April 2013
Companies reshoring manufacturing production

China is the world's manufacturing leader, but it is losing its cost advantage for American companies. While there are obstacles to bringing production back the U.S., many countries are beginning to consider it as a favorable option, according to Global Sources. Manufacturing costs may be a reason for American firms to reshore production. 

China built up infrastructure and development areas and its population shifted to areas with more jobs as global demand increased, but this resulted in Chinese goods costing more, Packaging World stated. U.S. companies are no longer saving enough money to counter the impact of the delay for goods to reach stores, and this can create problems with cash flow. Reshoring shortens the length of time between production and sale. Labor costs in China will continue to increase between 15 to 20 percent per year, which will significantly reduce the cost advantage, Global Sources said. Labor only represents a fraction of manufacturing costs, and considering the price of long-distance shipping, companies may not be saving as much money through offshoring as they thought. 

Reshoring challenges

Bringing manufacturing back to the U.S. is not an easy task either, though it may ultimately result in cost savings. The Boston Consulting Group predicts that by 2020, reshoring will bring between 2.5 million and 5 million jobs back to the U.S., according to Global Sources. Companies could face a shortage of skilled workers because the manufacturing industry declined in North America as production moved to Asia. Fewer young workers are pursuing factory jobs, and many workers are retiring. Reshoring experts believe the gap can be filled as organizations move stateside. 

Because much of the production of American goods occurs in other countries, there can be a shortage of suppliers if companies move production back to North America, Global Sources said. Manufacturers need to determine whether their supply chains can be reconfigured before relocating production. 

Supply chain risk management important to business success

As a business attempts to become more efficient, it may make its supply chain increasingly vulnerable to risk. Businesses use strategies such as outsourcing, supplier consolidation and low cost sourcing to improve efficiency, but these practices can add risk and a supply chain is only as strong as its weakest link, Supply Management stated. Risk analysis in strategic sourcing is crucial, and failure to identify and minimize risks can lead to profit loss. 

Ninety percent of firms fail to perform a risk assessment before outsourcing, Supply Management found. Some organizations fail to do anything more than create an annual risk register, which is usually for their insurance companies. Annual risk registers are a static assessment of risk when there are many dynamic factors at work in a global operation. The longer a supply chain is, the more vulnerable it can be to risk. Businesses often seek risk mitigation as impeding their profit strategies. 

The best way to be adequately prepared for risk is to develop a proactive strategy. Dr. David Simchi-Levi of Massachusetts Institute of Technology created a new tool for supply chain management called the Risk Exposure Index. It allows managers to quantify risks in a way traditional methods did not allow, according to Supply Chain Digest. An important part of the approach involves time to recovery, a measurement of how long it would take a particular node of the supply chain to fully recover after a large disruption. Older approaches to risk mitigation did not account for completely unexpected events, like natural disasters. Understanding the impact of a major disruption to a link in a supply chain can allow businesses to be better prepared. 

Procurement teams are often focused on waste reduction, supply chain performance and cost reduction, but risk preparedness can reduce total costs and protect an organization from the huge profit loss that can occur from a supply chain disruption. 

Supply chains can decrease e-waste

Rapidly evolving technology has generated a great deal of electronic waste. The U.S. generates 2.5 million tons of e-waste per year and most of it is exported to other countries, according to EBN. Though plastic, glass and metal elements can be recycled, it can be a costly process, so many developed nations send old electronics to other countries where it costs less for workers to break e-waste down. The entire electronics supply chain can have a role in reducing e-waste.

Most states have laws preventing obsolete devices from being dumped in landfills, but only one-quarter of the disposed e-waste gets recycled, Bloomberg Businessweek stated. It can be difficult to properly recycle e-waste because there are toxic chemicals like lead and mercury. Developing nations have fewer regulations, and workers may not know the personal risks of handling dangerous materials. Firms that practice improper use could add to harmful pollution.

How to improve e-waste recycling

When businesses need to dispose of old devices, they must ensure they are using a certified recycler, Businessweek said. Small- and mid-size businesses are more likely to improperly dispose of electronics. 

Electronics manufacturers can also reduce the amount of e-waste created each year by creating efforts to extend the lifespan of electronic components, EBN reported. If existing equipment is used longer, it will reduce churn and allow recyclers to find better ways of breaking down e-waste. Some electronics manufacturers have created refurbishment programs to rehabilitate old computers and servers, according to Businessweek.

Equipment leased to businesses is repaired and resold, preventing devices to contribute to e-waste. IBM handles 38,000 pieces of old equipment per week and is able to refurbish about 90 percent. The majority of the components are able to be reused in new devices, and only 1 percent ends up in landfills, IBM reported to Businessweek. In addition to being environmentally sound, this practice can reduce manufacturing costs. 

US diesel truck emissions decreased significantly

In less than 20 years, the trucking industry has managed to cut diesel truck and heavy equipment emissions by more than 95 percent, according to new research from Randall-Reilly, a trucking marketing company. Since 1996, stricter Environmental Protection Agency (EPA) regulations have decreased the maximum allowable diesel exhaust, changing the logistics industry. The gas releases fine particulate matter into the air, which can cause smog and public health concerns, EPA research stated.

By 2014, all off-road diesel equipment will be required to meet the stricter policies, reducing emissions in this category by 96 percent. When the new regulations are completely implemented, trucks and off-road equipment will have decreased nitrogen oxide emissions by 738,000 tons and 129,000 tons of particulate matter per year.

The regulations have effectively reduced pollution from trucking as the industry has adapted. Virtually all new trucks on the road today meet the new standards. The study said a new 18-wheeler vehicle can travel from Chicago to Baltimore without emitting more air pollution than grilling hamburgers for a family of four. The new trucks are so much cleaner it would take 60 units to match the equivalent of emissions of one from 1988. 

The significant decrease in air pollution has been achieved by improving engine technologies in the following ways:

  • Advanced diesel fuel injection
  • Computerized engine controls
  • Improved engine air management
  • Upgraded exhaust filters to contain particulate matter
  • Reduction of sulfur levels in diesel fuel

The EPA stated some older diesel trucks are not subject to new regulations and may be on the road for another 25 to 30 years, but they can be retrofitted with pollution controls and cleaner diesel fuel can reduce emissions. Logistics will remain an important industry as manufacturing increases, and providers adapt by moving toward more sustainable practices. 

Lower commodity costs could benefit manufacturers

The drop in gold prices and general weakness in commodity prices could be an indication that economic growth is slowing, Forbes reported. China is expressing less demand for raw materials and manufacturing orders have dropped. The European Union is undergoing austerity measures to battle the recession. Recently, the International Monetary Fund reduced its global growth forecast for the year from 3.5 percent to 3.3 percent, citing economic weakness in Europe as an impediment to worldwide growth. In the U.S., inflation predications from producer and consumer price indexes are less than expected. 

The relatively low inflation rates have hurt the price of gold and other precious metals. Gold is currently 28 percent away from its record high. Other commodities have suffered as well with crude oil and corn both experiencing significant drops. 

Though economists are concerned about the impact the drop in commodity prices will have on the economy's recovery, the lower costs could be beneficial to manufacturers and sourcing companies, according to NBC News. The decrease in commodity costs has affected a wide range of raw materials used in production. Copper, a versatile metal used in electronics and construction, is at an 18 month low because of the reduced demand in China, and iron and steel prices dropped as well. This lowers production costs in many different industries, from steel beams used in buildings to auto parts, the source reported. Food manufacturers and the clothing industry have also benefited from the reduced price of commodities. 

While demand for raw materials may not be as be high, U.S. exports to Asia remain strong. The American auto industry is experiencing an increase of exports to Japan, Hong Kong, Taiwan and South Korea, NBC News stated. Despite economic slowdowns in Europe and China, some economists do not expect U.S. exports to suffer.

Photo courtesy of iTunes.com

Google Now is quite possibly Android’s greatest, and creepiest, feature. It provides “context-aware” alerts, meaning it picks up on your patterns and habits better than most loved ones. Within days of using it, Google Now will start alerting you when you need to leave for work, when packages you’ve ordered will arrive, and how quickly you need to leave for your next office meeting. All without you ever telling it anything.

To those who have used Google Now, it has quickly become an indispensable resource, in both their personal lives and their business routines. And it was Android-only, giving Droid users something to hold over Apple iPhone-users heads. Until today.

In an update to the company’s existing Google Search app for the Apple iPhone and iPad, Google has now added in the majority of features of Google Now, including Siri-competing Google voice searching. Some of the more mundane features did not make it over, however. Android users have the ability to display their airline boarding passes, Fandango movie tickets, and a daily activity summary. The iOS version of Google Now does not, though the airline passes and movie tickets can be found in Apple’s own Passbook app. Other low-level functions – local event notifications and recent research topics – didn’t make the Apple cut either, but the big winners; the traffic alerts, the weather, and breaking news stories that you find topical -- all the things designed to make your personal and work life easier -- are definitely there.

If you are graced (cursed?) with an iOS device, head to the iTunes store now to download the new version of Google Search.

Samsung Galaxy S4 experiencing supply chain disruptions

The brand new Samsung Galaxy S4 is encountering higher demand than anticipated. Sprint and T-Mobile announced the smartphones will go on sale later than expected due to delays in shipments, Sky News reported. 

Sprint will offer the S4 on its website, and has not announced when the phone will first appear in stores, CNET stated. T-Mobile delayed its launch by five days, and the mobile provider will only be selling the device online. Verizon originally planned to begin offering the S4 on May 30, Sky News said.

Samsung warned the phone may initially be hard to find because of the high level of global demand. The company expects to fulfill demand within a few weeks, according to CNET. 

Increased popularity creating new supply problems for Samsung

The new Galaxy model was unveiled in New York last month as Samsung continues to compete with Apple, Sky News said. The South Korean mobile company overtook Apple as the world's largest smartphone provider, boosted by sales of the Galaxy S3. The company reported shipping more than 40 million units of the S3 since its launch last May. 

Supply problems have often delayed launches of popular smartphones, especially Apple's iPhone. However, Samsung has traditionally been good about providing adequate inventory before a launch, CNET stated. The Samsung Galaxy line proved to rival the iPhone, and now it is experiencing a similar problem with delays.

"Supply chain management is a core differentiator for our brand," said Tim Baxter, president of Samsung Electronics America, according to CNET. "It's part of our DNA."

Part of the reason Samsung has historically been more adept at meeting demand than some of its competitors is because many of the components used in its phones are manufactured in house, decreasing reliance on outside suppliers, CNET said. 

Nearly every wireless carrier globally committed to selling the S4.

Panama Canal expansion will change shipping industry

The expansion of the Panama Canal will allow higher capacity cargo ships from Asia to travel through the channels, Progressive Railroading stated. The project is scheduled for completion in 2015, and the added capacity will allow more foreign trade. 

"In the future, we foresee trade growing between Asia and Latin America, where Panama also has a significant competitive advantage due to its unique geographical position at the nexus of the Americas," Jorge Quijano, administrator for the Panama Canal Authority said to Port Technology. "With East Asia sourcing more and more raw materials out of Latin America, in particular coal and iron ore, the expanded Canal will offer enormous new opportunities."

The expansion could cause a reduction in the number of U.S. air cargo centers with the increase to marine shipping capabilities, Air Cargo World reported. However, the rise in container shipping will lead to upgraded ports and expanded railroads and trucking networks. It will likely create many changes for supply chain management as shipping methods shift from air to sea and land. 

Large scale expansion

The project has been focused on the widening and deepening of the Atlantic and Pacific approaches, the addition of new locks and deepening the Culebra cut - the Canal's narrowest point, which required four dry excavation projects, according to Port Technology. The expansion will allow much bigger carriers of up to 13,000 standard 20-foot units (TEUs) to safely pass through the canal, Trucking Info said. The current capability of the waterway is vessels of 5,000 TEU or less. 

Quijano added this will enable suppliers to reduce operating costs and carbon emissions, as well as increase speed of delivery because fewer ships will be able to transport greater amounts of cargo. Another objective of the expansion is to cut down use of freshwater.

Implications for North American logistics

Air Cargo World said within three to five years, there will only be six major air cargo hubs in the U.S. Hubs in Southern and mid-Atlantic states will have the advantage to remain significant as inland railroad and trucking networks build up to meet increased shipments to Gulf and East Coast ports. There is potential for development of smaller air cargo centers, and ports with links to air cargo hubs may have an advantage because shipments will not experience delays.

Railroads are collaborating with ports to upgrade before the completion of the canal expansion in 2015. Florida East Coast Railway (FEC), the only rail provider to southern Florida's sea ports, is working with Port Everglades and Port Miami to build on-dock rail facilities as these ports will likely experience an increase of cargo traffic, Progressive Railroading said. The connection of the railroad to Port Miami has been suspended since hurricane damage in 2005. 

"By summer 2014, we'll have the on-dock rail facility fully operational, which means that from Port Miami, we can hit 70 percent of the American population in a matter of days," Port Miami director Bill Johnson told Progressive Railroading.

He added Port Miami will have an advantage because the Atlantic exit of the Panama Canal will be deepened to 50 feet, and Miami is the southernmost East Coast port at that depth. Port Miami anticipates an upturn in traffic and profits by the end of 2015.

Expanded sea port shipments will create a demand for increased trucking networks. Trucking Info stated the industry has the capability to adapt to increased demand, and container transport will be dictated by ocean carriers and ports. The trucking industry does not predict there will be difficulties in meeting the rise in shipments. The Panama Canal is expanding to such a degree that it will have a large impact on logistics, but inland networks are working to upgrade. 

Bangladesh factory collapse brings manufacturing safety concerns to light

The collapse of an eight-story garment factory in the Bangladeshi capital of Dhaka is drawing attention to unsafe working conditions in Asian facilities. At least 700 factory workers have died in building collapses and fires in the Dhaka region alone in the past decade, CNN reported, and most of these deaths could have been prevented by following safety regulations. Manufacturing costs are much lower in Asia, particularly because Bangladesh has the cheapest labor, but sourcing companies may need to investigate the quality of conditions in their overseas facilities. 

Bangladesh boasts a $20 billion garment industry that supplies retailers around the world with low cost clothing. This industry accounts for more than 80 percent of the country's exports and has created four million jobs, BBC said. Garment factories have provided a great deal of employment to women living below the poverty line. Low cost of labor and fiscal advantages such as duty-free import of fabrics have made Bangladesh an attractive manufacturing destination for retail suppliers. However, safety regulations are sometimes ignored as corporations pursue cost savings objectives. North American companies are subject to more safety inspections, according to CNN, but conditions can be more difficult to monitor when production has been sent offshore to Asia.

"In my view, 50 percent of garment factories are located on premises which are not safe," Bangladeshi senior government official Mainuddin Khondker told BBC. He also admit no action has been taken against factory owners or landlords for safety violation or inadequate fire preparation. The garment industry has created so many jobs in Bangladesh that the local government is reluctant to get involved. The most recent major incident before the collapse was a fire in November in a factory with no fire exits, CNN reported.

Demand for low cost clothing remained high, especially during the recession. CNN said businesses need to be responsible for ensuring factory employees in offshore facilities are working in safe conditions. 

Photo Courtesy of Google.com

Much has been made of Google Glass in the buildup since they were announced, and the attention has certainly ramped up this week, as the first “Explorer Edition” frames land in the hands of a carefully curated list of users. If you’re unfamiliar, Google Glass is the search giant’s foray into wearable electronics, mashing together a flexible eyeglass frame, a trick Bluetooth earpiece, and a projector aimed square at the wearer’s retina to broadcast data from the user’s smartphone – sort of a PIP for real life.

Whether this technology revolutionizes the market like the Apple iPhone or comes to occupy that impressive-tech-but-extremely-dorky space it will share with the Segway will be fleshed out when the product comes to mass market, but for now, let’s look at what Google is showing and if the device has any forseeable business uses.

Short answer: No. Long answer: Maybe, but probably no.

To explain, here’s a quick rundown of the voice commands you’ll be able to use with Google Glass and their functions:

  • “Google”: Search for something
  • “Take a Picture”: Use the built-in 8MP camera on the frame to take a point-of-view (POV) photograph
  • “Record a Video”: Use the built-in camera to record a 720p video. By default, it will record 10 seconds. To record longer, you manually tap the side of the glasses’ frame.
  • “Get Directions To”: Use your smartphone’s GPS to plot your course, displaying a 3D map into the glasses’ video window
  • “Send a Message To”: Use your smartphone to send a text message
  • “Make a Call To”: Use the built-in earpiece and microphone to voice-dial a person
  • “Hang Out With”: Tied to Google’s own Google+ social network, this allows you to do a video chat with your contacts in Google+, with their video feed appearing within the glasses’ video window

So, as it stands now, Google Glass is an eye-mounted extension of your smartphone and its current business uses are limited to showing Google Now updates for upcoming meetings. There’s no ability to speak to schedule a new announcement, or capture a photo and instantly email it to someone. There’s not even the ability to surreptitiously watch YouTube cat videos or check ESPN from a drawn–out meeting.

Google has released an API for Google Glass, meaning the code is out there for other developers to produce new features for it, so the day may come where you can stare at a document, your phone will recognize it, and allow you to make edits without ever touching a keyboard or grabbing your phone. Or you might be able to look at a product’s bar code on your shelf and instantly tie in to your company’s inventory system. Or, y’know, the whole cat video thing.

The door is certainly wide open for Google Glass to become an indispensable tool for daily life and work, and it’s absolutely a cool looking piece of equipment (as opposed to, say, the Segway). But  it’s work-related uses are pretty limited right now, meaning the $1,500 you have to drop to get one will almost never qualify as a business expense.
Summer is right around the corner and Source One is gearing up  for a full season of events across the country.  If you're in town and you'd like to  schedule a  meeting with someone from Source One, if you're interested in attending any of our events, or even if you just want to go out and grab a drink and a bite to eat, let us know!  We enjoy getting the opportunity to catch up with our existing clients and business partners as well as chat with any potential  new customers.  Check out our schedule below and stayed tuned for more events to be added.

29th: Raleigh, NC-  Steve Belli and Joe Payne will be attending the 27th Semi-Annual Supply Chain Resource Cooperative Meeting entitled "the Future of Procurement" being held at the NC State University Club.  For more information on this event please  visit the SCRCM site.

7th: Chicago, IL- Kicking off Corporate United's  2013 SYNERGY events, Steve Belli and Bill Dorn will be attending the  Chicago SYNERGY Conference. Click here to register for this event.

7th: Widener University Chester, PA- Source One's Dave Pastore and Jen Ulrich in collaboration with The Association of Accountants and Financial Professionals in Business, will be presenting their topic  "Collaborate with Procurement and Improve Your Bottom Line".  Register here to purchase your tickets for this speaking event.  Attending this presentation qualifies for CPE credits.

27th: Washington D.C. - Source One's Bill Dorn and Steve Belli head to the nation's capital for the Washington D.C. SYNERGY Conference hosted by Corporate United. Click  here to register for this event.

24th: Minneapolis, MN - Join Source One at Corporate United's Minneapolis SYNERGY Conference. Bill Dorn will be featured as a guest speaker and will giving an informative presentation entitled "Technology in Procurement and Sourcing". To be a part of this event, please register here. 

Be sure to check back frequently as we add more events to our calendar.  If you'd like Source One to be a part of your event please contact us at info@sourceoneinc.com. 

We hope to see you soon!
Trucking industry to increase natural gas use

Natural gas is becoming more available in the U.S., and the trucking industry is taking note. Many shipping companies are switching from petroleum to natural gas, The New York Times reported. Cummins, a truck engine manufacturer, began shipping new natural gas-powered engines that allow trucks to make longer trips.

Natural gas burns cleaner than conventional fuel, which will allow trucks to meet stricter emissions standards, according to the newspaper. It is less expensive than petroleum, and with the shale boom in the U.S., supply chain managers will be less vulnerable to geopolitical disturbances that can impact the cost of oil. However, many trucking companies have been slow to make the switch because natural gas vehicles are too expensive for suppliers to see immediate cost savings, and many gas stations did not have refueling capabilities. Other truck manufacturers plan to introduce natural gas engines, and Clean Energy Fuels added 70 fill up stations along major truck routes, the news outlet stated. 

Large companies like Walmart, Proctor & Gamble and Nike have been adding natural gas trucks to their fleets. The latest major corporation to announce a move toward sustainability, UPS, plans to add 700 new vehicles to its fleet and build four refueling stations by the end of 2014, Reuters said. The project will give UPS one of largest natural gas fleets in the world, and the corporation listed lower greenhouse gas emissions as a motivator, as well as cheaper cost of fuel and accessibility of resources. The Center for Climate and Energy Solutions found natural gas vehicles can reduce emissions by as much as 55 percent

The New York Times reported many experts predict the number of natural gas trucks will continue to increase, particularly in the U.S. where fuel prices are relatively low.

Manufacturing growth slow in April

Factory activity continues to expand, though it grew at its slowest rate in the past six months, based on preliminary data from the April Markit Flash U.S. Manufacturing Purchasing Managers' Index (PMI). While economic growth decelerated, manufacturing did increase slightly. The Markit PMI has been in line with other surveys on economic growth. 

The slower pace is mostly attributed to a decrease in new domestic orders, though the market for exports rose at a stronger rate than the previous month, according to the report. There was a solid increase in manufacturing employment, but it was the lowest rise since November. Some economists speculate the drop is due to concerns of the impact the government sequester will have on the cost of manufacturing, reported the Chicago Tribune.

"The biggest monthly fall in the PMI since June 2010 raises concerns that the U.S. manufacturing expansion is losing momentum rapidly as businesses and households worry about the impact of tax hikes and government spending cuts," said Chris Williamson, chief economist at Markit. "The PMI suggests that output growth has slowed from an annual pace approaching 8 percent earlier in the year to only 2 percent at the start of the second quarter." He added exports were spurring the growth of the manufacturing sector as domestic orders decrease.

The economy still on path to recovery

While some may the stagnation as a negative sign for economic recovery, the housing market has strengthened. The Commerce Department found new home sales increased by 417,000 units in March, the Chicago Tribune stated. The housing sector will likely continue to grow at a slow pace as well. Housing sales have slowed slightly because of a lack of new home availability in many regions. The housing market does not seem to have been as affected by the sequester as the manufacturing industry.

If you know a little bit about computers, then you’ve probably heard of AMD. Advanced Micro Devices is the #2 producer of computer processors, in terms of scale, and is far behind #1 producer Intel. In an in-depth pair of articles produced earlier this week, Ars Technica chronicled the company’s rise and fall in the technology industry, and some of their failings sound really familiar.

AMD Did Not Control Spending

The article is full of quotes from former execs and analysts who have watched AMD get battered in the marketplace. Atiq Raza, the company’s former president, CTO, and COO is quoted as saying “There’s no control on spending”. Raza left the company after a dispute with AMD founder and then-CEO Jerry Sanders, when the latter decided to build an unneeded fabrication plant in Germany using borrowed money.

The article details how the AMD sales team was adorned in Rolexes and were encouraged to spend loosely, then mentions a New York Times article from 1989 detailing the company’s less-than-thrifty habits. Finally, it lists Raza recounting an early, foreboding discussion with Sanders. Sanders states “I have always spent more than I make”, leading Raza to respond with “I hope you don’t do it at AMD”, then recounting that Sanders, in fact, did.

AMD Did Not Have a Strategic Plan

AMD’s former CFO, Fran Barton, recalled how the company went from one near-disaster to another seemingly every other week. He tells that Mondays would be full of reports citing dropping yield and financial catastrophe, which would be resolved by the end of the week. Each time, he said, Sanders firmly delegated assignments that would lead to the next weeks’ flame ups. In the dust-up that saw the departure of Raza, when the German fabrication plant was ordered, Raza is quoted saying “I told him: don’t do it. I put the orders on hold. He didn’t tell me and accelerated the entire process.”

AMD Was Inefficient

The fab facilities that led to Raza’s departure also cast a heavy weight on the company’s bottom line. Each facility cost billions of dollars, funded on the future sales of processors, and AMD produced over demand and under capacity, costing them money on both ends through excess inventory and less-than-optimized production facilities.

The article lists the problems that accompanied AMD’s acquisition of ATI in 2006. Ian McNaughton, AMD’s former marketing manager, is quoted saying that the ideas of combining processors and graphics companies made sense, but their implementation failed, saying “This was an acquisition treated like a merger. AMD people were AMD people; ATI people were ATI people.”

From poorly managed spending, to poor planning and strategizing, to poor business processes, AMD inflicted a number of ills against itself as reported in the Ars Technica series, and every organization should see a bit of themselves in them and learn a valuable lesson.

Read the articles here and here.
Levi's built worker well-being and sustainability into supply chain

Levi Straus and Co. has used the trend toward sustainability and listening to the voice of its workers to improve supply chain management, according to GreenBiz.com. Levi's new approach involves improving worker well-being by ensuring they have opportunities for economic empowerment, good health, family security, equality, access to education and a safe working environment. 

Companies are beginning to pay attention to how worker satisfaction can impact business profits, GreenBiz stated. If factory employees are dissatisfied, it can lead to turnover, absenteeism and worker strikes, all of which can have a negative impact on the success of a supply chain. Focusing on worker well-being can benefit employees in developing nations, but it can also prevent a loss of profits or disruptions to the supply chain.

Finding sustainable products has become a growing concern for consumers, and Levi's has made efforts to reduce its environmental impact. In 2006, Levi's commissioned an assessment of their products to determine use of resources, said MainStreet. The report found the company was utilizing water inefficiently with 42 liters used in the finishing process alone, so Levi's released a collection of jeans that used the same materials, but 96 percent less water. This initiative has saved 172 million liters of water, according to a blog at Alabama.com.

The move toward sustainability can improve brand image since many consumers seek environmental and social information before purchasing a product. Companies used to see this approach as less profitable, the blog revealed, but 71 percent of consumers consider the environment when shopping and four in five Millennials would switch brands for a good cause. Businesses can educate consumers about sustainability if they speak out about their environmental goals. Large corporations can have a great deal of influence, so they are the ones who can impact global sustainability efforts.

Flooding causes delays in river traffic

The U.S. Coast Guard is considering placing shipping restrictions on the Illinois River after severe flooding led to closing of several locks and barge accidents, according to Reuters. The natural disaster occurred three months after the Mississippi River was nearly closed because the water level was at a record low. Dozens of locks along Mississippi and Illinois have been closed until the water levels withdraw.

On Saturday, 114 barges broke free from a fleeting area on the Mississippi River near St. Louis due to the high water levels, and 11 barges filled with coal sank. A section of the river was closed to allow salvage crews to recover the wreckage. On the Illinois River, a loose barge struck a dam, and the damage cannot be assessed until the water recedes, reported Reuters. 

"We're looking at all options to get navigation flowing again," said U.S. Coast Guard spokesman Colin Fogarty to Reuters. "However, until we can get the surveyors and the salvors out onto the scene it is difficult to say how soon we can get the river back open."

The flooding may continue to impact distribution supply chains and could lead to commodity price increases. Cash offered to grain and soybean farmers dropped because of the barge stoppages, according to Reuters. Sixty percent of the grain grown in the U.S. is shipped along the Mississippi, so suppliers have tried to find alternative methods. Prices for barge shipments from the Gulf of Mexico have risen, and the Coast Guard has no estimate for when river shipping operations may return to normal.

The Mississippi River may rise further before cresting, said the St. Louis Post-Dispatch. More rain is expected, which could continue to affect river closures. Reuters reported some of the locks may be closed until early May. 

Everyone is busy! 2012 was a busy year. The first quarter of 2013 hasn't broken the trend; in fact, it seems that activity only continues to increase. Across the board, people are busy, particularly procurement and sourcing groups.

I'm not just making blanket statements to make people feel better about the long hours they've been putting in and the stress they've been dealing with lately. We actually are seeing the direct impact of the increased workload amongst our own staff. If you hadn’t heard, demand for our services are so strong that we recently outgrew our facilities. When I say everyone is busy, I base it on a new trend that we’ve seen in the last 24 months. That new trend is that everyone is asking for help.

Ten years ago, when I started with Source One, I maybe knew about 3 people outside of this company that had ever even heard the term "strategic sourcing" before. As you can imagine, selling a product that people had never heard of before was a challenge. Companies like ours spent time looking for that forward-thinking C-Level executive that "got it" and tried to convince them to push us down into the ranks of individuals controlling spend. That tactic almost universally met resistance. You've got the procurement and sourcing folks that were proud of the results they just negotiated, and felt threatened. You've got the process folks who wanted to tell you how the three-bid process them implemented saved millions, and there was no other way to do it. You had the marketing managers crying that we didn't understand advertising or media buying, the IT directors telling us that you couldn't improve pricing on products that had no competition in the marketplace, the shop floor managers telling us how only X brand filters would fit in their equipment, and the dozens of 20-year veterans that wanted no parts of someone that might ask any questions about how things had been done in the past. The list of complaints and excuses goes on and on.

Things slowly started to change. The term "strategic sourcing" started to become a bit more recognizable. In the mid-2000s, we saw more and more companies begin to adopt their own internal sourcing groups or processes. We saw more companies get focused on vendor relationships and understanding the total cost of a product or service purchase. But, many companies still thought sourcing was a "three bid and a buy", and across the board, most companies still felt challenged by anyone that suggested that there might be a better way of doing things.

Then the recession hit. Companies scrambled. People were let go. Departments, divisions, job functions and responsibilities all consolidated. Globally, companies cut spending, but often blindly, without a future vision.

Companies did what they needed to do to survive, but over time, they eventually started spending again. But beyond just spending, they started to also look at how and why they were spending. Even the companies that didn’t suffer in the recession started to become more aware of the way they handled purchases and procurement, and the way they chose their suppliers. Companies got smarter about sourcing and their overall supply chain. They started to find experts, whether in house or through services like Source One offers, and started to identify ways to reduce costs. Companies started to get serious about looking at how they spend. Companies began to move beyond the three-bid process. Companies began to realize that a software tool or an electronic catalog alone wasn’t going to produce the best-in-class results they needed. Executives started to mandate improvements in terms of hard dollar and soft dollar cost reduction, increases in service levels and improvements in payment terms.

That’s when things really started to get busy. Companies finally became aware of the internal goldmine of savings opportunities that existed and put the pressure on their teams to achieve it. However, it doesn’t always make sense to blindly throw staff into every spend category, nor did it make sense to hire internal staff experts for categories that may only get sourced once every three years.

So a major shift happened; “Strategic Sourcing” became a household term. Those same people that for the last ten years fought the very idea of a consultant involved in their spending now embraced it. I’d love to take credit and say that the book we wrote changed the industry’s perception of sourcing, but that wasn’t it. And it wasn’t purely the fact that executives started throwing challenging or sometimes unrealistic savings targets at department managers and expected them to perform… No, it was that the sourcing function finally started to earn the respect that it deserved for the last 20 years.

So it started to make sense now. Those individuals that fought tooth and nail to keep consultants out of their spend categories didn’t do it because they were lazy, inherently bad at their jobs, or were just waiting for retirement. They did it because they knew, that in almost every case, the work that they HAD been doing was not respected. They knew that the results produced in a collaborative engagement with a consultant would reflect poorly on them; because their own managers and colleagues didn’t understand what it was that they did every day. They knew that working with a consultant would pull them away from the dozens of other high priority projects they had going on, and they knew that would also reflect poorly on them.

But, things have finally changed. Procurement and Sourcing are becoming highly respected within their organization. The shift has been so drastic, that the stigma of working with a consultant has disappeared. In fact, the majority of the phone calls we receive are now coming directly from people that control spend, not from executives trying to force us down into their organizations. Spend managers have been tasked to do more with less. In this case, produce results, but don’t add payroll, and it has caused an absolutely boom in this niche consulting industry.

But the education of the strategic sourcing function still has a ways to go. Some companies are now just starting to understand that strategic sourcing is not just a cost-focused function. Bleeding-edge companies have already started to build out their own Shared Services groups, with sourcing teams playing a critical role. Those same companies are staffing their Shared Services teams with a combination of the right internal people, outsourced resources, tools and market intelligence – regardless of it they are home grown or outsourced. Interestingly, the companies that we see incorporating strategic sourcing into their culture are the companies that are strongly outperforming their competition. They realize strategic sourcing can serve a critical function in identifying the right products, services, partners and suppliers to align themselves with to ensure success. Further, by having the right individuals assisting with market research, sourcing, interviewing and selection of those solutions, they can free their own subject matters up to focus on the job functions that they are best performing. A properly formed Shared Services team takes the best skills from each stakeholder and ultimately delivers a result than no individual person or SME group could have achieved on their own.

While traditionally thought of as a procurement function, the evolution of Strategic Sourcing is a cross-functional team that can appropriately support and improve organizational business needs. It’s an exciting time in our industry now, because more and more companies are starting to “get it”, and those people within your companies that have been fighting for the last 20 years to get their heads above water are starting to finally earn the respect that they deserve.

Source One Management Services, LLC is proud to announce its relocation to its new corporate headquarters located at 1015 N York Road in Willow Grove, PA. The facility offers the space needed to accommodate the company’s record growth over the past two years.

The new headquarters offers a near doubling of total square footage which manifests in 1.5 times more private offices, a doubling of private workspaces, and a quadrupling of meeting spaces in terms of both conference rooms and shared work spaces for collaboration between Source One’s many teams of sourcing professionals. This collaboration is furthered by the campus’ high tech outfitting, which includes an infrastructure and device setup that facilitates personal and team mobility, 65” displays scattered throughout the building accessible by any device in seconds for brainstorming sessions, and screamingly fast data connections throughout the facility allowing instant access to the specially designed central data stores. The headquarters will also contain the resources necessary to maintain Source One-developed WhyAbe.com, the first and only free e-sourcing tool platform for buyers and suppliers to run and participate in RFx and reverse auction events.

“In 1992, Source One started with three guys working out of a makeshift office. As we grew over the years, our office needs grew with us. But having experienced the rapid expansion we have over the past few years, we got to the point where we were elbow-to-elbow before our office space could grow with us. This new facility should give us the room we need to work and grow for the near future” said Vice President of Operations William Dorn.

The move comes as Source One’s traditional strategic sourcing services, which help companies in all types of industries improve supplier quality and service while lowering costs, are in record demand. Growing demand comes from an increased interest in the fields of domestic reshoring and nearshoring into Central and South America, IT and technology spending, supply chain optimization and streamlining, and decision support.

Source One operates as an extension to the sourcing teams for companies throughout the world, an industry that is in particularly high demand in the post-recession.
Companies are less prepared for risk

Companies are struggling with risk analysis in strategic sourcing, according to a recent report from Aon Risk Solutions. The report found companies are overall less prepared for risk.

Some of the findings included:

  • Among the top risks for companies were economic slowdown, regulatory changes, increasing competition and business interruption 
  • Political uncertainties entered the top 10 for the first time. Global companies may source from different countries, and social unrest can cause disruptions in the supply chain 
  • Aon reported that 2013 had more respondents than ever, which could be an indication that companies are growing more concerned with risk management
  • Weather and natural disasters are predicted to enter the top 10 risks by 2016, meaning may companies may be adapting their procurement strategies in the next three years

"One possible explanation of the decline in risk readiness could be that the prolonged economic recovery has strained organizations's resources, thus hampering the abilities to mitigate many of these risks," said Stephen Cross, chairman of Aon Global Risk Consulting. "Our survey revealed that, despite diverse geographies, companies across the globe shared surprisingly similar views on the risks we are facing today - whether or not they feel prepared."

Organizations that understand risk management is not just part of the business but a means to improve the organization can drive their bottom line, according to Supply Chain Digest. Fifty percent of a company's value can come from outside suppliers, so procurement adaptability is important to the success of managing risks. Early risk identification can be a method for minimizing the impacts of changes to a supply chain. Supply Chain Digest notes many companies prioritize risks to identify which components of a supply chain have the potential to cause the biggest disruption and focus on taking action when necessary. As processes change, the ability to adapt is critical.

Kroger commits to sustainably sourcing palm oil

Palm oil accounts for approximately one-third of the world's vegetable oil production and is used in many foods and cosmetic products. The Kroger Corporation announced it would commit to sustainable strategic sourcing for 100 percent of the palm oil used in its production supply chain by 2015. 

Some organizations have grown concerned about the use of palm oil in products because if it is not sourced responsibly, it can cause deforestation, greenhouse gas emission and loss of habitat for indigenous tribes and endangered species, according to Asian Correspondent. About 80 percent of the world's palm oil is produced in Malaysia and Indonesia, and is mainly used by multinational Western corporations. Malaysia has taken strides to reduce the environmental impacts of palm oil production by committing to maintain the forest cover of 50 percent of its land, while producing half of the world's RSPO certified sustainable palm oil. The increase in palm oil use came after changes in regulations for labeling products containing unsaturated fat.

"For the products we self-manufacture, we are proud to already source exclusively from suppliers who are RSPO members, working toward certification," said Calvin Kaufman, Kroger's group vice president of manufacturing. "Our plants are modeling the way for our third-party suppliers."

Kroger has committed to assisting their third-party suppliers in making the switch to sustainably sourced palm oil. The corporation will disclose its progress toward sustainability in its annual report and will support public policy initiatives for preventing palm oil production from expanding in rainforest territories. 

While palm oil continues to grow in popularity, many consumers are becoming concerned with the effects of climate change and other negative environmental impacts. Many corporations are beginning to take precautions to ensure the palm oil used in their products is responsibly sourced. 

In celebration of Earth Day here are 5 easy  tips you can utilize in your every day life to do your part to contribute in preserving the environment.  By implementing a few of these easy changes into your daily routine you can not only save money but also  contribute to creating a healthier environment.
  1. Look for foods with little or no packaging which has a two-fold benefit; healthier foods like fruits and vegetables tend  to be packaged with minimal  materials  leading to less packaging waste which makes up about one-third of non-industrial solid waste.  
  2. Utilize perennial crops  which often have extensive roots systems made for retaining water which in turn help prevent soil erosion.  Perennial's also grow back each year making them a great investment for your garden.
  3. Plan meals to cook in bulk then freeze for use later on, this method utilizes less energy during cooking and also helps prevent food waste.  Its also a great solution for freeing up more time in the evening during the hectic work week
  4. Use refillable bags at the grocery store and refillable water containers at home and in the office. Its an easy solution that significantly helps cut back on packaging waste.
  5. Educate yourself.   Green does not always guarantee sustainability. For example Hybrid cars by definition are not sustainable as they still utilize oil based fuels and contain parts that are not easily recyclable and can be often toxic to the environment.  While the impact is less than that of a regular vehicle, using a bicycle is true sustainability.


There are number of things you can do to make daily living more sustainable, often it is as simple as turning off a light. Take a few minutes to see where you can implement these and other tips into your lifestyle to do your part in contributing to the world around us.


History is full of quotes and advice that seem to become more valuable as time passes. “Never get in a land war in Asia” is a popular one. “Don’t mess around with Jim” is also pretty solid. But, for businesses, “To save money, move production to Asia” has seemingly stood above the rest for what seems like a very long time, holding true for decades.

But that advice is shaky now, and here is a quartet of reasons you should get manufacturing out of Asia.

Reason 1: Intellectual Property Concerns

According to a recent survey by the American Chamber of Commerce in China, the results of which were released last month, a quarter of American businesses doing business in China have been victims of data theft, losing proprietary data and trade secrets due to cyber attacks. The problem has spiked in recent years, according to an article at ZDNet, and more difficult to trace as thieves storing their information on solid state hard drives are able to cleanly delete all evidence, whereas older magnetic disc drives kept remnants of old information even after several deletions. Relocating manufacturing to North America, and the intellectual property laws held by all of its resident governments, is quickly becoming a preferred solution.

Reason 2: Labor Concerns

“Well,” you might be thinking, “The product might get knocked off, but at least it’s manufactured cheaply.”  If you believe a recent report from AlixPartners, that reasoning won’t be valid for too much longer. The report states that, by 2015, the total landed cost of a product built in Asia will equal that of a product built in the U.S.. While rising labor costs in big production countries like China bear some of the concern, the real cost bloat is in the transportation across the Pacific, particularly the fuel going into the boat.

Reason 3: Climate Risks

In 2011, when an earthquake and tsunami (and potential nuclear meltdown) combined to devastate Japan, a shortage developed for key technology components. Everything from iPads, to laptops, to video game discs, to video projectors quickly became hard to find. Later that year, when Thailand flooded, computer hard drives became scarce. While both countries eventually recovered, even a week's
delay can render financial harm to a business.

Asia has fallen victim to two devastating tsunamis in the past decade, is home to half of the largest active volcanoes in the Pacific “Ring of Fire”, is in constant earthquake danger due to its active tectonic plates, and has recently witnessed a higher flooding risk during the monsoon season due to global warming. For this reason, many companies are looking to other low-cost manufacturing centers in safer environments, like Mexico.

Reason 4: Political Climate Risks

Boston law enforcement search slowed down deliveries

As the manhunt for the remaining suspect in Boston Marathon was carried out, it had an effect on deliveries to and from the city. Officials shut down transportation, hospitals and other services in Boston and its suburbs on Friday, and all residents were urged to stay in their homes with the doors locked. All truckers heading into the Boston metropolitan area for a delivery or pick up were told to contact a dispatcher to find out if the business was open, according to The Trucker.

No highways were closed, although all traffic in the Watertown area was suspended, according to CNN. All modes of mass transit including trains, buses and ferries were shut down on Friday morning, and businesses were asked not to open on Friday. Authorities recommended residents of Watertown, Newton, Arlington, Waltham, Belmont, Cambridge and the Allston-Brighton neighborhoods of Boston to stay home. At least a quarter of a million people live in the affected areas, according to The Trucker. The announcement came after one of the suspects and a university police officer were fatally wounded in a clash, which occurred shortly after the FBI released photos of the suspects. 

FedEx and United Parcel Service also reported there may be delays in the Boston Area last week, according to Fox Business. FedEx reported disruptions could occur in several metropolitan areas, but the company was trying to put contingency plans in place to resume regular service. UPS's website said its service guarantee does not apply when transportation networks are disturbed by forces outside its control, though the company was trying to operate through accessible roadways. Many shipping companies prepare strategies for natural disasters, but unexpected events can present different challenges for logistics.

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It bewilders me when people will spend hundreds to millions of dollars on adding a little bling to their hardware…and I do not mean household items or everyday necessities.  I am talking about cell phones and tablets.
Today I looked for a new cover for my Kindle Fire and found a very pretty floral Vera Bradley case but it was $39.  Yes it is stylish, but it was a piece of cotton and cardboard that I could make myself.  Designers today are expanding their product lines marketing all different avenues including technology.  You can find covers and cases from Disney to Harley Davidson and even a little bedazzle with Swarovski crystal...Hello Kitty Swarovski crystal to be exact.  I understand the pricing for these items falls within reason to today’s baseline pricing, but what about Stuart Hughes Black Diamond iPhone 5 selling for $15.3 Million!  This Iced-Out phone includes an inlay of 600 white diamonds, asolid gold Apple logo surrounded by 53 white diamonds, 135 grams of 24-caratgold and sapphire glass for the screen. As for the black diamond, the stonereplaced the iPhone's home button. 
Doesn’t this defeat the purpose of a phone case?  It should function as a means of protection from damage not an open invitation to steal it.  The cost of the bling is worth more than the actual hardware and technology used to develop the device. 
I forgot to mention that I bought my current Kindle Fire cover at Five Below for $5 after sourcing it with several different retailers.  It has the exact same interior and functionality as the Vera Bradley one I saw today.  As discussed above, retailers in every industry are broadening their designs to the technology industry which allows consumers to purchase trendy accessories at reasonable prices.  Below are a few other places I looked before making my purchase:
·         E-Commerce Channels – Amazon/eBay
·         Book Stores
·         Flea Markets – you can find almost any style phone and tablet equipment cases and covers for under $5.  These are designer inspired and there is always room for negotiation with these vendors.
My final thoughts are even if you can afford a diamond encrusted phone cover, why not spend the money on a more purposeful product like an $890,000 Stuart Hughes suit!  This will really boost the US economy.
Cost of manufacturing in China approaching US level

The United States is gaining a competitive edge for manufacturers as costs rise in China, according to a new study from consulting firm AlixPartners. China was previously seen as the cheapest location for offshore manufacturing, but the research found production costs in China and the U.S. would be equal by 2015. 

The price to ship goods from China to other areas of the world is high. As worker conditions improved, the cost of labor increased, and Chinese currency gained value, meaning much of the competitive advantage of manufacturing in China has disappeared, according to CNBC. Manufacturers knew rising costs would be a risk they would have to face eventually, but they did not know how quickly it would happen.

Approximately 58 percent of the participants in the AlixPartners survey said production had already been nearshored or was being considered for insourcing. Thirty-seven percent of manufacturing executives said the U.S. would be their location of choice for moving production. 

Moving manufacturing requires cost analysis

The survey found Mexico and India may be attractive destinations for companies because cost of manufacturing is cheaper and has increased at a much slower rate than China. However, AlixPartners warns companies to carefully consider product type, location, transportation and cost of raw materials before deciding to nearshore.

"Without question, these are absolutely critical decisions for company leaders," said Foster Finley, AlixPartners managing director. "When it comes to moving production, companies should look twice before they leap. "Not only do product-cost variables vary widely by product type, but several factors, such as exchange rates, materials costs and labor agreements, can all have a dramatic impact on the outcome."

While many companies may decide to move manufacturing operations to capture cost advantages in the long run, there can be impediments to nearshoring including labor shortages in the U.S. and the huge cost of moving operations. AlixPartners says it should be considered on a case-by-case business to determine the most cost-effective decision.

With rumors abounding about Apple's next big thing, be it the iWatch, an Apple TV with an actual screen, or the never-promised, forever-expected budget iPhone, the fact of the matter is that the company hasn't launched any new product lines in quite some time and it's taking a hit in the market because of that.

The financial minds at MoneyChoice.org compiled this infographic detailing just how far Apple has fallen and could fall. An interesting look.

See the full image at MoneyChoice.org.

You know those ads on TV where an insurance spokesperson – be it some retro-hairstyled upbeat lady or a talking lizard – promise you steep discounts on your auto insurance just for letting them monitor your driving habits? They make it sound so simple, easy, and not at all intrusive.

Lies. Deceitful, hurtful lies.

I say this because my insurer, who I won’t name by name but they have pretty good hands and their commercials are rife with actors from Major League and Oz, increased my monthly rates a while back by about $60/month. There are no tickets, criminal charges, or accidents on either my wife or my accounts that would justify the increase, but when we called they were oh-so-happy to drop the amount down to our old rate in exchange for us using some of those tracking dongles that plug into our cars’ OBD ports. While my “suspicion-indicating” eyebrow just about punched through the ceiling when they told me that, whatever; send them now and stop charging me money. “Besides,” the inner monologue went, “What harm could it do? We’re both good drivers in simple cars – there’s no way we will be penalized.”

I was wrong.

When the little candy-colored dongles arrived, the screenshots on their activation website explained that, while we would never be charged more money based on the devices’ findings, we could increase our savings by NOT doing any of the following:

Driving in the “caution hours” of 7a to 7p
Driving in the “danger hours” of 2a to 7a
Driving at speeds above 80MPH
Braking hard

While we couldn’t avoid the first one, we could pretty much avoid all the others because we can set cruise control and we neither one are teenagers in beat-up Civics doing our best racing maneuvers, flooring it at green lights and slamming on our brakes. Heck, even if we wanted to do that, the fact that we split our time between an old Hyundai and a 4-cylinder minivan pretty much meant we couldn’t.

I was wrong.

It took three days of wheeling around before the device began reporting my driving data. When I pulled up the analytics website, I admit, I was geeked (I did the same thing when I got one of those automatic toll-paying devices. I’m a nerd.). That excitement was short-lived. In just the first trip I took – a 20 mile highway commute to work – I had somehow racked up three episodes of hard braking. "Whatever, fine, I’ll be more careful," the inner monologue went. By the end of the week, I’d racked up 13 instances of hard braking, 11 instances of “extreme braking” which I didn’t even know existed, and 27 miles of over-80 driving. Pretty impressive for a car that was set to drive 75, and either I'm a terrible driver or something was up.

A deeper look into the specific instances shows that their definition of “hard” for braking and acceleration is pretty subjective. And by “pretty subjective” I mean “it means whatever they want it to mean, whenever they want to mean it”. My hard braking instance descriptions included “braking from 75 to 70”, “braking from 73 to 69”, and “braking from 18 to 10”... otherwise known as “tapping the brake pedal”, “tapping the pedal again”, and “slowing down to approach a toll”.

I asked a friend, formerly a car electronics installer and now a mechanical engineer who I knew had taken his own insurance dongle apart, how the dongles compare to the commercial truck monitors he used to install. The tracking kits rose to prominence in the last two decades as the technology became reliable and rising oil costs and cost cutting needs drove trucking companies to use them en masse. The commercial devices, he says (and a quick Google search reinforces), use GPS to monitor speed and driver performance. He said insurance dongles, to appease privacy concerns, don’t use GPS but rely on engine data for speed and measure braking with an accelerometer, like those used to adjust screen positioning on a smartphone. He then pulled out his iPhone 5 to illustrate how easy it is to trip up an accelerometer. It was easy.

In his summation, those that want accurate results will use GPS. Those that want jittery results they manipulate to their own ends will stick to unreliable accelerometers. Which is why insurance companies – or at least my insurance company – should never make logistics equipment.

I'd prefer it if they didn't make decisions on my driving habits either.