e-commerce sales. As businesses are becoming more dependent on e-commerce revenue and site visits, more attention is turning towards delivering a browsing and purchasing experience that is similar to the experience delivered via PC. Consumers are expecting the mobile experience to be better or equal to the experience received online, it is the right time for businesses to be focusing on optimizing their mobile experience.

Many business may question, what are the benefits of creating a mobile optimized website or is it worth investing in the creation of a mobile app?

There is a slight difference between a mobile optimized site and a mobile app which would have a deciding factor to which site would be best suited for your business. A mobile website is specifically designed to be viewed on mobile devices and therefore renders the web page to be viewed appropriately on mobile devices. An app is a piece of software that is written on a technology stack/platform and distributed through App stores such as iTunes, Android Play Store, etc. The below summarizes a few advantages and disadvantages between mobile websites and mobile apps.

In conclusion, both options have their advantages and disadvantages and the decision will ultimately rely on your consumer base and what information will be provided. If your mobile goals are to establish an easy way for users to search your website and have the ability to deliver content effectively, a mobile optimized website would be the ideal choice. Although, if your goals are aimed more towards creating an interactive and engaging place for users to view and take advantage of your information, a mobile application would be best fit. If mobile devices represent a significant chunk of your site interaction, considerations should be taken to ensure that sales opportunities are not being lost an due to consumers not having an ideal web experience. Now is the time to begin considering a greater mobile presence.
Walmart, the big blue superstore chain, recently had a shakeup in getting their inventory to the shelf. This isn't a euphemism concerning supply chain troubles, they actually had serious problems getting items from their stock rooms onto the shelf. 

To restate the obvious for a bit of background: Walmart's business model is to sell common products at low margin but at extremely high volumes. The low prices are secured through the company's practice of supplier management, building relationships with high-volume suppliers and securing their lowest possible price by promising an incredibly large amount of orders. These high volumes are maintained through intricate and state of the art logistics planning to move products as quickly and efficiently as possible from the manufacturers to the distribution centers, then from there to to the individual stores, and from there to the shelves. 

So where did the problem arise?

In an article published in Bloomberg this week, it was alleged that individual Walmart stores were not operating with the necessary levels staff (if you've ever wondered why they have 50 register stalls but only six open, here's your answer). These budget-minded, intentional staffing shortages made by the company affected the stocking crew, and there were not enough employees on the floor to ensure the shelves were properly stocked. 

If a product isn't stocked, it can't be sold, decreasing profits. If a product isn't stocked, it's in the warehouse, increasing turnover times. Both of these problems are bad for a company with the business model like Walmart. 

The company identified and remedied this problem through the use of a consultant firm who identified approximately 800 SKUs across all departments that were indicative of common customer purchases. The consultants came in to various stores, performed anonymous shelf audits, and identified which products were under-stocked. In a later phase, the consultants placed stickers at each SKUs shelf location, allowing Walmart employees to key in on those critical products. 

The takeaway, if there is one other than "buy green stickers", is that for all the planning and forecasting that can be done on the manufacturing quantity, inventory cycling, and transportation angles, problems can arise at any point along the supply line. Often in the most basic areas.
Cyberattacks should be accounted for in risk management process

When companies perform qualitative risk assessments, they often fail to consider the potential disruption from a sophisticated cyberattack. The frequency and complexity of cyberattacks is increasing, and hackers are more able to breach a company's security detection system, according to a recent study from Frost & Sullivan. Next-generation intrusion prevention systems (NGIPS) are becoming more widely adopted to mitigate the risk of a cyberattack.

Organizations have experienced a rise in long-term, targeted advanced persistent threats, which indicates hackers are better organized and more skilled. Many enterprises continue to install intrusion prevention systems to detect traditional malware, but some are upgrading protection measures as the threats to data security increase. However, the high cost of software upgrades can deter some businesses from investing in new systems. 

Earlier this month, the U.S. government cautioned businesses about the heightened risk of cyber crime could create disruptions for companies that provide critical infrastructure services, such as electricity and water, The Washington Post reported. U.S. officials are increasingly concerned about data breaches on authorized computer networks, and have warned that cybercriminals are probing into computer systems that control chemical, electric and water plants. Federal agencies are increasing efforts to share information about potential cyberattack risks with infrastructure industries and encouraging computer network security. 

Although such attacks are rare, targeted cybercrime could cause a severe business disruption. While data security breaches are a risk for many industries, the government warned it would be particularly damaging for infrastructure providers, The Washington Post stated. The government issued specific measures that could be taken and gave detailed descriptions of tactics used to gain access to company networks. Adequate measures to prevent data security breaches are important for the risk management process.

Mexican border delays costing US businesses billions

Although Mexico is becoming an attractive manufacturing destination, delays at the border cost U.S. businesses $7.8 billion in 2011, Bloomberg reported. The value of logistics between the U.S. and Mexico is expected to reach $463 billion by 2020, and this could cause the total losses to grow to $14.7 billion annually. 

The average wait time for commercial vehicles at the Mexican border is just over an hour, though the wait is longer at peak times, according to Bloomberg. The amount of money lost accounted for costs of fuel and trucker wages as well as lost business opportunities. More than 5.1 million trucks crossed the border in 2012 at the largest commercial ports of entry. This number is expected to climb to 7.3 million truck crossings per year by 2020. Land ports of entry are an average of 40 years old, and modernization would cost $6 billion. The ports were built before security regulations tightened after 9/11. Approximately half of the cost would be for improvements on the Mexican side of the border.

Mexico has recently been seen as an advantageous location for companies to move production to reduce manufacturing costs. Direct labor costs are relatively low, and it is more cost effective to ship merchandise. The five industries that carry the highest trade value - electrical machinery, computers, automobiles, plastics and precision health instruments - experienced the highest impact from logistics difficulties.

The border delays could increase costs of consumer electronics and complicate logistics for major automakers. Honda, Nissan, Mazda and Audi have all offshored some manufacturing to Mexico, Bloomberg said. Car companies often shift parts across the southern border multiple times during the manufacturing process, causing operating costs to jump. 

Simplifying logistics helps companies grow

As a company grows, so do logistics operations. However, rather than getting bigger, logistics becomes more complex, according to Forbes. Having more than one warehouse is a sign a business is growing, but it can make distribution more complicated. 

As a business grows, order processing in retail sourcing is one of the tasks that can become significantly more complicated, Software Thinktank stated. Depending on the number of warehouses used by a company, order processing can become more difficult. The company recommended warehouse maps with product locations, while electronic procurement through an asset management software can create better organization. Inventory levels can be updated in real time, which allows employees to work faster and fill multiple orders at a time in some cases. 

When orders become larger, it is harder for businesses to assess how much inventory they need at any given time, Forbes said. Large orders could delay future shipments if products are backordered, but too much inventory is a waste of resources and space. If a company does not track inventory levels, the warehouse can end up with a surplus of one product while running out of another. The solution to inventory management is good recordkeeping.

"If you always update your inventory records when you sell, order or receive products, you'll have a firm grasp of your situation, and you'll be able to respond to changes quickly," Software Thinktank said. "It doesn't hurt to plan ahead either. If you notice that certain products are more popular at one location or at a specific time of year, you can stockpile more of those products at the right place and time."

Receiving more orders and expanding to multiple warehouses can be growth opportunities for businesses. Simplifying retail logistics can facilitate the growth process. 

Chinese environmental officials approve world's tallest dam

The environment ministry of China granted permission for the world's tallest hydroelectric dam to be built on the Dadu River. Construction plans were approved despite acknowledgement of impacts to endangered plants and rare fish species during environmental risk assessment procedures, according to Reuters. The dam will measure 1,030 feet in height and will be located in the southwestern Sichuan province. When completed, the dam will generate a total installed capacity of 20 gigawatts.

The region is home to diverse plant and fish species, many of which are under government protection, The Guardian reported. The environmental ministry proposed mitigation efforts, such as protection of fish habitats in tributaries and increased efforts for fish breeding and releasing. 

China has made the move to strengthen its energy portfolio by upping non-fossil fuels to 15 percent of the total energy used by 2020, Reuters said. Hydropower is predicted to make the largest contribution. Chinese authorities approved a controversial group of dams along the Nu River, The Guardian stated. A previous hydroelectric dam project on the Dadu River sparked unrest among farmers in the region who would be forced to relocate. 

In addition to the potential impacts on endangered species, scientists have cautioned that excessive damming in southwest China could increase the region's risk of natural disasters, such as earthquakes and landslides. Rivers often form along fault lines, so planned dam projects are at risk of damage, according to New Scientist. Seismologists have suggested the creation of reservoirs could partially trigger massive earthquakes in geologically unstable provinces like Sichuan because the weight of the water increases pressure on fault lines. A recent quake in China damaged two medium-sized dams and 52 smaller ones, causing residents to be evacuated downstream. Natural disasters could have a dramatic effect on logistics and other business operations in the region.  

Whether for work or play, travel is a necessary evil for all of us at some point.

Between travel, gifts, attire and other costs, guests are expected to spend an average of $539 per wedding this year -- up more than 50% from last year's average expected expense of $339, according to the American Express Spending and Saving Tracker's recent survey of about 1,500 adults.

Almost 140 million Americans (59%) are planning a summer vacation. They expect to spend an average of $1,180 per person, on par with 2011.

With statistics like that it is important to plan for any and all expenses that you might incur while travelling, however, as much as we try to plan for any unexpected costs it is inevitable at times that we will run into situations that will leave our budgets a little shorter than anticipated. This article will highlight some common events that you may not consider and how to avoid them and their price tags.

1. AVOID ROAMING CHARGES – one way to avoid roaming charges while traveling is to ensure that you tap into available WI-FI where you are located when using data. You should also consider turning off apps, data roaming, and fetch data.

2. EAT LOCALLY – tourists often flock to touristy attractions or restaurants that they feel comfortable with, if you go to downtown Cancun, Mexico its like being right at home with Outback Steakhouse right on the corner. Of course if dining at the tourist traps you are likely to pay out the nose. Ask around or at the hotel for local restaurants to try, they are generally a lot less costly and you can be adventurous with your choices!

3. EXCHANGE RATE SCAMS – be careful about where you exchange your money when traveling abroad. Anyone with a little spare cash can set up an exchange booth and charge outrageous fees on top of the national or local exchange rate. Avoid this by exchanging money through a secure provider like at your hotel.

4. DON’T GET TAKEN FOR A RIDE – before traveling outside of the country research the best way to get around and the costs associated. When you are in an unfamiliar place taking a taxi for example may be more costly than necessary, they have little regulations around charging fares and can take you on the scenic route to increase the fare.

These are just a few ways that you can save while traveling this summer. Your best bet is to try to do some research before you head out to your destination. Most local information is readily available and just a little extra time spent researching can pay off big when you get where you are going.

While these tips can be used for personal or business related travel, check out the May issue of Strategic Sourcing News and Views for more tips on how to save on your travel expenses both for yourself and your company.
Just a reminder, Source One will be heading to Widener University next month to attend the Continuing Professional Education (CPE) Conference hosted by The Association of Accountants and Financial Professionals in Business.  Source One representatives, Jennifer Ulrich and David Pastore will be presenting their discussion piece titled "Collaborate with Procurement & Improve Your Bottom Line.  The event starts at 7:30 am on Friday, June 7th and will continue until 4:00 pm.  The conference will be held at Widener University's Webb Room located at University Center, 700 E. 14th Street, Chester, PA.

This event is right around the corner so don’t forget to register soon to get your tickets.  For more information on this event or if you'd like to schedule a one on one appointment to speak with someone from Source One please contact us at  We hope to see you there!
In April, Source One quietly moved to its new corporate headquarters in Willow Grove, PA. The relocation served as an indicator of our continued growth over these past 20+ years, but also reflects our ability to stay ahead of the continuing shifts in the strategic sourcing playing field and enhance the performance and profitability of our clients.

As you might have seen in the AberdeenGroup’s whitepaper titled “The CPO’s Agenda for 2012 …and Beyond”, which was circulated late last year, the priorities of CPOs across the U.S. are shifting in terms of how they plan on improving their organization’s spend management. This shift in priorities resulted in Strategic Sourcing, which has historically proven to be the most efficient and productive method of managing a business’ spend, being ranked last on the list, overshadowed by “increased focusing on spending categories” and “aligning procurement’s strategy with the organization’s goals as a whole”. This shifting to the organizational center by procurement departments reflects the success of companies like Apple, whose supply chain optimizations and supplier management practices under Tim Cook’s time as CPO helped make the company the most valuable corporation in the world.

In our providing of consultative services concerning strategic sourcing and cost reduction, we have been building relationships with companies across a broad range of industries for more than two decades. Last year, our growth accelerated and hasn’t slowed as a result of our emphasis shift from cost-cutting to a consultancy that offers value-add services related to supply chain management, which includes supplier relationship management, project management, and top-line revenue growth.

Our rapid growth required us to relocate to our new headquarters, but this relocation also served as the final step in our organizational restructuring. To support the demand for a more comprehensive service offering, Source One created a Supply Chain Center of Excellence within our new headquarters, with Source One now acting as an incubator for the development of new ideas and best practices for category management, supplier relationship management, and Supply Chain/Finance Integration. The initial focus includes curating a stakeholder engagement process to allow procurement to effectively support their marketing groups, while crafting thorough & accurate spend analyses and opportunity assessment tactics for IT.

To get an idea of how this works, we were able to flex our Supply Chain Center of Excellence’s muscles in our nearshoring initiatives. In assisting our clients manufacturing moves to locations nearer to the U.S., we discovered that Mexican companies were unfamiliar and struggling with strategic sourcing – their business practices were centered around doing business with those they had personal relationships with, and advertising their products and services was not an established practice. Their negotiation tactics also differed greatly from those used in the United States. These differences made it difficult for U.S. companies to find the right suppliers in Mexico, and even if they did, the differences led to inflated prices, reducing the country’s competitive advantage. Source One developed a strategy to act as ambassadors for strategic sourcing in Mexico, helping regions within the country build foundations to work efficiently and effectively with its partners in the U.S. We were invited to CONAMA in 2011, a gathering of Mexican businesses, politicians, and scholars, to further define strategic sourcing and provide insight on the opportunities and challenges facing Mexico’s, and Latin America’s, nearshoring industry. Since then, we have continued the dialogue, and have spoken at various events for LaSalle University students in Mexico City, furthering their education on U.S. business practices.

To sum it up, Source One is leveraging our industry knowledge to stay ahead of the advances of the changing procurement industry by shifting away from cost reduction practices and moving towards proactive supply chain and risk management. As procurement moves from purely cutting costs to managing projects and offering market intelligence in the name of offering their company’s a competitive advantage, we are ready to help.

Check out our Center of Excellence page here.
Impact of 3D printing for domestic manufacturing

Manufacturing used to be seen as an industry that required a great deal of capital, but as 3D printing takes off, companies may be able to reduce manufacturing costs while creating innovative products because it is much easier to create prototypes. Additive manufacturing is the process of building objects by adding thin layers on top of each other based on a computerized design, MIT Technology Review stated. On a large scale, this technique is used to produce specialized medical implants and to produce plastic prototypes for engineers and designers. 

Some major manufacturers are starting to move some production to 3D printing. General Electric will be producing jet engine nozzles with lasers rather than the traditional method of casting and welding metals, according to the source. Conventional manufacturing requires the welding together of 20 separate, small pieces together for the jet engine components, and this is a labor intensive process where much of the material is wasted. 3D printing will provide a way to make more complex shapes while also conserving material. GE expects the new manufacturing technique will give product designers greater flexibility and freedom from traditional manufacturing limitations. 

Benefits for small business manufacturing

In addition to large companies like GE, 3D printing could be very significant to small businesses because it allows entrepreneurs to make a prototype with ease, and it can be a way to reduce operating costs for a business, Forbes reported. While additive manufacturing is not new, the reduction of cost in 3D printers is a recent development. Depending on the capability, some 3D printers cost as little as $5,000, making the technology accessible to businesses with less capital. 

Manufacturers are constantly seeking ways to achieve cost reduction, and 3D printing will offer new ways to do this because of lower levels of raw material waste, according to Spend Matters. For example, a 3D printer can use only the necessary amount of steel dust to make a metal component rather than carving down a whole steel billet. Manufacturing used to have a great deal of material waste, and 3D printing generates no excess. 

Additive manufacturing challenges

Since 3D printing technology has only recently become widely accessible, the capacity is small and printers are typically slow. Projects such as the GE jet engine components will serve as tests to how significant this technology can become as it develops. Since additive manufacturing will enable small-business manufacturing, there could be intellectual property risks, Bloomberg stated. The accessibility of 3D printing could increase chances of counterfeiting. Larger organizations may try to force smaller producers out of business with lawsuits, and there could be the risk of products with questionable quality and safety entering the market. Since 3D printing is less labor-intensive than traditional manufacturing, it could mean fewer assembly line jobs, although ultimately the technology could lead to new opportunities.

3D printing will create new challenges for procurement as manufacturers may eventually be able to reduce their numbers of suppliers. If companies can make an object themselves, there is less incentive to procure a project from a third-party supplier, according to Spend Matters. Mass production of standardized products will likely continue because it will be the most cost-effective option. However, specialty items will have value from complex designs. Manufacturing suppliers that produce complicated products may experience a loss of value when other companies have the internal technology to make these components on their own. 

While additive manufacturing is still gaining traction, it is positioned to dramatically change the industry. Small-business manufacturing could benefit from cost reduction and increased capabilities for innovation. 

The news for Happy Family is pretty good recently, topped by a Mother's Day acquisition by French food conglomerate Danone that saw the Evian water-owner picked up 92% of stock in Happy Family. The date is doubly significant for Happy Family, as the company got its start on Mother's Day 2006, launched by a young woman upset at what was going into the processed baby food available at that time. The product was organic, nutrient-enhanced, and came in an easily carried pouch.

There were two key decisions she made when launching Happy Family. The first set her apart from her competition. The second sparked an industry trend. The first was the choice of using only organic yogurts, fruits, and vegetables, which compared to the preservative-laden baby food at the time, offered parents a healthier alternative that they previously did not have. Remember, this debuted right around the time people started getting concerned about aspartame, high fructose corn syrup, and other questionably chemical food additives.

The second decision is the one that set fire to the industry: the pouch. Up until that point, baby food came in jars. Occasionally plastic tubs, but predominantly tiny glass jars. With the pouch, consumers were sold on convenience -- take it anywhere, no spoons needed, your child will be able to feed themselves sooner. This managed to hit virtually every buzzword modern parents were looking for. You could leave the house, not bring a big/change of clothes/pressure washer, and help your kid hit a milestone. What was cleverly concealed under all this convenience, were the cost cutting measures enabled by the pouch. This concealment via clever marketing is beginning to fall under a larger term: cost structure transformation.

The plastic pouches are cheaper to produce than glass jars, they typically hold fewer ounces of food (3.5 oz. pouch vs. 6 oz. jar), they expire faster (baby food jars are good for two days after opening if refrigerated, pouches have less than 24 hours) thereby generating more purchases, and they are essentially 100% labeling; producing far more space for brand recognition purposes than jars. All of these factors serve to benefit the company first and foremost, but that's never discussed thanks to clever and effective marketing.

In the realm of revenue generation, this is as effective as it is devious, and it's really effective. It's right up there with the "grocery shrink ray" and "planned obsolescence". But as your own organization hunts for savings, it's not a bad trick to pull out, if possible. Mull the idea over a "lunchbox-friendly" 8 oz. soda (down from 12 ozs.) or a "responsible" (read: shrunken) Snickers bar. Tell us what you think below.
Small-business manufacturing has opportunities for innovation and growth

When people think of manufacturing, they typically imagine cars, airplanes, electronics and home appliances, but many of the opportunities for production in the U.S. may be on a much smaller scale, according to Bloomberg Businessweek.

Many manufacturing companies have under 500 employees, however, they still have great potential to grow. Some people believe the manufacturing renaissance is due to the reshoring movement, but small-business manufacturers will most likely be responsible for the highest amounts of growth in the sector. 

Direct labor costs are causing offshore manufacturing destinations like China to lose cost reduction advantages, the Washington Post reported. As technology has improved, American worker productivity has increased, which has made the case for reshoring production compelling. Despite this positive news, most of the new manufacturing positions in the U.S. have not been the result of companies returning operations. The average U.S. manufacturing company has less than 50 employees, Businessweek stated. 

Some studies show that smaller manufacturing firms produce a greater number of innovations per employee. Many experts believe new manufacturing positions will come from these firms, and small companies provide parts and components to larger manufacturers. Small and mid-size manufacturers account for one-third of total U.S. export value, Businessweek said. Unfortunately, small-business manufacturers often have difficulty obtaining financing and venture capital to restructure and grow, which can make it difficult to manage business overhead costs. 

Metropolitan areas that have the most manufacturing momentum often have the highest amounts of economic growth and job expansion, according to Forbes. Cities with higher levels of manufacturing production have experienced greater job growth overall. With the rebound of car and truck sales, many cities with high concentrations of auto production have increased manufacturing and high-tech employment.