August 2014
Ivory: Uses, sourcing and legalities

While many companies would assert their absence from the global sourcing of ivory, they may be unwittingly contributing to the decimation of an endangered species.

A number of enterprises and consumers throughout the world prize the precious material, primarily using it to make jewelry or apparel. Many countries have banned the ivory trade altogether, as it contributes to the depopulation of elephants and endangered species such as the rhinoceros.

The value

Rebecca Rosen of The Atlantic noted 70 percent of the world's illegal ivory typically heads to China, where one pound is worth around $1,000. People assign such value to the material because of the historical context behind it: Rosen acknowledged artistic ivory carvings originating from the sixth millennium BCE. Archeologists have discovered common accessories and tools such as chopsticks, bow tips, combs, buckles handles and other artifacts.

Why was ivory made a commodity to begin with? Rosen noted its durability and the ease with which it can be carved and shaped into a variety of objects, which has resulted in it becoming a luxury symbol.

How does the ivory trade affect the legitimate procurement process?

The fact of the matter is, many organizations could be unwittingly transporting ivory across the world without being aware of it. That being said, how could such blindness persist? Organized crime. Because demand for the material is so high, structured underworld factions have collaborated to penetrate legal shipping operations. False containers, barrels disguised as oil drums and other duplicitous assets are employed.

It's a situation some would expect out of a TV show, but fiction is usually inspired by events grounded in reality. Supply Management noted a report conducted by the Born Free Foundation, which discovered between 2009 and June 2014, 170 tons of ivory had been seized by officials. This equates to the deaths of nearly 230,000 elephants.

How can procurement services purge illicit ivory trade from company practices?

  1. Quiet audits: It may seem over the top, but auditors operating incognito may be able to prevent employees with nefarious intentions from smuggling illegal goods.
  2. Look at the hot spots: Companies with operations in ports that have lax trade regulations and standards should be thoroughly assessed - criminals look for such locations to traffic products.
  3. Test the waters: Before the RFP process, get as well acquainted with a business as possible.

It's a frightening idea, but it's possible for criminals to exploit global shipping endeavors. Those are three steps companies can take to ensure this isn't happening in their supplier relationships.

How much do consumers care about ethics?

It's assumed marketing analysis would show consumers base decisions on how socially and environmentally conscious companies are. 

Is this really the case? Professionals take note of how easy it is for the average person to collect information on global enterprises and their practices. There's no disputing this, but analysts should also consider the following factors:

  • People don't always regard everything they read on the Internet as truth, even if the materials originate from reputable sources. Everything is perceived with a hint of criticism. 
  • Some consumers have accepted the intricacy of global sourcing, recognizing how difficult it is for enterprises to keep track of all their sources
  • Many individuals are desensitized to reports detailing poor business practices or scandals. 

A tough trade to make 

One would assume consumer cognizance of animal rights effectively eliminated the fur trade. However, The Telegraph contributor Oliver Duggan noted The Polar Group, a holding firm that owns and operates Hockley - a company specializing in designing fur apparel - is encountering an increase in sales

The enterprise's chairman, Frank Zilberkweit, asserted the industry encountered a social setback a decade ago due to the sector's lack of transparency with the public. Duggan referenced pictures of animals raised in poor conditions branded Hockley and other fur traders with a negative image. 

Tempering assumptions

Now, the tide appears to be changing. Zilberkweit noted Hockley responded to the demand for ethically bred animals by sourcing from members of Moscow's Origin Assured program, which defines industry best practices. 

"The industry has got its act together and offers much more information, which is demonstrating that we have very high standards, probably greater than most other animal industries, particular (sic) meat and leather, because we are so aware of past criticism," Zilberkweit told Duggan. 

A need for a bargain 

Consumers aren't disregarding prices either. Business Wire cited a study conducted by Trade Extensions, which scrutinized sentiments among consumers in the United States and United Kingdom. The study discovered 80 percent of respondents believe businesses should conduct themselves ethically, but when it comes to purchasing goods, price, value and quality are top of mind. The research discovered two seemingly contradictory attitudes:

  • 40 percent of shoppers ranked price as the most important factor after being asked to list their three biggest concerns
  • 70 percent of participants said they're more likely to purchase goods from companies with strong sustainability and ethical standards

In other words, people are paying attention to best practices, but these are not necessarily going to make a buyer-seller relationship. 

Emissions reduction a priority for large corporations

Time and again, marketing analysis has shown western consumers favor renewable energies.

Companies selling goods in the North American and European economies are recognizing this fact, prompting them to reevaluate their procurement strategies and contract with companies using the technology. Just how much green energy a production firm uses to power its facilities can be vague, depending on how thorough factory audits are.

Asserting priorities 

According to Associated Press writer John Flesher, popular consumer packaged goods brand Kellogg announced its intention to reduce its overall greenhouse gas output by reassessing the practices of its suppliers. Diane Holdorf, the company's chief sustainability officer, says the firm intends to build a broader plan based on a goal posited in 2008, which obligates Kellogg to decrease emissions by 15 percent to 20 percent. 

"Not only is it what our customers and stakeholders expect of us ... but we want to hold ourselves accountable," said Holdorf, as quoted by Flesher. 

Kellogg intends to increase its use of low-carbon power 50 percent by 2020 and install reusable water processes in 25 percent of its plants. In addition, the food company wants 30 percent of its facilities to stop sending waste to landfills within the same timeframe. 

Is using renewable resources viable? 

Over the past couple of years, a number of major technology firms have used solar and wind power to achieve corporate cost reduction and decrease their environmental footprints. As data centers typically require 100 percent uptime, green energy has proven itself as a feasible source of power. 

But do the same rules apply to factories? The electricity needs of such facilities are much different than those of information-intensive data centers. 

Hitting the right angles 

Essentially, photovoltaic panels need to become more productive in order for manufacturers to seriously consider procuring them. The Christian Science Monitor noted how one company, Glint Photonics, has developed solar equipment that can absorb sun radiation from multiple angles, a capability that apparently wasn't so prevalent.

Glint developed "a protean material that adapts its reflectivity depending on the heat from concentrated light," the news source reported. The technology is self-activating, requiring no active monitoring from third parties, and can capture sunlight from disparate angles during various times of the day. 

The panel manufacturer asserted this solution is much cheaper to produce than more technical counterparts, and concentrates light 500 times more than conventional PV surfaces. Once Glint's innovation becomes more ubiquitous, it's likely factories will see solar energy as feasible to install. 

Centralized or Decentralized? Consolidated or Unconsolidated? If you ask any sourcing professional the best route in organizing their company’s supply base and achieving cost savings, the most common response to these two questions is centralize and consolidate…as much as possible. But if you ask the question: “Coupled or Decoupled?”, these terms may not be all too familiar to a sourcing professional, unless they oversee the marketing spend category.

Most of the time, centralizing your supply base and consolidating wherever possible delivers the most benefits for your organization in the form of cost reduction and easier supplier relationship management. However, this approach might not make sense for certain spend categories you find yourself managing and there may be other objectives you need to keep in mind. If you are responsible for overseeing the marketing spend category, you may be asked by your stakeholders to decouple an agency relationship or two or at least explore the option given some recent trends in the industry. Well, what does decoupling mean exactly? And why would this approach make sense?

Decoupling is when an advertiser chooses to separate the production of a creative concept or idea from the actual development of the idea (and strategy behind it). The term can also apply when you are referring to the separation of media buying from creative. Traditionally, agencies have been viewed as a one-stop shop for developing and executing marketing campaigns, meaning they are responsible for the development of ideas, bringing these ideas to life through production (e.g. print, broadcast, digital), and then sharing these ideas with the end consumer through media platforms. Some traditional agencies are now only being asked to come up with the core idea and then this deliverable is passed off to production agencies, bringing rise to production houses focused strictly on one thing – you guessed it, production; and since this is their one and only core competency, they are able to deliver faster turnarounds, lower costs, strong expertise and reliability.

There is an ongoing debate about decoupling and whether or not it is the right strategy to employ. Decoupling may not make sense for every advertiser, and in fact, many still argue that media and creative should not be separated, which is a very common practice these days. Others say that the strategy makes sense, but only for digital media and digital creative projects. The reality is, the optimal solution depends on a company’s overarching marketing strategy and internal resources. Typically, if there is a great deal of production work required for certain marketing tactics within your brand’s campaign, decoupling may be a good sourcing strategy to consider. If the scope of a project is small, a single agency may be able to deliver and deliver effectively on every core competency needed to run a comprehensive campaign from start to finish. The decision to decouple depends on the makeup of your current agency network and how well they support your brand. Sometimes it does not make sense to disrupt the current state if relationships are healthy and ROI is high.

The topic of decoupling deserves its own blog series, so this post is the first of a few. In this series, we will be discussing all things “decoupling”, covering the following:

  • Historical and recent trends as they relate to decoupling services, specifically media and production, answering the question: How did decoupling originate as a strategy?
  • The advantages and disadvantages that the decoupling of agency services can have on your brand; key considerations before getting underway with this type of sourcing strategy
  • Scenarios where decoupling makes the most sense and which categories fit the model well; we’ll also call out some key players to consider that have sparked this trend
In our next post, we’ll provide some additional context around decoupling and why it is a topic that is growing in popularity.
Can food companies benefit from sourcing grass-fed beef?

Western consumers have grown incredibly health-conscious lately, prompting many supermarkets and restaurants to offer customers beef products from grass-fed cows. 

What's wrong with corn-fed? The basic explanation is that cattle can't properly digest grain, despite the fact that many large food companies use it to feed their livestock. Although grass-fed beef is better for consumer health, enterprise procurement processes officers are wondering if it's better for them. 

A meager supply 

Food Renegade acknowledged restaurant chain Chipotle's commitment to sourcing 100 percent of its beef from grass-fed cows, the majority of which are raised in Australia. The organization's reasoning behind this decision is that there aren't enough farmers based in the U.S. who follow a truly organic protocol. 

Although farmers raising grass-fed cattle are all over the U.S., Chipotle asserts too many of them use hormones and antibiotics. Therefore, sourcing from businesses raising livestock in such a manner prevents the brand from honestly labeling itself as a user of organic meat. 

In contrast, Australian-raised cows spend their entire lives in pastures, eating grass or forages such as hay, the source noted. Procurement services and other organizations have discovered other Australian practices surpass standards outlined by the American Grassfed Association, further solidifying the reasoning behind Chipotle's decision.

Organizing supply 

It's this stringent policy that's causing Chipotle to resist purchasing beef from American farmers. Many of the U.S.-based livestock herders that follow Australian practices can't adequately support Chipotle's demand: The volume is simply too great. 

Not to mention, the U.S. suffered a drought in 2012 that killed off much of the nation's grass-fed livestock, causing many companies to turn to commercial producers that feed their cattle corn, Bloomberg News' Megan Durisin reported. However, 2014 has proven to be a bountiful year for grazers. Durisin noted that Glen Cope, owner of a 2,000-acre ranch in Aurora, Missouri, is benefiting from a season that's "been getting plenty of rain."

Durisin noted that 48 percent of pastures and rangeland were labeled as either being in "good" or "excellent" condition as of August 17 - the best rating since 2010. She cited a statistic from the U.S. Drought Monitor, which showed a 32 percent decrease in aridness. 

As grazing conditions improve throughout the nation, strategic sourcing specialists may advise U.S. enterprises to source from farmers specializing in raising grass-fed cattle. Hiring procurement services to conduct comprehensive surveys of farmer practices and protocols will help businesses accurately inform consumers that they're providing organic beef. 

As Source One plans to attend the Rutgers University Supply Chain Meet and Greet on September 17th, we decided to take a deeper look into why there was such an unarguable demand to attend this event—for students and corporations alike. While supply chain professionals work daily to refine supply chains and granular details of business process, it can become easy to overlook the larger impact of supply chain management and why jobs in the field are so desirable. Supply & Demand Chain Executive Magazine made it clear why supply chain management is the “Sexiest Job in the World” in their March 2014 article. Here’s some key take aways from what they had to say:
1. Successful Supply Chains are the Blueprint for Successful Products
Without a smooth backbone of operations, none of the products and technologies we value most would be possible. As a product or service gains global traction, effective supply chain management is what allows for the expansion of that offering and its effective transition into a new area.

2. Supply Chain Management Demands The Newest Technology
As globalization becomes a crucial component of countless businesses, supply chains become more and more complex. Advanced technologies can aid in managing relationships with partners, ERP software, and cloud-based collaboration platforms.

3. The Most Successful Supply Chains are Fast and Agile
To overcome disruptions, keep up with changing market conditions, and withstand competitive burden, supply chain management requires quick response to changes. For professionals up for the challenge, this offers an exciting and active role in a company’s stability.

For these reasons among others, it seems clear why crowds of job seekers will be flocking to the Supply Chain Meet and Greet on the 17th. If you are a job seeker and are interested in the same fast-paced supply chain environment from a consultant perspective, there is  chance Source One is the company for you. Come see us at the meet and greet and learn more about all the supply chain field can offer—you’d be pleasantly surprised.

Procurement services wonder if China is losing its luster

Whether companies headquartered in North American and Europe will continue to source from Chinese manufacturers is up for debate.

Over time, spend analysis has shown the cost of producing goods in China is growing more expensive. Some professionals have even asserted the nation's enterprises aren't focusing on quality. 

Not impressed 

At least, that's what Australian entrepreneur Amanda Bennett believes. BRW spoke with the former business owner, who asserted she had to liquidate her company as an direct result of doing business with Chinese production companies. 

The concept behind Bennetts Boots was to create footwear for people with wider calves. Initially, the finished goods Bennett received from China were a hit with Australian consumers. Upon opening a store in Melbourne, she sold $700,000 worth of merchandise in the first six weeks. 

However, in 2011, the quality of the apparel began declining. Bennett recalls one shipment of boots that were literally falling apart. About 80 percent of the units were unsaleable. This trend continued, and despite cutting staff, running a leaner business and taking other measures to achieve corporate cost reduction, Bennetts Boots ultimately had to shut down. 

A poor way of doing business? 

BRW acknowledged the findings of Chris O'Halloran, a procurement process specialist who assists Australian enterprises in doing business with Chinese manufacturers. He noted the disparity between two types of production companies the country harbors: Those that are completely automated and others that seek to improve profits wherever possible. 

"The Chinese do business by going in cheap and then try (sic) to recover margins by cutting corners, hoping no one notices," said O'Halloran, as quoted by the source. "To the Chinese, if it looks the same to them, then it is the same. They're not trying to be nasty; it's just the way they do business." 

China beginning to outsource

Speaking of footwear, some Chinese production companies are finding doing business domestically isn't as feasible anymore. The Week noted that, although China bereaved the U.S. of about 2.4 million jobs over the last decade, companies such as Huajian Shoes are outsourcing operations to Africa. 

"Ethiopia is exactly like China 30 years ago," said Huajian Shoes President Zhang Huarong, as quoted by the source. 

Huarong noted that Ethiopia has a high unemployment rate, which makes the country perfect as a strategic sourcing partner. China's average manufacturing wage dwarfs Ethiopia's by approximately $530, so the profits associated with procuring goods from the latter country are enormous. 

Strengthen supplier relationships to improve production quality

As product release dates are central components of retail marketing strategies, those managing the procurement process need to ensure items are operable when they arrive to market. 

Manufacturing delays and mishaps can offset distribution, in turn causing disappointment among consumers. If a new item is set to be unveiled in October 2014 but won't arrive in select stores until the following month, there's a fair chance sales may suffer. 

Mitigating errors 

Apple may encounter just such a setback. According to Reuters, the reputed software and hardware manufacturer is working frantically to assess a critical screen glitch that may postpone the iPhone 6's September 9 media event. This particular model is anticipated to have a wider display than its predecessors - the iPhone 5S and 5C. 

Two Apple suppliers informed the source that the backlight illuminating the screen had to be redesigned. In an effort to create a thinner screen, Apple blueprinted the iPhone 6 to possess one layer of backlight film. As a result, the display wasn't as bright as the manufacturer hoped it would be, obligating Apple to revamp the smartphone to fit an additional layer of film. 

What's to be learned?

It's unlikely that Apple's initial iPhone 6 prototype didn't coincide with its designers' expectations, but there's no way of validating this assertion. Product teams are typically a collection of professionals specializing in disparate fields, which can cause confusion if department organization isn't employed. 

Yet, one still can't turn away from supplier relationship management concerns. In this regard, Apple actually did a fantastic job of making the most out of an unfavorable situation. Tight, comprehensive communication between blueprinting specialists in headquarters and manufacturers across the globe was maintained, allowing the company to implement changes swiftly. 

The manufacturer's input 

What defines a strong supplier connection? Supply Management spoke with Planning Perspectives CEO John Henke, who authored a report titled "OEM Profitability and Supplier Relations." The general sentiment is that greater profits can be achieved when production companies are regarded as partners as opposed to simply sources. 

"It doesn't matter what business you're in," Henke told the source. "If you want to maximize the opportunity to make a profit it is absolutely important that you develop the best possible relationships you can with your suppliers."

For instance, if Company A spends more time communicating and collaborating with Manufacturer C than Company B, Manufacturer C will likely keep Company A informed on the best hardware. From there, designers can integrate such implementations into their products, improving quality and therefore customer opinion. 

With a new presence in downtown Chicago,  Source One is excited to attend Corporate United’s 2014 Synergy Conference on September 15th & 16th and network within the Chicago community. The SYNERGY 2014 Conference was designed to provide the tools and insights to help teams overcome age-old challenges and lay the foundation for the procurement of tomorrow through the “Four Ps of Procurement”:  People, Priorities, Progress and Promotion. As thought leaders in the procurement and strategic sourcing space, Source One is attending with the goal of learning about diverse needs of the market and ways to optimize work based around those items.
As Source One, the industry, and general business climates continually shift, Synergy strives to approach the issues procurement executives and practitioners believe remain key areas worthy of attention. Whether it’s a lack of category knowledge, inability to achieve buy-in, or difficulty creating more value from supplier relationships, the challenges consistently remain the same. A main emphasis of the conference is that innovative solutions are the cure for advancing through these unchanging problems.
As a sponsor of the event, Source One stands by this emphasis on the need for innovation and distinct market intelligence in order to overcome procurement obstacles. With a talented workforce dedicated to delivering value to clients, Source One believes there will be enhanced success in engagements from learning new strategies at the conference. While becoming accustomed to a new area, Synergy will also serve as a good way to develop connections and learn how our services can support the Chicago market further.

If you plan to attend the conference and would like to meet with Source One to exchange thoughts or ideas, we would love to set up some time to make this a reality. Please contact Heather Grossmuller at with any requests. 
Next Level Purchasing Association (NLPA), a global organization that helps clients establish procurement best practices and supports the education of procurement professionals, holds its annual conference September 15-17 in Pittsburgh, PA. Source One Director, Brad Carlson, will be at the event on an interactive panel to share insights for improving procurement performance.

A key topic of this panel, which happens to be Carlson’s area of expertise, is supplier relationship management. Supplier relationshipmanagement programs can help businesses optimize and generate additional value from their supplier base post-contract signature. In June, Source One released its SRM Insights Report, which outlines the business case for implementing such a program.

Why SRM?

In truth, many companies spend valuable time and energy finding best-fit suppliers and negotiating cost-effective contracts.  However, that investment is often neglected or mismanaged once the deal is completed. In the SRM Insights Report, it shows three distinct paths that supplier relations can take after the contract has been signed. Suppliers can be essentially ignored (1), even after long and timely negotiations; suppliers can be somewhat managed (2), but not enough to sustain any long-term value; or suppliers can be (3) setup to succeed through SRM. SRM programs support collaboration efforts and put processes in place so that suppliers are engaged and aligned with your business objectives at all times.

Though there are some SRM skeptics in the world, studies show that without rigorous contract management, 75% of sourcing savings can disappear within 18 months. [1] Some sourcing and procurement departments are resistant, purely due to a lack of understanding of such a program. Carlson hopes that he can illuminate those business professionals and help them realize that SRM can produce continuous improvements in supplier customer service, quality, overall costs, and material flow. The NLPA Conference panel should be an interesting and lively discussion on the topic, but for those not attending you can learn more at

As an evolving area, we recognize that the most innovative ideas pertaining to SRM involve diverse input. We would love to combine ideas and have a conversation with anyone who is attending the conference and would like to meet. Please contact Heather Grossmuller with any requests at For more information about the conference, visit the NLPA Conference webpage. Don’t miss this great event!

[1] The Corporate Executive Board Company, Create Value Through Productive Supplier Partnerships and Become a “Customer of Choice, (last accessed May 1, 2014)
Rare earths: Strategic sourcing considerations

Those in the tech industry, particularly companies manufacturing central processing units, are quite familiar with procuring rare earth minerals. 

IT hardware producers belong to just one contingency out of the many kinds of businesses that source such materials. As these commodities are of incredibly high value, some enterprises employ supplier relationship management tools to ensure the following:

  • Miners aren't cutting corners and acquiring the minerals from insurgents
  • Distribution routes are secured to reduce the chances of thievery 
  • Producers aren't smuggling rare earths to terrorists or criminal syndicates

Conducting a thorough assessment of supplier practices requires companies to review policies, practices and finances. 

Defining rare earths 

According to InformationWeek, assigning the name "rare earth" to a particular mineral doesn't necessarily mean it's rare, but simply cannot be found in concentrated forms. Extracting these metals often requires complex mining processes, and refining them typically has a detrimental affect on the environment. 

The source listed the rare earths, several of which are outlined below, along with what they're used to create:

  • Scandium: Aerospace components with light aluminum
  • Lanthium: Hydrogen storage, battery electrodes and camera lenses
  • Gadolinium: Computer memory (RAM), MRI contrast agents and X-ray tubes
  • Erbium: Infrared lasers, fiber-optic cables 
  • Ytterbium: Stainless steel, stress gauges

Scrutinizing "the largest player" 

Investor Intel contributor Christopher Ecclestone wrote China is the largest participant in rare earths global sourcing, producing an estimated 90 percent of such materials mined throughout the world. The writer noted that despite the nation's heavy involvement in the industry, measuring price, volume and vendor output rate has proven quite vexing for those specializing in the procurement process. 

Ecclestone acknowledged one particular instance in which the country reported a 3.5 percent drop in rare earths exports from 2011 to 2012, or 16,855 tons to 16,265 tons. However, this statistic contradicted an estimate released by the vice director of the Chinese Ministry of Industry and Information Technology in 2013, which asserted China exported 18,600 tons in 2011. 

What does this discrepancy show? Ecclestone believes this ambiguity is a sign of smuggling. For example, while the country's mines that were taking advantage of Ionic Adsorption clays were reportedly shut down four years ago, procurement officers can only truly rely on the good word of the Chinese government. 

He noted another instance in 2011, when Burma (now Myanmar) exported nearly 14,000 terapascals of antimony concentrate to China, with an undetermined amount being smuggled by rebel tribes who mined the mineral. In other words, Ecclestone believed China was importing conflict metals. 

Being able to navigate through the opaque, befuddling trade of rare earths can be quite difficult. Procurement services and other such professionals have the knowledge, resources and time to do so successfully. 

In a highly specialized and technical field keeping up to date may seem like climbing Mt. Everest. As a follow-up to the Keeping up with Pharma: Resources Strategic Sourcing Experts Use to Stay Informed I'd like to provide a simplified roadmap and several examples to navigate the closely related medical imaging device field. This includes an introduction to terminology, what areas of focus are commonly presented, and a look at the leading societies and online news sources.

Getting familiar with terminology is the key step to abate confusion before it starts. Although, this can pose quite a learning curve if not focused on a specific area of interest. The terms biophotonics, biomedical imaging or optics, medical imaging, and bioMEMS have very specific interpretations, but can be considered as simple search keywords for the first pass. It helps to associate imaging with the traditional approaches of light microscopy, x-ray, ultrasound, and MRI. While, photonics and optics are usually related to new and emerging technologies such as laser and fluorescence microscopy, fiber-optic instruments, and microfluidics and microelectromechanical methods.

The search for information is simplified by relating the area of interest to the commonly presented divisions within the field. Science (research), medicine, techniques, tools, and business trends provide common categories. For example, if considering melanoma diagnosis and treatment BioOptics World, and Medical Physics are good first stops.

For in-depth reviews of current techniques and tools review articles are indispensable. The Society of Photo-Optical Instrumentation Engineers (SPIE) publishes several journals related to biomedical and medical imaging. The Optical Society of America (OSA) is widely recognized for its optics journals, but also publishes biomedical optics express to highlight evolving technology in the field. Open access information is available from both societies.

Well organized databases are critical, such as the The National Center for Biotechnology Information (NCBI) which provides access to biomedical and genomic articles in the health and science fields from the U.S. National Institutes of Health's National Library of Medicine (NIH/NLM). PubMed Central (PMC) serves as the free full-text archive of NIH/NML journal literature.

For everyday updates, short descriptions of innovations in the field, and business news the sites from Photonics Media, and PennWell Corp. relate the technical aspects of the field to the activities of the leading companies.

Although, Photonics is the most well known site from Photonics Media, the BioPhotonics portal filters articles centered on the biomedical industry. They present short descriptions of recent research, product, and business news with a link to the original journal and author's site. The buyer's guide can be very useful when searching for suppliers in a specific area.

BioOptics World is PennWell's site for the biomedical community. They also separate research, medicine, techniques, and tools while linking advancements in the field to business trends. Laser Focus World and Strategies Unlimited serve as links to the optics and market intelligence communities. Although reports are offered for a fee, viewpoints are given from both the supply and demand side of the market and are based on in-house data collection efforts. This helps when trying to predict the market directions of new technologies or applications.

Gathering news articles, and keeping track of trends in technical fields can be a daunting prospect, but a systematic approach along with dependable publications can ease the introduction. By concentrating on getting familiar with the field's terminology trade publications and journal articles will become more accessible. With the wide availability of open-access literature a thorough and focused research initiative can then be carried out utilizing the associated society publications, databases, and market intelligence reports.

Image courtesy of

Use supplier relationship management to prevent poor labor practices

While strategic sourcing is typically characterized by the material acquisition process, the approach can also be directed toward scrutinizing supplier employment protocols.

Modern consumerism is obligating enterprises to fully comprehend how raw commodities are harvested, delivered to factories, manufactured and finally transported to the market. Lackadaisical procurement oversight can lead to a tarnished reputation or, in a worst-case scenario, a federal indictment.

Still not enough?

Despite its commitment to the Fair Labor Association and its creation of a Supplier Responsibility initiative, popular electronics manufacturer Apple Inc. has yet to bring its factories up to FLA standards, according to Inside Counsel. The source noted that the FLA recently conducted an analysis of two Apple overseas plants, the results of which were released on August 15. Although the FLA is not a government body, and can therefore not enforce fines, it does offer comprehensive advice on how to mitigate any problems that may arise.

The factories, which are located in Shanghai and Changshu, China, and operated by Quanta Computer, received citations pertaining to overtime protocols, health and safety violations, and poor recruitment practices. For instance, just over four-fifths of the workers interviewed by the FLA stated they had to pay a fee just to work in the facility.

Apple responded to the findings by saying it will "work closely with Quanta and our other suppliers to prevent [excessive overtime]," as quoted by Inside Counsel.

Modern-day slavery?

The expense associated with personnel wages is often taken into account with a comprehensive spend analysis. When exceptionally low figures are reported, the first impulse is to marvel at how productive a certain supplier is. However, failing to bring context to those numbers can result in unsavory or even illicit practices going unacknowledged.

The Guardian referenced a study formulated by the Chartered Institute of Purchasing and Supply, which discovered an alarming 11 percent of enterprises headquartered in the United Kingdom believed it "likely" that a collection of their indirect suppliers are using some form of modern-day slavery.

Although the CIPS reported consistent reduction in its global supply chain risk metric, the assumption that some businesses are underpaying workers - or failing to provide them with any wage at all - is astounding.

It may seem like an over-the-top tactic, but in order to validate or discredit such estimation, firms should consider the pros and cons of outsourcing to procurement specialists to carry out covert audits of both direct and indirect suppliers. Otherwise, grievous human rights abuses will continue to go unacknowledged.

Strategic sourcing for data center management: Where's the hardware?

The cloud, big data analysis and seemingly limitless Internet connectivity are powered by data centers and the personnel who manage them.

Over the next decade, billions of Internet-connected devices are expected to come online, which will require a level of support the PCs of the early 2000s did not. For tech enterprises, the procurement process and talent management are going to be essential in meeting the demands of future businesses and consumers. 

Advancing data center technology involves a symbiotic combination of optimal hardware, but rising to the next level doesn't only involve creating a faster Web. 

A smarter Internet 

In an effort to compete with search engine giant Google, Microsoft researchers and a team from Bing collaborated to create a specialized computer chip that expedites Bing's delivery time, according to TechNet. 

The mechanism, appropriately named "Catapult," was unveiled in a paper at the 41st International Symposium on Computer Architecture in Minneapolis on June 16. Microsoft scientist Doug Burger outlined the project's capabilities, which are supported by field-programmable gate arrays that can be reconfigured by software residing in the cloud. 

The implementation was demonstrated on a collection of 1,632 servers, improving throughput by 95 percent and effectively reducing the number of machines Bing's data centers need to power the programs. 

Reinventing the wheel 

Procurement services working for tech companies, as well as experts within the computer science industry, have foreshadowed the eventual demise of Moore's Law. This concept asserts that the size of computer chip transistors will decrease twofold every two years while simultaneously doubling processing speed. 

Now, IBM has abandoned the classic CPU design for a microprocessor that mimics the architecture of the brain. The device is as small as a postage stamp and requires the same amount of power used by conventional hearing aids. Dubbed SyNAPSE, it uses 4096 neurosynaptic cores, with each combining computation, memory and communication.

Greener facilities 

Managed IT services and other tech companies are interested in procuring energy derived from renewable resources to power their data centers. According to Data Center Knowledge, Green House Data recently unveiled a facility in Cheyenne, Wyoming, that derives its power entirely from green power credit purchases.

Although the source didn't specify which resources were supporting the data center (wind, solar, geothermal, etc.), it did note a similar endeavor by Microsoft. The Redmond, Washington-based software giant unveiled a proof-of-concept implementation that uses fuel cells to convert methane gas output into electricity. 

Procuring new technology and implementing revolutionary techniques are becoming regular parts of the tech industry. For example, how a firm leverages strategic sourcing may define its success in appealing to customers. 

It seems like every day there is a new casino in AC declaring bankruptcy or closing its doors to gamblers. With tremendous debt burden and the competitive casino market straining to turn a profit, many casinos are doing anything to avoid the downward spiral. In the last decade, 26 casinos opened in Pennsylvania alone, creating a distinct challenge for New Jersey to compete with casinos offering close-to-home convenience. Especially with the addition of online outlets that don’t require leaving home, New Jersey is no longer a place gamblers need to travel consistently. Complimentary hotel stays may fill casino penny slot seats but to gain a substantial advantage, resorts need to begin to consider reevaluating their purchasing process during slumps like the present. For the casinos that are still hanging on, reducing operating costs may not spare a declining gambling market, but it can allow a rise above stressed competitors.

Whether it’s surrounding hotel amenities, marketing and advertising, or casino floor machines and equipment, casino purchasing managers have the potential to widen their budgets while strengthening supplier relationships through enabling a thorough strategic sourcing initiative. The same cost savings and relationship reinforcement can be extended to food entities within casino resorts to source quality, cost-efficient ingredients, supplies, and staff. Through granting this visibility into total spend, some of the discrepancies within casinos’ control can be addressed. 

According to the American Gaming Association, the commercial casino industry has been a long-time proponent of diversity in all aspects of its business, from internal hiring and human resources policies to purchasing and contracting practices. Since many casinos seek suppliers who employ staff of diverse backgrounds, a supplier diversity program may aid in consolidating those needs in a way that can prevent overextending budget to achieve a certain level of diversity spend. A comprehensive supplier diversity program can not only help a casino to be ethically bound, but also improve their bottom line while realizing undiscovered suppliers. After establishing selection criteria and training around acquiring diverse suppliers, the benefits of maintaining these relationships can be realized.

Especially following the release of the luxurious Revel casino’s closing, investors and gamblers alike remain skeptical about the future outlook of Atlantic City. "Atlantic City is undergoing a massive economic transition," Atlantic City Mayor Don Guardian said at a news conference. "We know it is painful for those who are losing their casino jobs." Liza Cartmell, chief executive officer of the nonprofit Atlantic City Alliance, was a bit blunter. "Recent developments in Atlantic City are part of the larger picture of excess gaming across the United States that's leading to painful economic decisions," she said.

Although the failure of casinos in New Jersey is tied into the government and some uncontrollable forces, the remaining resorts can be strategic in how they stage their operations going forward. With limited projected future growth in AC, casinos that employ strategic sourcing and supplier relationship management have the opportunity to remain competitive in a struggling industry.

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How will Analytics 3.0 change the procurement process?

Data analytics has helped procurement services weigh the risk of sourcing from particular overseas manufacturers, scrutinize production output, forecast yearly food deliveries and a wealth of other factors. 

Analysis is an integral part of every business, but even the sophisticated visualization tools of today can only be used by departmental teams. Empowering the average worker with software capable of scrutinizing unstructured and structured data in real time isn't necessarily feasible. 

The uses of the future 

However, a future in which even minimum-wage workers are equipped with such tools may not be too far off. Thomas Davenport, a renowned author and contributor to The Wall Street Journal, detailed three generations of data analysis protocols, forecasting a future in which analytics are considered a fundamental part of business practices. 

  • Analytics 1.0: A generation of tools that could only scrutinize structured, historical data that was produced internally. Models and representations took months to formulate. The task of analyzing information wasn't regarded as essential. 
  • Analytics 2.0: Programs began processing external, unstructured data. Managed IT services provided Hadoop and open source databases were capable of quickly inputting information. Data scientists were more involved with the business, instead of working behind the scenes. 
  • Analytics 3.0: In-database and in-memory analytics expedite information processing. Prescriptive and predictive analysis models mature and become a central part of enterprise decision-making. Entire departments are created to support data analysis endeavors. 

Above all, Davenport maintained 3.0 will be a combination of its predecessors. Unstructured, structured, internal and external data will all be regarded as a single cohesive data set. It can be imagined these programs will be able to answer more specific questions, as well. 

Already at work 

Davenport recently spoke at's CIO 100 Symposium and Awards ceremony in Rancho Palos Verdes, California, acknowledging how Cisco, Ford, General Electric, Monsanto and a few others are leading the way into Analytics 3.0, the magazine reported. The way they're doing this? 

  • GE is intends to develop its concept of an "Industrial Internet" through which it can sell predictive maintenance information regarding its jet engines
  • Ford envisions a fleet of vehicles possessing multiple sensors that cohesively produce data 
  • Monsanto wants to create predictive tools for farmers to use to optimize crop yields 

Basically, enterprises are leveraging analysis products as additional customer service provisions. Monsanto's development is particularly interesting, at it sanctions the symbiosis of a seemingly anachronistic industry with sophisticated business intelligence programs. 

Analytics 3.0 isn't just about a more data-intensive world, it involves putting advanced software in the hands of average consumers. 

When is it time to source overseas?

North American companies often grapple with the prospect of reshoring manufacturing. 

Options and questions 

However, there's one key question that always appears during the RFP process: Is reshoring profitable?

As of now, nearshoring to Mexico and other Latin American countries appears to be the safest bet - their proximity to the U.S. border reduces logistical risk and enables procurement professionals to visit facilities more frequently. However, this isn't to say outsourcing to overseas enterprises is out of the question. 

A domestic dilemma 

The Portland Press Herald referenced statistics produced by the American Apparel and Footwear Association, which found only 2.5 percent of the clothing bought by U.S. consumers in 2013 was produced domestically. That's a sharp drop from 56 percent in 1991. The downturn was induced by a series of trade agreements that occurred over the mid-1990s through the 2000s and eliminated various restrictions that caused high overseas production costs. 

However, the tide seams to be changing at a tempered pace. Procurement services and other professionals have cited labor grievances transpiring in overseas production facilities, prompting people to refrain from purchasing goods manufactured in certain countries. 

Strictly by the numbers

Sourcing specialist and IndustryWeek contributor Paul Ericksen noted weighing the cost of producing goods overseas or domestically depends on measuring a supplier's manufacturing critical-path time (MCT). He defined this metric as a deduction of the time it takes for a production company to deliver to the customer's point of use. 

As one can observe, the calculation depends on the industry in which the merchant and manufacturer operate. For example, retail professionals know they can sell a smartphone quicker during the time of its original public release, because consumer hype regarding the product remains healthy. 

At first glance, it would appear overseas producers are at a disadvantage because of the time it takes to deliver goods across the Pacific - but this doesn't matter seeing how logistics isn't entered into the equation. What it comes down to is measuring material variance, which is typically used by manufacturers to deduce the performance of each of their departments. 

In other words, the goal isn't to measure how many units a company can produce in a single hour with a predetermined budget. Instead, it's a complex measurement of how a business performs as a cohesive unit - this includes human resources, sales and other seemingly disparate teams. 

Finally, it's also important to acknowledged the business environment of particular countries. For example, does a scattered network of specialist contractors muddle the logistics process? 

Marketing analysis shows opportunity in Sub-Saharan Africa

When global sourcing enters a boardroom conversation, much of the discussion focuses on Southeast Asian and Latin American manufacturing.

Yet, there's untapped opportunity in Sub-Saharan African. Before organizations pack up shop in other production economies and start constructing thousands of factories throughout the region, there are several factors enterprises need to consider.

Tenuous physical support

The labor exists, but the infrastructure is still being developed. General Electric noted that only three in 10 Africans have electricity in their homes. The source referenced a statistic by the World Bank, which asserted manufacturers operating on the continent have to contend with an average of 56 days a year without power. 

These factors are no reason for investors to turn their backs and run. In fact, great opportunities exist for renewable energy companies to install windmills, geothermal plans and other such implementations on the continent simply because the demand for electricity is so high. The Bisasar Road project in South Africa, for example, uses seven Jenbacher engines to burn biogas produced by the nation's waste. 

A long term endeavor 

When a company directs its strategic sourcing to the continent, the likelihood of it witnessing large returns is pretty tame. Forbes contributor Alejandro Lago maintained that time and persistence are going to be required to do three things successfully:

  • Navigate the complex, intensely regulated political nature of select nations
  • Attract and foster local talent 
  • Establish boundaries for near-future operations and set a tempered plan for growth

In this respect, it should be noted GE plans to invest more than $2 billion in Africa to construct new plants and support skills training programs, as well as sustainability projects.

Foster connections 

As every good business professional and college professor would assert, networking is essential to successfully initiating operations in Africa. In order to do this, connect with investors who were born and raised within specific countries. 

This should go without saying, but don't treat the continent as one huge country - one only has to look at the number of native languages spoken in Africa to understand how culturally diverse it really is. Procurement professionals should be cognizant of this fact and acknowledge the needs and desires of different businessmen. 

Remember: Setting up operations in Botswana has different repercussions than establishing connections in Ghana. 

Depending on how an enterprise approaches the situation, bringing manufacturing to Africa has the potential to be a winning situation. With more concentrated investment being focused toward the continent, its infrastructure is likely to improve. 

Is procuring wind energy economically sustainable?

Fossil fuels have contributed to both the instigation of global conflict and the perpetuation of worldwide climate change. These as well as other residual factors are forcing public and private entities to assess the validity of investing in renewable energy. 

Some enterprises have consulted procurement services to determine whether partaking in multiparty wind energy financing is economically feasible. This requires a thorough analysis of projected return on investment, the cost of installation, the labor and skill sets needed to support such an endeavor and how current energy sourcing will be transformed or manipulated. 

North American view 

During last year's American Wind Energy Association's WINDPOWER 2013 conference in Chicago, Greg Pool, Walmart senior manager for renewable energy and emissions, asserted the discount retailer's intent to invest in wind energy, North American Wind Power reported. 

"Energy is our second largest controllable expense," said Pool, as quoted by the source. "If we can control that, it has a big impact on the profitability of our company." 

So far, power purchasing agreements - contracts between a business that produces electricity and an enterprise that intends to use it - appear to be the most popular strategic sourcing model in regard to wind. This way, interested parties don't have to buy energy from utilities and can validate their claims to the public. 

Is it profitable? 

Green initiatives and good intentions are all positive public relations, but enterprises are asking their procurement process advisors whether they'll receive a sizable return on investment. According to The Star, Kenya plans on installing 20.5 megawatts of wind energy in the near future, starting now.

The Danish Business Network will work with the Kenyan government to help authorities obtain the labor and resources necessary to fund a wind installment project comprised of 13 sites - a $204,800,000 endeavor. 

Kenyan Renewable Energy and Petroleum Director Isaac Kiva asserts the initiative will reduce consumer electricity costs 40 percent and foster reliability. Over the next three years, approximately 460 MW of wind energy will be funneled into Kenya's national grid. 

Consumer concerns 

It's not uncommon to hear homeowners complain of the wind turbines towering over their backyards. Many people see the machines as eyesores, and they reduce the value of homes. 

In response to this criticism, many businesses and consumers alike have advocated for the installation of offshore wind (OSW). Not only does this mitigate property concerns, it also enables organizations to construct more turbines in a concentrated location.

How to go about it  

With OSW considered, how should interested parties conduct themselves during the RFP process? In 2012, Clean Energy States Alliance was contracted by the OffshoreWind Accelerator Project to produce a white paper detailing best practices in regard to procuring OSW.

The study maintained that when buyers networks participate in the user end of a PPA, it results in the following benefits:

  • Collaboration: Joining forces with two or more organizations interested in purchasing OSW energy can expedite negotiations and increase investor confidence in the feasibility of an OSW project. Municipalities, government entities and enterprises alike can collectively streamline contract agreements.
  • Reduction: The more investors on board with an OSW procurement project, the less the produced energy will cost in the long run. For example, a buyers network can better source the skilled labor needed to expedite installation and decrease concentrated risk. The study found this approach lowers the levelized cost of OSW energy by nearly $35 per megawatt hour. 
  • Connectivity: If a network is comprised of municipal utilities, entities partnered with state power authorities can sell tax-exempt bonds and use the revenue to fund the energy purchase. 

As one can see, procuring wind is certainly a feasible option. It simply depends on what kind of strategy organizations employ. 

Manufacturers: Seek security when procuring Internet-connected devices

The concept of the "smart factory" has intrigued manufacturers as to just how far the Internet of Things will take the industry. Corporate cost reduction and full automation are just two repercussions production businesses expect to encounter as a result of installing Web-connected mechanisms.

Yet, a lot of security concerns have been associated with IoT, primarily because companies developing the technology are focusing more on getting implementations ready for immediate deployment. This rush to bring revolutionary new products to the market has caused some enterprises to neglect device security.

Where weaknesses exist

Tech Times referenced a study conducted by Hewlett-Packard, which assessed the protective capabilities of 10 popular Internet-connected solutions and concluded that each mechanism has at least 10 defense flaws. One of the reasons why IoT devices have such lackluster protection features is because they lack the passwords necessary to deter even the most rudimentary cyberattacks.

However, despite this finding, numerous tech companies such as Cisco are working to develop IoT technology not only capable of making a single factory or household object "smart," but also of allowing these mechanisms to communicate with one another to develop a cohesive environment. This endeavor in itself exacerbates the risks associated with IoT, because it would only require one device to be compromised for a debilitating network breach to occur.

Current worries

Before manufacturers invest the resources necessary to install holistic IoT infrastructures, they need to determine where existing network vulnerabilities lie. Kaspersky Lab recently conducted a survey of IT managers working for manufacturers headquartered across the globe, discovering that 21 percent of production companies lost intellectual property.

What were the causes? The following statistics were brought to light:

  • Just under a quarter (23 percent) of respondents asserted malware was to blame
  • Approximately 8 percent stated network intrusion caused IP losses 
  • A low 5 percent believe information was leaked through mobile devices

Taking the latter two points into account, one would regard network vulnerabilities as a minor factor. However, it's important to acknowledge that malware was likely inserted through connection discrepancies, and then activated once it was on a machine with authority.

Where's the solution?

Kaspersky Lab itself offers protection software specifically for industrial operations. While installing its program may benefit manufacturers, such businesses should also consult the expertise of procurement services to assist them in finding a company that specializes in constructing data security architectures made to accommodate IoT. HP's study and Kaspersky's findings are motivating software developers to create such technology, and neglecting to invest in it could cause grievous consequences. 

What went wrong with the McDonald's procurement process?

Lack of communication and infrequent auditing likely contributed to the McDonald's meat scandal that has garnered a lot of press attention as of late. 

Weighing the pros and cons of outsourcing to a procurement services provider involves deducing how much risk permeates throughout an industry. McDonald's partakes in a market that can be particularly hazardous for participants. Here are the reasons why:

  1. Documentaries such as "Food Inc." and critical literature have stirred suspicion among consumers, so any warning signs are regarded as red flags.
  2. Public authorities maintain stringent standards for food companies to abide by.
  3. Because edible products are perishable, extensive measures need to be taken to ensure their lifecycles are sustained. 

The situation 

OSI Group, a U.S.-based holding company of meat producers that provides goods to those in the food service industry, has been contending with the brunt of the issue. Its subsidiary, Shanghai Husi Food, faces allegations from the Chinese government stating that the processor intentionally sold expired meat to McDonald's, KFC and other enterprises, The Wall Street Journal reported. 

Although OSI is claiming it wasn't aware of Shanghai Husi's practices (and has since pledged to withdraw all meat products produced by the company), its ignorance of the situation has caused professionals and consumers alike to wonder what else OSI doesn't know about.

In order to prevent such situations, organizations may hire companies specializing in global sourcing to regularly conduct audits of their partners. Feigning ignorance in front of the public doesn't necessarily free a business from blame, and its neglect may cause other enterprises to refrain from establishing a relationship with it. 

Bottom line: Assuming everything is "all right" on the factory floor can cause major problems. 

Decreasing profits 

Not only does ignorance tarnish partnerships, it sends a rift through company revenue. According to B​loomberg Businessweek, McDonald's sales weakened considerably in light of the ordeal, with U.S. transactions decreasing 3.2 percent and purchases in the Asia, Middle East, and Africa sector declining 7.3 percent.

McDonald's CEO Don Thompson stated that the meat scandal has damaged the organization's ability to inspire trust and loyalty in its customers. In the U.S., same-store sales have either been low or flat over the past nine months. This factor is likely more inspired by consumer awareness of healthy living than anything else, but the OSI ordeal hasn't helped to mitigate the situation.

Preventing a public relations nightmare from occurring involves thorough and frequent analysis of all partner practices. If a discrepancy manages to fall through the cracks, acknowledging the situation outright and employing honesty is the best tactic to employ. 

How procurement services can foster business-university collaboration

Traditionally, procurement services have connected organizations with other entities through which they can acquire goods.

Now, the provision has become much more flexible. Strategic sourcing specialists and other such professionals recognize that labor and skills are just as important as attaining materials.

A significant shortage 

In 2012, the Boston Consulting Group acknowledged a skill deficit of between 80,000 and 100,000, a number that's expected to rise dramatically over the next decade, the American reported.

Manufacturers operating in the United States are having difficulty finding people with the skill sets and wherewithal they need to advance operations. For this reason, many private enterprises are networking with universities that offer programs in science, technology, engineering and mathematics. 

Hasn't fully recovered

Although some journalists often detail special situations to assert the U.S. manufacturing economy's "inevitable" return, there's still room for improvement. For now, nearshoring to Mexico and other Latin American countries remains strong, but when will enterprises set up domestic factories? 

While IndustryWeek contributor Robert Atkinson maintained that lowering the corporate tax rate and optimizing trade enforcement are two steps the U.S. government needs to make in order to foster investment in the nation's production market, he also asserted that specialty universities need to be created. 

A shift in priority 

With that being said, there are plenty of institutions offering engineering programs. However, Atkinson believes professors need to focus more on real-world problems and less on abstract science. Manufacturers need graduates who are capable of assessing vexing issues and proposing a solution. 

This factor has resulted in a lack of private investment. Atkinson referenced statistics from The World Academic Summit Innovation Index, which showed Korean universities typically receive four times as much industry funding than American counterparts. 

How can procurement specialists help? 

Essentially, universities need to be able to obtain the capital necessary to better train their students for the workforce. A procurement service can help broker deals between institutions and private enterprises in need of skilled labor, by outlining:

  • The responsibilities and expectations of professors
  • Internship and co-op initiatives
  • How instructor tenure will be adjusted to reflect their work with industry participants
  • What other resources private enterprises will provide to universities for their contributions

In addition, universities and private organizations could show support for Delaware Senator Chris Coons' "Manufacturing Universities Act of 2014." The legislation proposes several initiatives that ultimately encourage the integration of advanced engineering curricula focused on innovation, designing, problem-solving and common use. 

Startups: Is Mexico your golden goose?

Although the country doesn't receive the same amount of attention as India, Brazil or other burgeoning economies, Mexico's budding manufacturing industry is offering easy opportunities to startups and established companies alike.

In response to rising labor costs, stringent regulations and political tensions, procurement services have advised U.S. companies to near-shore production closer to home. Mexico's close proximity reduces risks associated with logistics, and enables those in the tech industry to make more frequent visits to factories and development facilities.

Increasing output

According to Forbes, merchandise production rose modestly in 2013 (3 percent), but is expected to gain momentum throughout the rest of the year. The appliances industry in particular has put a lot of stake in the country, with the sector growing at a sustainable rate. The source asserted Mexico could gain anywhere between $20 billion and $60 billion from manufacturing through 2018, citing the following factors:

  • U.S.-Mexican trade has grown to more than $500 billion annually
  • Last October, Chrysler announced its intention to invest $1.3 billion to open production facilities in Mexico
  • Audi contributed more than $1 billion to build luxury cars in San José Chiapa
  • Mexico's government is incredibly business-friendly, and has lower energy costs than other countries
  • Information communication technology is anticipated to account for 13 percent of projected exports from 2017 to 2020

Well-connected with Texan startups

IT hardware developers and similar entrepreneurs headquartered in Texas will likely benefit from the state's proximity to Mexico, as well as the country's low-cost manufacturing industry. TechCrunch noted how spacecraft development company SpaceX plans on using maquiladoras (production operations set up in free trade zones) to fabricate the designs blueprinted by engineers.

"SpaceX would be hiring and developing 600 rocket scientists," said Brownsville Economic Development Corporation Executive Vice President Gilberto Salinas, as quoted by the source.

One particular startup in El Paso, the Hub of Innovation, is assisting startups. The firm is helping them achieve their production needs by connecting them with facilities in Mexico capable of obliging. Company CEO Cathy Swain lauded El Paso as one of the greatest aggregations of advanced manufacturing in the nation.

"For the first time in modern history the lines have crossed where China is no longer the obvious option - you have to look at Mexico," Tecma Group President and CEO Alan Russell told TechCrunch.

Mexico's manufacturing sector isn't the only benefit of doing business with the country. iTexico CEO Anurag Kumar acknowledged Mexican tech talent as underutilized, claiming that the Latin American workforce is better trained than tech companies give it credit for.

How can manufacturers improve their network security architectures?

Procurement services have helped production companies build relationships with Internet providers in the past, but now they're advising their clients to take a stronger focus on security. 

IT protection nightmares are most often associated with retailers, but the threat remains just as real for manufacturers. Cybercriminals are hired for a number of reasons, such as to:

  • Gain shipment information so pirates are aware of vessel vulnerabilities 
  • Steal intellectual property 
  • Divulge discreet contract agreements to the public 
  • Collect personal information of employees and customers
  • Disrupt operations to cripple an enterprise's revenue stream

The list goes on. So what can goods producers do to prevent hackers and other perpetrators from gaining access to their network architectures? 

Who's authorized? 

On the ground level, a basic authorization system should be installed. When it comes to database access, usernames with complex passwords that aren't easy to decrypt need to be employed. Clark Case, a contributor to Manufacturing Business Technology, acknowledged using biometric scanning as an extra security measure is good to employ (though this tactic is more applicable to facilities). 

In regard to database administration, it's also important for user roles to be clearly defined. Special authorizations are handed out for a reason - unfortunately, some in-house professional may have ill intentions. 

Assessing the framework 

Clark asserted that EtherNet/Industrial Protocol is a good choice for manufacturers thanks to its simplicity and user-access security process. This particular infrastructure also communicates seamlessly with Ethernet-based IT systems across an entire business. 

In this respect, it's important for enterprises to use IP-based databases so management can revoke former employees' access to digital and physical environments alike once they leave the company. If a single server is used to organize and administer employee roles and access, than it only takes a few clicks to remove them from the system. 

Advantages of the cloud 

Although cloud computing has been associated with security discrepancies, these allegations have mostly been inspired by the apprehension of using a new architecture. Mirko Zorz, editor in chief for Help Net Security, identified several defense capabilities associated with the cloud: 

  • Polymorphic virus detection can be employed by leveraging huge amounts of crowd-sourced data in real-time
  • Redundancy can be applied during website outages
  • Elastic computing can be exercised to manage tasks that may surpass the processing power of basic endpoint network protection mechanisms
  • Real-time surveillance of manufacturing architectures enables threat monitoring solutions to deter attacks automatically, while simultaneously recording vulnerability details

In this respect, cloud network architectures are advantageous for nationwide manufacturers to employ.