January 2016

on Friday, January 29, 2016 0

Source One Round Up: January 6, 2016

Here's a look at where Source One experts have been featured this week!





 Blogs:

Choosing the Right Customer Loyalty Platform Provider
Did you know that acquiring a new customer is on average 5-10 times more expensive than retaining an existing customer? For most companies, the easiest source of revenue are your loyal customers, so it should come as no surprise that many organizations are turning to Customer Loyalty Programs in an effort to keep their loyal customers engaged. These programs provide a great opportunity for businesses to shape consumer behavior by offering incentives based on their shopping habits. There are an array of platform providers that offer different capabilities and services. The trick, however, is first understanding what your company's needs and goals are for the loyalty program you're looking to launch. This week, Source One's Senior Project Analyst and Marketing pundit, Liz Skipor breaks down the key considerations to assess when sourcing customer loyalty program platform providers. 

Data Breach Response Planning Part I
In today's data driven landscape, the news is constantly filled with stories of major data breaches. From retailers to financial institutions, it seems as though there is no industry immune. In the ideal world, data breach prevention would be all an organization needs to combat hackers. However, hackers are always finding new ways to get a hold of critical data, which is why it is critical for organizations to have a response plan ready to implement, should the worst case scenario occur. With an extensive background in helping top companies drive greater value from their IT and Telecommunications investments, 
Source One's Project Manager, Torey Guingrich sheds light on how procurement plays a critical role in sourcing all of the major partners a company needs when handling a data breach. 

 Making the Case for a More Diverse Supply Chain Part II - Supplier Evaluation
Supplier Diversity Programs boast a number of benefits for organizations, and not just those geared towards minority and women owned businesses. Supplier Diversity also means having a supply based varying in geographical locations, social, environmental, and political status, and alternative capabilities. This week, Source One's Project Analyst Jennifer Engel elaborates further on the components of establishing a diverse supply base. In her follow up article, Jennifer walks readers through the supplier rationalization process. She explains what considerations to include when developing a duel-faceted RFP that includes evaluating suppliers based on their capabilities, but also their potential to build resiliency, stability, and adaptability in your supply chain. 

NEW PODCAST: Supply Management Recruiting Series Part 3 
Listen in to the third installment of Source One's Supply Management Recruiting Series. In this edition, our experts sit down with MRA Global Sourcing's Executive Search Consultant Nick Lazzara and Kaitlyn Krigbaum to dive in to the details of how the Procurement function is viewed within companies and how the affects the hiring process. 

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on Friday, January 29, 2016 0
Using data analytics for a supply chain advantage

A growing concern that many supply chain leaders have with implementing the Internet of Things into their operational systems and processes is that it could expose their companies to heightened levels of security risk. Such worry is understandable, considering security breaches are one of the major disruptions that threaten supply chains. However, there are many ways that supply chain data and analytics can be used to improve performance, increase visibility and transparency and, ultimately, enhance the overall success of an organization.

Data science of supply chains
A recently published white paper, commissioned by DHL, examined the role of data science in supply chains and predictive enterprise. This paper, written by Iharrington group LLC President Lisa Harrington, indicated that businesses are sitting on a gold mine of data that they are not using to their advantage and that it can be harnessed to gain an edge over competitors.

In the report, Harrington said that there has been more data created within the past couple of years than ever before. Harrington added that companies can greatly benefit by collecting data from their supply chains because this is where so much information stems from and is the area of business that has the greatest influence over the other ones.

And, while this is true for the majority of organizations, not enough corporations are effectively using this essential data to their advantage. Tools such as data mining, analytics and pattern recognition are certainly not new to the business environment. However, how this information can be utilized exactly is something many enterprises are still trying to figure out.

Harrington reported that a survey conducted by Accenture revealed almost all, or 97 percent, of business executives feel they know how the use of data analytics can be beneficial to supply chains, yet only 17 have actually integrated analytics into a function of their supply chains.

So, in what ways can data and analytics be used to improve supply chains?

Benefits of analytic tools
One area analytics can help with is supplier relationships. According to Shelly Dutton, a contributor to Business 2 Community, "this information can improve decision-making on supplier selection, contracting and monitoring. With the emergence of advanced data collection and analytical tools, companies can expand their scope of research across a broader population of transactions rather than data samples."

In addition, the source added, data and analytics tools can be used to gain a deeper look into supply chain operations by auditing labor practices, ensuring they are meeting safety and compliance standards and are maintaining a business that is socially and environmentally responsible. These systems can also be leveraged to reduce the risk of fraud in supply chain networks and minimize the chance of disruptions.

To effectively utilize business intelligence and data analytics to improve supply chain operations, many industry experts recommend partnering with people in the market who can offer a comprehensive understanding of such information to provide businesses with the needed guidance.

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on Friday, January 29, 2016 0
          Reflecting on the advertising agency landscape in 2015, we saw a number of key mergers and acquisitions and trends that shaped the landscape as we enter 2016. In the last post of this series, we highlighted some of the M&A activities with the large advertising holding companies, including WPP’s GroupM, Havas, Publicis Groupe, and Interpublic Group. Staying abreast of these activities in the advertising landscape is crucial for marketers, and marketing sourcing professionals, since these mergers and acquisitions may have a trickle- down effect on the agency you are currently working with.
The large holding companies are frequently adding to and changing their agency networks to remain competitive in the ever-growing advertising agency landscape. However, M&A activity isn’t limited to these holding companies. In fact, this past year there was a rise in activities with independent advertising agencies, and as a result these independent advertising agencies are thriving.
                But why are companies choosing to partner with independent agencies? Especially when a larger agency may have more name recognition and experience than an independent firm?
First, companies are becoming increasingly interested in transparency with their advertising partners. They want to know where their money is going and be able to calculate a clear return on investment for their marketing budget. Also, many organizations are not interested in being viewed as another client added to an agency’s roster. With an independent agency, the client is able to get to know and build a strong relationship with the staff working on their account and be a focal point of the agency’s efforts. These companies are also using technology to their advantage, creating ads that can reach hundreds of countries and eliminating the need for offices around the world.
Although there have always been independent advertising agencies, in the past these companies have had a difficult time competing against the larger holding companies. However, in 2015 we saw independent agencies on the rise. Here are some independent agencies to get to know.
Horizon Media, the largest standalone media agency in the U.S., with $4.5 billion in ad spend across 100 clients, gained additional recognition in 2015. The company continuously strives to deliver on its mission, “to create the most meaningful brand connections within the lives of people everywhere.” Horizon Media works with clients such as Geico, the History Channel, Corona, and they recently agreed to become an equal partner in a newly created media joint venture, Canvas Worldwide, which will take control of the nearly $700 million U.S. media business for Hyundai and Kia beginning this year. This past year, the company received two Adweek project Isaac Awards, an award that celebrates invention in media, advertising, and marketing and technology. Nominations were accepted across 35 categories and divided into four brackets: Advertising & Marketing, Media, Digital, and Best Practices. Horizon Media competed against companies such as Mindshare, 72andSunny, Leo Burnett Argentina, and J. Walter Thompson. Horizon took two awards for their partnership with iHeartMedia on a radio campaign and an internal invention-development program. Keeping the Horizon mission in mind, enabled these inventions to reach fruition, increasing the growth of this independent agency.         
Similar to Horizon, two other independent advertising agencies, Merkle and Cummins & Partners, also expanded in 2015.  Merkle, the largest independent agency in the U.S. for CRM, digital, and search, announced in 2015 that they have set aside $1 billion for acquisitions over the next 5 years. Merkle is looking to fill the gaps in their service offering by purchasing companies that enable emerging digital efforts like native advertising and video in order to compete against the larger holding companies. Merkle has clients spanning numerous industries such as insurance, retail & consumer goods, travel, and media and due to the number of acquisitions in the near future, will be a company to watch in 2016.
Along the same lines, Cummins & Partners, an independent agency founded in Australia, also gained popularity in 2015. Realizing it wasn’t just the business that mattered, it was the quality of people, Cummins & Partners chose to acquire New York based creative agency, dc3. With companies becoming more focused on the individuals working on their advertising accounts, Cummins & Partners wanted to make sure they had an all-star employee roster. Todd Irwin, founder of dc3 produced work for brands such as Verizon, Nikon, and Coca-Cola, and this type of experience will likely persuade clients to choose Cummins & Partners, therefore enabling the independent agency to scale their brand.
                What is the endgame for independent agencies such as Horizon, Merkle, and Cummins & Partners? For some agencies they may want to continue to grow and then sell to a conglomerate, such as WPP or Publicis; however, others, and what I expect to be the majority of independent agencies, will remain fiercely committed to their independence in 2016. These agencies will continue to enjoy the freedoms they have as an independent, such as a unique culture and the ability to choose the best talent and work with the best clients. I expect that in 2016 we continue to see more rising independent advertising agencies and an increase in the number of clients choosing to partner with these agencies.


For more insight into 2015 trends and outlooks for 2016, be on the lookout upcoming blogs in this series.

 Source One's Marketing Spend Optimization experts will be at ISM2016, where Source One is the exclusive sponsor of the Exec IN forum. Want to save on registration costs to attend this landmark event? Learn more over at SourceOneInc.Com. 

References
"Horizon Media." Horizon Media. Adbrands, 20 Aug. 2015. Web. 19 Jan. 2016.
"Horizon Media Wins Two Adweek Project Isaac Awards, Recognizing Invention." Horizon Media. PR Newswire, 22 Sept. 2015. Web. 19 Jan. 2016.
Kayne, Kate. "Merkle Will Spend $1 Billion on Acquisitions in Next Five Years." Advertising Age DataDriven Marketing RSS. AdvertisingAge, 16 Apr. 2015. Web. 18 Jan. 2016.
Stilson, Janet. "Can Indie Ad Agencies Thrive in the Merger Era?" AdWeek. AdWeek, 20 May 2014. Web. 19 Jan. 2016.
Wander, Erik. "How This Independent Agency Is Starting Its Aggressive Global Expansion Plan." AdWeek. AdWeek, 12 Nov. 2015. Web. 18 Jan. 2016. 
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on Thursday, January 28, 2016 0
Throughout my career as a sourcing consultant I have interacted with hundreds of suppliers. Prior to this career I held various positions within the restaurant industry as well as other desk oriented roles in contractor and contingent labor positions. Among these roles I have been able to take the perspective of the customer, the supplier, and a third party. Based on these experiences I have learned a great deal about supplier engagement. Throughout this post I will touch upon four key concepts in supplier engagement, initiation, collaboration, communication, and sustentation. All of which play an important role in getting and keeping suppliers engaged. Also, check out some articles I have written in the past on similar topics to get a different angle on how to approach suppliers and relationships - Some Tips for Business Relationships…and Life and Building a Supplier Relationship Management Program.

Initiation

Just as in any interaction, the first impression is the most critical when engaging a supplier for business. Whether the intention of the relationship is more tactical or strategic in nature, it is important to set the right tone. When I first contact a supplier for information on their services or product portfolio for a client I am up front about what my intentions are, and this is customized based on whether they hold incumbency status or not. In the instance where I am working with an incumbent supplier I take great care in ensuring they are clear on what my role is, what the process is (strategic sourcing process), and what expectations I have for them in the project. The most critical piece of that first communication is giving them the opportunity to voice their concerns as well as their ideas for improvement or value added support. The more valued a supplier feels, the more engaged they will be throughout the process. If they are approached in a way that makes them think you are just trying to beat them up on their pricing, they will present numerous roadblocks throughout the process.

Collaboration

This leads us to collaboration. A supplier can be a business’s biggest asset in many ways. They offer expertise that the client would not otherwise have, they can support the client’s development activities, and they can provide insight into their industry…all of which can be considered a value add of a strong partnership, information a client may otherwise have to pay for. On the other hand, some key things to remember are that while they have all of this to offer, they are looking to gain something in return, whether that includes insight from the client’s side, benefits from the development of new products, or additional business. With that said, it is important to be able to decipher the difference between INSIGHT and BIAS. Remember that as the client you need to maintain a slight edge over the supplier in managing the relationship.

Communication

Communication is an obvious one of course, but how and when matter most. Something I have found useful more often than not is transparency. Being open and honest about the process, along with the associated timelines and roles and responsibilities of those involved will keep the supplier engaged. Adversely, leaving them in the dark in these areas will lead to more work on your part to answer questions and have to engage new suppliers because you have lost the interest of those you in which you did not cultivate the relationship properly. Keeping them in the loop throughout each step of the process, answering questions, and simply talking to them like real people will go a long way in supplier engagement. With those suppliers who hold a more strategic status within the organization, routine business reviews are critical for both sides of the table to remain engaged and aligned to produce valuable and sustainable results.

Sustentation

By following the above three concepts in a continuous manner you will be able to sustain engagement with a supplier. Suppliers that provide good service and feel valued in the relationship will growth with you and look for ways to help you improve. As your business grows, they benefit from economies of scale so it just makes sense for them to manage the relationship. What the client needs to remember though is that suppliers can help accelerate their growth so fostering and properly managing those more critical relationships is a mutually beneficial effort.

For more information on supplier engagement and Supplier Relationship Management best practices, go to Sourceoneinc.com.

Source One's Supplier Relationship Management (SRM) experts will be at ISM2016, where Source One is the exclusive sponsor of the Exec IN forum. Want to save on registration costs to attend this landmark event? Learn more over at SourceOneInc.Com/ISM2016-ExecIn.  
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on Thursday, January 28, 2016 0
The importance of suppliers in risk mitigation

Having a comprehensive recovery plan in place is essential to the longevity of a global supply chain. However, many executives don't realize the paramount importance of risk management processes until a disruption actually occurs and weaknesses along various checkpoints are uncovered.

Although procurement and logistics leaders have no way of knowing when a disaster will occur, there are a number of mitigation strategies companies can adopt to reduce financial and production loss and improve the resilience of operations if an interruption were to occur. In order to know how to prevent disruption, it is first important that businesses have a thorough understanding of where the biggest vulnerabilities are.

Mitigation focus areas
This week, Procurement Leaders is conducting an analysis of major risk areas for supply chains and how much each can end up costing companies, the organization's head of strategy research, Jonathan Webb, reported in an article for Forbes. The company identified five areas that are especially susceptible to threats: quality, delivery, price, legal and reputation.

The source recommended that businesses integrate automation into quality risk management processes to streamline production and minimize the chance of mundane mistakes. There are several ways in which the delivery function of supply chains poses risks: early delivery, late delivery and non-delivery.

Webb said that the two common risks associated with price are volatility and inflation. However, signing long-term contracts can help supply chain leaders avoid the negative impact of abrupt price fluctuations and elusive markets.

In addition, he indicated that, in order to avoid liability issues, it is crucial for companies to be thorough in training suppliers and procurement managers and conduct assessments that ensure suppliers are adhering to compliance and regulatory standards.

Supply chain relationship management
Evaluating suppliers is certainly an area that many company neglect. Supply Chain Brain contributor Robert Bowman recently revealed that research conducted by the Business Continuity Institute and Zurich Insurance Group found that about one in every 10 businesses is unable to name its main suppliers and 70 percent of organizations need more supply chain visibility.

Making sure supplier relationships are secure is also important since, as Webb pointed out, the legal risks can sometimes overlap with the reputational ones which, the source added, is an area that can be difficult to discern.

"Such instances can often relate to aspects which are legal and even viewed as the business norm, but can shock the public," Webb explained. "It may be perfectly normal (even good business practice) but it strikes others as plain wrong."

The source noted that people rarely distinguish between which parties purchase goods and services and which ones supply them. Therefore, any mistake the supplier makes goes unacknowledged and the media focuses on the well-known company names.

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on Tuesday, January 26, 2016 0
     Airbnb has shaped the way that people travel on a budget.  According to their summer travel report, over 17 million people booked lodging through Airbnb in summer 2015.    While Airbnb travel was never exclusive to pleasure over business, as the demand for improved features catering to corporate travel became more apparent, Airbnb for Business was launched.  This move has gained immediate traction and may shape the overall outlook for corporate lodging in 2016.

     Currently over 250 companies have created business accounts with Airbnb including tech giants Google and SoundCloud.  These companies receive typical perks associated with a corporate travel account including a central billing system, employee spend tracking features, and mobile travel management.  There are two key factors that set Airbnb for Business apart from traditional hotel accommodations.  The first is the reduction in cost.  According to a study by Priceonomics, the average apartment rented through Airbnb costs 21.2% less than a standard hotel room, and the average single room rented through Airbnb costs 50% less than a standard hotel room.  The second perk is the choice of amenities.  Airbnb offers the option of renting single rooms, apartments, or entire homes.  For frequent and extended stay travelers, the luxury of living in a more permanent residence may reduce the overall burden of working remotely.  Many business travelers prefer to have access to a private kitchen, an amenity that can be costly in hotels.  There is also space available through Airbnb to book retreats for multiple employees or group trips, offering common spaces as well as private rooms.

     There are a few disadvantages of renting accommodations through Airbnb, the foremost being safety concerns.  Airbnb has attempted to mitigate these concerns by launching their Business Travel Ready Program which only features whole property rentals equipped with WiFi, toiletries, fire and carbon monoxide detectors, and above average reviews.  The review platform at Airbnb is much more robust than standard hotel reviews.  According to Airbnb, over 80% of their users contribute to these rating statistics compared to just 30% of hotel travelers.

     Another disadvantage is the lack of transparency between hosts and guests.  Corporate booking typically goes through a specialized department on one corporate Airbnb account.  As a result, the host does not have full knowledge behind the guest arriving at their property as it was not booked through an account that has a rating built solely on that guest’s merit.  It can also be difficult for guests to personally review host accommodations after their stay.

     The final disadvantage is the expectation of communication between the host and the business traveler.  Once a request is made to book a property through Airbnb, it can often take over 24 hours for a host to respond.  Time is certainly money in this instances, and for a company that is booking travel for multiple employees daily this extra burden may not be worth the overall cost savings.


     Despite these shortcomings, Airbnb may still prevail in receiving a significant portion of the business travel revenue for 2016.  The discounted prices open up opportunity for employees to take advantage of “bleisure” trips, extending their business stay on their own dime to further explore the location.  For travelers who prefer the safe familiarity of a standard hotel, the extra volume contributed by Airbnb may keep hotel pricing to a minimum.  The overall business model seems to be a win for Airbnb hosts and businesses alike, especially with the announcement of the Marriott and Starwood Hotels merger decreasing competition in the hotel market. 
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on Tuesday, January 26, 2016 0
Restructuring hospital supply chains for better cost-savings

As with all organizations, hospitals are continuously challenged in developing cost-reduction strategies. And many rural health care facilities face distinct limitations that make achieving substantial savings difficult.

Tony Ybarra, senior vice president of Supply Trust, a sector of the Community Hospital Corporation, said in a CHC Supply Trust post for Hospitals and Health Networks, or H&HN, that smaller hospitals tend to have fragmented supply chains.

"What we find is you may have the lab manager, engineering, housekeeping and even multiple clinicians placing orders and performing a supply chain function without knowledge of or access to contracts, contract pricing, purchase orders or the materials management information system module," Ybarra said to the source.

Costly supplies and limited accessibility
In addition to decentralized operations, rural hospitals are also negatively impacted by higher supply costs. In an article for RevCycle Intelligence, Jacqueline DiChiana reported that Materials Management in Health Care revealed about 40 percent of a hospital's budget is accounted for by supplies alone.

And research conducted by CHC found that approximately 45 percent of supply inventory in these hospitals are used in the operating room, 35 percent in the pharmacy and 20 percent divided throughout the rest of the facility. Ybarra told the source that supply chain managers often prioritize general stores supplies, but it would be more effective to focus on the OR and pharmacy because these areas can significantly influence supply chain spend.

CHC also pointed out that these small organizations don't get the same benefit of large volume discounts that larger hospitals do. To alleviate the financial burden of buying supplies and managing costs, some health care businesses join group purchasing organizations but, as one Community Hospital finance executive added, even this does not guarantee big savings.

Lack of supply chain visibility, connectivity and accessibility to essential data and information is also a problem. Simpler Healthcare logistics professional James Spann told DiChiana that many health care supply chain managers don't realize that not being able to accurately identify inventory redundancy and other weaknesses can lead to unnecessary costs. Failing to implement standardized and consolidated ordering and delivery processes can further perpetuate the issue.

"The goal for executives should be to build a lean supply chain - which will help you advance up the profit curve," Spann said the source. "Having the right amount of the right supplies, at the right time and place at the lowest possible cost - can actually increase patient care quality as well as clinician satisfaction."

Investing in insight
Leveraging data analytics and financial metrics can provide hospitals with the increased insight needed to improve operations. CHC revealed that this is one of the approaches taken to stabilize its savings strategy. The corporation's director of materials management, Jon Reiners, stated that investing in supply chain analytics and automation tools and developing the appropriate infrastructure has vastly helped the company increase savings.

CHC reorganized its supply chain and improved many aspects of its business by collaborating with a third-party consulting firm, the organization reported. This strategic partnership helped strengthen the purchasing power of the organization and allowed it to uncover cost-savings opportunities.

In an interview with HIT Consultant, Global Healthcare Exchange, LLC CEO Bruce Johnson explained that the health care industry has undergone a major transformation over the past few years and has shifted to a model that allows supply chains to strategically use data and insight to develop more sustainable operations.

"The health care supply chain is inherently different than other industries because, at the end of the day, it deals with people vs. 'things," Johnson told the source. But it's that very reason - the drive to provide better patient care - why its transformation has been so impactful."

He also indicated that, by adopting digital technologies and data and automation tools, health care professionals can strategically use the supply chain as a useful resource and advantage.

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on Monday, January 25, 2016 0
Storm Jonas disrupts shipping and transportation industry

The snowstorm that recently hit the East Coast, nicknamed Jonas, caused a lot of disruptions and inconvenience to businesses over the weekend, especially to those in the transportation industry. However, most experts have said the overall economic impact is still unclear.

Weather Co. Vice President of Weather Analytics Paul Walsh told The Wall Street Journal that he estimates at least $500 million in productivity was lost over a 48-hour span. He also said that transportation and travel companies lost a weekend's worth of business and, although retail sales suffered, it is also probable that some stores saw increases from people preparing for the blizzard.

Air carriers interrupted
Recovering from supply chain disruptions can be a lengthy process. Airports need to ensure all the snow is removed, not only from the runways but from the streets people take to get there as well.

The United States Environmental Protection Agency said the U.S. Global Change Research Program found that some of the major airports throughout the country "are located in low-lying coastal areas, making them particularly vulnerable to inundation. For example, in the tri-state area of New York, New Jersey and Connecticut, many critical transportation infrastructure facilities (including Newark and LaGuardia airports) lie within the range of current and projected 50-year coastal storm surges."

The Wall Street Journal reported that, according to FlightAware, airlines were forced to cancel more than 12,000 flights between Friday and Tuesday.

Global Eagle Entertainment Inc. Senior Vice President of Operations Solutions Josh Marks told the source that while in a recovery period, air carriers will likely prioritize international flights over domestics ones.

Recovery planning
In an article for Supply Chain 24/7, Peter Goldstein pointed out that bad weather can be especially problematic for shippers and transportation companies.

"Trucks get stuck on congested, unplowed highways. Railroads can't clear snow from the tracks fast enough for trains to get through. Snow and ice made it impossible for planes to safely land and take off. Like dominoes, one delay leads to another, disrupting supply chains across the country," he explained.

Unfortunately, harsh weather conditions and natural disasters are some of the biggest threats to supply chains, which is why it is so important companies have a comprehensive risk management and recovery plan in place.

To minimize the negative effect weather has on business, Goldstein emphasized the importance of preparing for such disruptions ahead of time and highlighted some essential tips for supply chain managers. In his suggestions, Goldstein said executives should execute an annual procurement assessment to evaluate existing providers and rates, measure the freight volumes carriers handle before agreeing to work with them and follow market trends to be aware of any negative effects economic shifts could have on transportation costs. He also noted that it is imperative for supply chain leaders to identify budget for transportation operations.

Building a resilient supply chain
C.H. Robinson recently published a white paper that said it is essential that companies utilize different methods of transporting materials and leverage a variety of logistics providers. In addition, executives should consider the tradeoffs of each type of transit carrier. For example, although it may be more expensive to have marine freight shippers transport products directly to a terminal, it speeds up delivery times.

The source pointed out that, in the event of disruption, corporations should assess which loads need to be expedited and which can wait, then distribute the deliveries through the most cost-effective channels for each. It also explained that creating a resilient supply chain is more efficient with the help of a global transportation management system and a third-party firm that specializes in strategic supply chain and logistics solutions.

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on Monday, January 25, 2016 0
Balancing supply chain sustainability and risk management

With the new year underway, global supply chain, procurement and logistics companies are assessing what market changes will mean for business and which strategies will be most cost-effective.

This week, Spend Matters revealed some of the obstacles procurement providers can expect to see in 2016. In an interview with the organization, riskmethods Founder and Managing Director Heiko Schwarz said that some of the main issues supply chain executives will be presented with will be in the areas of globalization, regulatory compliance and mounting external threats.

Schwarz indicated that, although natural disasters and weather disruptions have always been a risk for supply chains, they will be even more so this year. The source also said that the globalization trend is fueling companies to seek supplier relationships in regions they never have before. In addition, increasing operational costs in China are causing more corporations to source elsewhere.

Globalization also makes supply chains more vulnerable to complications and, in part, has contributed to elevated levels of pressure to comply with regulations. Risk management, Schwarz added to the source, is now an absolute necessity to ensure this compliance." To minimize susceptibility to supply chain disruption, Schwarz revealed that his company will use automation tools to identify potential threats.

Leveraging data and analytics
The traditional model of companies has typically been to follow a linear supply chain starting with raw materials and ending with the customer. However, as Adam Robinson pointed out in an article for Cerasis.com, over the past year, the industry saw a change it the economy that now suggests a more effective approach to adopt is a circular, rather than "closed-loop" supply chain.

However, in order to properly implement this model, the source explained, it would be beneficial for industry managers to leverage reverse logistics. In addition to cost-reductions, this data can also lead to more market share and increased volume. Robinson also pointed out that using reverse logistics can lead to higher return on investment from equipment.

Making sure proper plans and systems are in place in the event of a disaster is not the only way supply chain leaders can help protect operations and, therefore, increase sustainability.

While many companies know data can be used to optimize supply chain operations and, therefore, have begun converting to converting to cloud-based systems that offer more flexibility and increased insight, it also comes with a number of security risks. But are these potential threats so major that some businesses should continue operating in silos?

Isabelle Grenon of Pivot 88 recently argued that they are not and that "by laying [a] cloud-based solution on top of existing legacy systems, rapid integration, improved quality and reduced cost can be achieved in weeks instead of years."

Improving sustainable practices
In its effort to reduce risks of disruptions while still managing to be sustainable and efficient in operations, some supply chain leaders are at a crossroads. This predicament is understandable since, as Ian Lefshitz, a contributor to Supply Chain Executive, worded it, "While there are obvious long-term benefits to more sustainable practices, a major challenge for corporations and procurement professionals in particular is ensuring that the entire supply chain meets established standards."

To maintain a healthy balance, the author recommended companies practice transparency while also promoting accountability. Lefshitz said that it would be wise to partner with a third party that can oversee the sustainability sector of the business to identify any weaknesses or risks, as well as making sure all suppliers are adhering to supply chain standards and replacing the ones that are not.

Read more »

on Monday, January 25, 2016 0
Global commodities company Cargill shutting down London office

The dry freight market has been on a steady decline recently, much of which has been attributed to a drop in China's economy and fluctuating oil prices.

Cargill, an international commodity trading company, announced this week that it will be shutting down its London shipping office. The corporation will be consolidating freight operations to Geneva and has already met with the 10 people employed at this location.

Shift in shipping
In the press release, Cargill Head of Ocean Transportation Roger Janson said that this decision was not an easy one for the company to make because the London location helped integrate the organization into the shipping community and market and it is where many of the top team members came from.

"However, in today's world where means of communication have changed, connections between big cities are efficient and affordable and our relationships with the owners are good, the time is right for the activities of the London office to be consolidated into Geneva," Janson stated.

According to Reuters, earlier this month Cargill released its quarterly earnings which revealed a decline in profits. There have been a number of stories within the past several weeks revealing that market segments that handle the transportation of materials such as grain and coal have been the biggest victims of China's economic decline.

Slow global market
Cargill indicated that this closing can be attributed to a decreasing demand in China and a slower global economy. These two factors left the market with too much dry bulk supply, and are why the company plans to formulate a new strategy to ensure none of its vendor, supplier or customer relationships are sacrificed. In addition, the business said it plans to maintain optimal safety standards and compliance.

It is in the midst of a restructuring aimed at making the company more responsive to commodities market swings.

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on Friday, January 22, 2016 0
As with most years, the advertising agency landscape changed its shape in 2015. In an effort to stay informed of these changes, we have developed a series of blog posts discussing the changes in the landscape this past year and their impact to marketers. Our last post discussed the importance of monitoring these changes to the agency landscape as marketing sourcing professionals, including knowing the main players in the market, gaining subject matter expertise, and ensuring there are no conflicts of interest.

Mergers and acquisitions (M&As) by some of the larger agencies in the market are the some of the most common activities influencing the agency landscape. Agencies choose to merge and acquire for a number of reasons, but the most common are to enhance capabilities in a growing service area and to expand global reach into new geographic regions. There were far too many M&As in the advertising space in 2015 to cover in one post, so this post will highlight some of the key activities this past year.

One agency in particular, WPP’s GroupM, was making waves in the advertising landscape by executing a number of acquisitions last year. In 2015, GroupM announced a number of new acquisitions and partnerships throughout their agency network, including directComm Marketing Group, Essence Digital Limited, and the Exchange Lab. With each of these acquisitions GroupM has expanded their media agency portfolio and increased their buying power. Specifically, with the addition of the Exchange Lab, GroupM has grown their programmatic capabilities and with directComm they have expanded their presence in Turkey. It is not only GroupM that benefits from each of these acquisitions, but also the WPP agency network as a whole. As evident with GroupM, when examining the agency landscape, it is important to monitor the activities of the sister/subsidiary agencies and not just those of the holding company.

Havas, one of the big advertising holding companies, rarely makes the news for large-scale acquisitions. In fact, its acquisition of FullSix in September for $75M was the company’s largest acquisition in nearly 15 years. The FullSix Group is a Paris-based agency providing clients with digital, media, and communications services through its various subsidiary agencies. Havas currently operates through two division: Havas Creative Group and Havas Media Group and through this acquisition, they will be able to grow the groups digital and data capabilities. Like with many M&As, Havas sought out an agency that could add to their capabilities and service offering in an area of high demand.

In February, Publicis Groupe completed its acquisition of Sapient Corporation for approximately $3.7B. Publicis, one of the largest advertising holding companies, is frequently in the news for M&As, such as the highly publicized potential merger with Omnicom Group in 2014. Sapient Corporation is a Boston based advertising agency that specializes in digital advertising and technology, whether for the public sector or advertisers looking to increase their digital efforts. Prior to acquiring Sapient, Publicis’ digital arm included agencies like Razorfish, Rosetta, and DigitasLBi. Not only did the Publicis-Sapient acquisition expand the Groupe’s global presence and technological capabilities, but was part of a larger restructuring of the Publicis Groupe and the companies that fall under its umbrella. The Publicis Groupe will now be divided into four brands: Publicis Media, Publicis.Sapient, Publicis Health, and Publicis Communications. Industry experts have indicated that this restructuring will result in cost savings for clients, increased buying power, and overall efficiencies between agencies. There is still much to be learned about the implications of the new structure for Publicis and the agency landscape as a whole.

There were not only acquisitions taking place in the advertising space, but also mergers between agencies. Notably, in May Interpublic Group (IPG) announced the merger of two of its subsidiary companies, Mullen and Lowe and Partners, to form the new Mullen Lowe Group. Lowe has previously merged with a number of other IPG companies, including Deustch, Ammirati Puris Lintas, and Bozell, with the intention of expanding the UK based agency’s US footprint. The Lowe-Mullen merger is intended to further expand Lowe’s presence in the US and boost the overall creative capabilities of both agencies. The newly branded Mullen Lowe Group will replace the previous Lowe and Mullen shops and restructure the hierarchy of the agencies that fall under the two brands. As can be seen with this merger, as well as the Publicis restructuring, M&A activities have deeper impacts on the overall agency networks, which may have a trickle-down effect on your agency or those you are looking to partner with.

Mergers and acquisitions are common in all areas of business, especially within the advertising space. The large advertising holding companies are frequently adding to and changing their agency networks to ensure that they have all of the capabilities necessary to remain competitive and meet their clients’ needs. Ensuring that you are aware of any M&A activities taking place with your agencies or those you are considering working with, including those within their network, is an important part of the marketing sourcing process.


Still to come in this series, we will cover the growing popularity of independent, in-house, and niche agencies, as well as trends to look out for in 2016. 

Source One's Marketing Spend Optimization experts will be at ISM2016, where Source One is the exclusive sponsor of the Exec IN forum. Want to save on registration costs to attend this landmark event? Learn more over at SourceOneInc.Com. 
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on Thursday, January 21, 2016 0
Supply chain executives expect growth in global economy

Over the past year, supply chains were forced to deal with a number of global economy changes that threatened operations. However, many industry executives remain optimistic about market growth in 2016.

This week, Agility Global Integrated Logistics announced its Emerging Markets Logistics Index report, which ranks the top 45 countries throughout the world based on how appealing their markets are to shippers, distributors, logistics providers and air cargo carriers. The data was gathered in collaboration with analysis and research company Transport Intelligence. It is the seventh consecutive year Agility has released this report.

Although 61 percent of the over 1,000 supply chain and logistics professionals surveyed said they were wary about the global economy in 2016, 59.4 percent agreed with the International Monetary Fund's estimate of an emerging market growth rate of about 4.7 percent, the statement revealed.

Top emerging global markets
This report brought some surprises revelations. It is the first year industry executives have said India will likely have the most growth potential. In previous years, China has been the front-runner.

However, China's economy has been slowing down recently. Just this week, Costas Paris, a reporter for The Wall Street Journal, said that a decline in the country's demand is "wreaking havoc among the world's biggest shipping companies." Because China is importing materials and commodities in smaller volumes, the dry bulk market is in a state of crisis.

The Index ranked India in the third spot for emerging markets, a jump from last year's number five slot, and placed China as number one, with United Arab Emirates following. Also ranked in the top 10 were Malaysia, Saudi Arabia, Brazil, Indonesia, Mexico, Russia and Turkey.

"It was a volatile year for emerging markets, and you see that in the Index," Agility President and CEO Essa Al-Saleh said. "Eight of the top 10 emerging markets shifted places. Despite the turbulence, the fundamentals driving growth remain consistent - a rising middle class with spending power, progress in poverty reduction, growing populations. That's why we are still positive on the outlook for emerging markets and see them driving global growth."

According to the full Index report, World Bank's International Finance Corporation was the first to popularize the term "emerging markets," and it defines a country that is taking action on developing its economy.

Supply chain concerns
The study said that even though the executives ranked India as having the most growth potential, about 42 percent believe it needs "more structural reform" and 21 percent said "more than economic reform" to support and continue its level of growth.

The growth rate of a country's economy, international investment and trade volumes were the top factors considered, the study reported. When considering emerging markets, although the industry professionals surveyed said corruption was a top concern, they also indicated that possessing a "lack of corruption" does not make a country more attractive.

Two of the biggest concerns the supply chain and logistics executives said they have about the global economy in 2016 are the state of China's economy and inconsistent oil prices.

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on Thursday, January 21, 2016 0
UK supply chains not complying with Modern Slavery Act

Global supply chains are under increased scrutiny and facing mounting pressure to prove they are demonstrating social responsibility.

The United States federal government recently held the President's Interagency Task Force to Monitor and Combat Trafficking in Persons annual meeting where the group outlined the steps that have been taken to minimize human trafficking cases. Last month, in the wake of unfair labor conditions in the Thailand fishing industry being uncovered, Rep. Carolyn Maloney introduced a bill requesting Congress amend the Securities Exchange Act of 1934 and require businesses to publicly release the actions taken to remove all occurrences of forced labor from supply chains.

And while lawmakers are doing what they can to address the issue of modern slavery, their efforts are of little use if the companies do not comply with their regulations.

Anti-Slavery non-compliance
Earlier this week, Amnesty International revealed that a number of major technology companies, including Samsung and Apple Inc., are failing to cooperate with supply chain inspections and allegedly equipping products with batteries that contain cobalt sourced from child-labor mines in the southern Democratic Republic of Congo.

Similarity, a recent survey conducted by the Chartered Institute of Procurement and Supply found that many supply chain managers in the United Kingdom are failing to adhere to the Modern Slavery Act 2015, a new policy created to address the problem of forced labor and trafficking.

The Act, which was adopted in March of last year, forces global companies generating more than $51 million to disclose what measures have been taken to eliminate modern slavery throughout supply chain operations, according to the source. The CIPS research showed that most business managers did not feel they would be able to satisfy the new policy.

In its announcement, the CIPS found 19 percent, or one in five, supply chain leaders are unfamiliar with the new requirements and 27 percent aren't clear on what specific steps should to be taken. Furthermore, 38 percent don't know when the first public disclosure statement should be released and 40 percent "have not even read the government guidance."

Unclear and ineffective government guidance
An additional issue seems to be, judging by what the supply chain managers indicated in the study's findings, a lack of definitive direction on the policies. The source added that the majority of the executives agreed they were unsure about what should be done if modern slavery was found in the company's operations which is why, perhaps, one in every four managers was unable to identify a solid measure taken to comply with the Act.

"Our findings suggest that good intent is not yet translating into action," CIPS Group CEO David Noble said in the statement. "With little motivation and no sanctions to speak of, this requirement rests on goodwill and general awareness. Consumers, communities and businesses deserve better."

Although there are currently no existing penalties for noncompliance, the survey found that 68 percent of respondents agreed that failing to adhere to the policies should result in financial and legal sanctions.

Erica Phillips, a reporter for The Wall Street Journal, pointed out that the U.K. law resembles one passed in California in 2010, which was aimed at retail and manufacturing companies accumulating more than $100 million. However, a study conducted by KnowTheChain found that 47 percent of these businesses were failing to properly release the necessary information, according to Phillips.

The research conducted by the CIPS showed that supply chain managers are also insufficient at providing workers with information on modern slavery. Less than 28 percent of companies have trained team members and partners on the subject. This is a problem, considering 25 percent of the procurement executives attributed non-compliance issues with "lack of skills."

"The Modern Slavery reporting requirement means that businesses can no longer afford to ignore slavery issues, morally and commercially," Noble explained. "If they are unable to convincingly outline the steps they are taking to eradicate human exploitation from their supply chain, they risk damaging both their reputation and their bottom line."

The source also added that the research and data gathered by the CIPS suggests that more supply chain managers would be likely to take action if, rather than relying on "goodwill and general awareness," lawmakers enforced penalties and sanctions against those that do not comply with the policy.

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on Thursday, January 21, 2016 0
Temperatures are dropping! You are putting on your boots, mittens, hat, and scarf, and lastly your warmest item of all: that down coat you have wanted for years. This coat is surprising light and easy to tote around, but also extremely warm during the blistering winter months. But have you stopped to think about where this coat comes from? No, I don’t mean thinking about how you got the coat as a Christmas present from your mother-in-law or that you purchased it at a store in your local mall. I am talking about really discerning where the down feathers came from.
Now, think about the brand of your coat and which store it came from. If you bought a North Face coat you can embrace the cold with a smile on your face, knowing that North Face is certified under the Responsible Down Standard (RDS). But what about if you have a different brand? Don’t’ start panicking yet. There may still be hope for you. Did you buy your coat from H&M? If so, you can breathe a sigh of relief too. H&M has now become only the second company after North Face to meet its target of providing 100% ethically sourced down products. By being a part of the Responsible Down Standard (RDS) these companies have pushed for improved animal welfare in the industry and sought to protect the welfare of birds that source the down products.
The North Face created the Responsible Down Standard (RDS) in partnership with the Textile Exchange, a global nonprofit dedicated to sustainability in the apparel and textile industry, and Control Union Certifications, a third-party certification body with expertise in agriculture and farm systems. The RDS ensures that animals are not subjected to force-feeding or live-plucking.
As more and more companies are striving to become more socially responsible, they are investing time and money into sustainability and humane animal treatment initiatives. Not only are companies interested in social responsibility, but with animal rights organizations from the Humane Society to PETS, highlighting what is going in the products you eat and the fashion you wear. Buyers are also challenging companies’ supply chains and choosing to only invest their money into socially responsible products. While H&M and North Face may be the only two companies to sell 100% ethically sourced down products, more than 40 brands from the outdoor, apparel, and home industries have initiated certification of their supply chains to the RDS. Some of these well-known brands include Adidas, Timberland, Eddie Bauer, and Mammut.
So what does this mean for the industry as a whole? Well, even though the Responsible Down Standard is completely voluntary and there is no legislation requiring companies to certify their products, and as more and more companies are pledging to certify their products, it will push other companies to do so. This will then translate into more humane sourcing as well. If companies choose to be RDS certified, then they must work with suppliers who abide by the standard, meaning, force-feeding is prohibited, live-plucking is prohibited, birds must be properly watered and fed, proper environments must be maintained, birds must be kept in good health, proper handling must be conducted, and traceability is mandatory. Companies who become RDS certified agree to submit to an annual audit, plus a number of unannounced audits that could take place throughout the year.

Social responsibility is becoming a concern for both customers and businesses. North Face and H&M have already taken the leap to sourcing 100% ethical down products, and I foresee the trend continuing. So, when putting on your down coat from H&M or North Face to brace the cold, you can rest easy knowing that it meets the Responsible Down Standard. But, buyers beware, if you are wearing any down products from other companies who do not yet have 100% ethically sourced down products, you may want to take a minute to think about your web-footed friends. 
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on Wednesday, January 20, 2016 0
Ports America announces shutdown of Port of Oakland terminal

Ports America, the largest terminal operator in the United States, revealed this week that it would be ending a 50-year lease with the Port of Oakland, with cargo operations ending in 30 days and a full terminal shutdown in 60 days.

In its announcement, the stevedore service provider explained that the decision to cease business with the Port of Oakland terminal operated by Outer Harbor Terminal, LLC is part of its new strategy. Ports America said it aims to grow its presence on the West Coast, with a specific interest in ports located in Long Beach, Los Angeles and the Pacific Northwest.

Rerouting container ships
The company also added that its expansion plan will be fueled by its continued partnership with the West Basin Container Terminal and International Transportation Services, which it recently acquired 30 percent of.

"We're disappointed that Ports America is leaving," Port of Oakland Maritime Director John Driscoll said in a statement. "But we're in advanced discussions with our maritime partners here to prevent disruption to the Oakland business."

Until the location shuts down in March, the port said it will continue to move cargo and redirect vessels to nearby terminals. The statement also noted that the decision to cease operations was not a mutual agreement.

However, the source also pointed out that this change presents a couple of opportunities, rerouting container ships to other terminals that have more availability and it "can find new, better uses for Ports America Outer Harbor Terminal."

Alternatives the port suggested include using the property for something entirely independent of shipping containers. But, as of right now, its main focus is on reducing the negative impact the transition has on business. One way in which it is doing this is by expanding the operating hours of the Oakland International Container Terminal so for the next 60 days it operates on nights and weekends.

Shippers consolidate operations
According to The Wall Street Journal, this announcement is occurring at a time when the maritime industry is in a transition period. There is little growth in freight rates and, as a result, some shipping companies are merging and forming partnerships to stabilize and strengthen operations.

"Ports America may have decided they're going to put their money where their volumes are," Jock O'Connell, an international trade economist, suggested to the source. "All of this plays into the decisions of terminal operators as to where they're going to concentrate future investments."

O'Connell also indicated that industry officials have to identify opportunities for growth and take advantage of wise investment deals that don't require excessive resources for expensive equipment.

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on Wednesday, January 20, 2016 0
2015 has come and passed and so we take a look back at the new developments and changes that occurred over the past 12 months. In 2015, we saw the revamp of the Star Wars series, the creation of Google's parent company (Alphabet), declining fuel prices, the potential merger of Time Warner Cable and Comcast, and more. The advertising world was no exception to change in 2015, especially within the agency landscape.

Every year there are a number of factors that influence and alter the advertising agency landscape, including trends and technology changes, mergers and acquisitions (M&As), and more. As trends and technologies change, agencies pop-up to meet these new demands with the less adaptable agencies falling out of focus. Along the same lines, the bigger players buy up or join forces with the agencies that have the talent and resources they need in order to stay relevant and attractive to marketers. There are very few barriers to entry in the advertising space, it seems as though agencies can be formed and destroyed almost overnight, making it difficult to have a clear picture of the current state of the agency landscape for extended periods of time.

As a marketing sourcing professional, it is important to track the changes to the agency landscape in order to be able to offer comprehensive and accurate recommendations to clients for potential agency partners. With such a diverse supply base to choose from, including niche or full-service and global or regional players, it is essential to be aware of the difficult options available to your clients and understand the pros and cons of each. For example, while one of the big ad agencies may be enticing for the name-recognition it brings your campaign, a smaller, regional agency may be better suited for your assignment if it is targeting a specific geographic area. However, if you are launching a new global brand, an agency with a strong global presence and established expertise could be a better option than a local agency.

Similarly, when conducting conflict of interest screenings, you should be aware of the different relationships between agencies, whether they fall under the same holding company, are part of the same partner network, or are independent entities. Knowing upfront that Agency A is the sister company to Agency B, whose number one client is your client's direct competitor, can immediately eliminate them from consideration.

Finally, by monitoring the changes within the landscape you will remain on top of the major trends sculpting the market and be able to share this subject matter expertise with your clients when making recommendations. The marketing space is highly volatile, with different tactics and strategies fading in and out of style as trends and technologies change. Agencies must stay on top of the latest trends in order to maintain their clientele; therefore, following the way agencies are adapting to trends can provide you with valuable insight into the market.

Monitoring the changes in the advertising agency landscape is an essential component of the marketing sourcing process. This blog series will take a look back at 2015 and discuss some of the changes to the landscape, including why they occurred and what they mean. In this series we will cover the following:

  •  A review of some of the major mergers and acquisitions of agencies;
  • The creation of spin-off/niche agencies and production houses;
  • The rise of independent agencies as key players in the market;
  • The increasing popularity of in-house agencies for advertising services; and
  • Outlooks and predictions for the trends that will impact the agency landscape in 2016.
In our next post, we will discuss some of the major M&As of 2015, and what they mean to the agency landscape.

Source One's Marketing Spend Optimization experts will be at ISM2016, where Source One is the exclusive sponsor of the Exec IN forum. Want to save on registration costs to attend this landmark event? Learn more over at SourceOneInc.Com. 
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on Tuesday, January 19, 2016 0
Logistics providers may suffer from increase in online sales

The rapid growth of e-commerce sales has initiated many changes throughout retailers global supply chains. But it seems that the transition may also be causing significant challenges for logistics providers.

According to The Wall Street Journal, shipping delivery company EZ Worldwide Express has filed for chapter 11 bankruptcy protection and the reason is largely attributed to an increase in online sales.

The fourth quarter is usually a busy time for EZ Worldwide, accounting for 40 percent of total revenue, but this year was different. The company told the court that business was comparatively slow and the stagnation was especially damaging because it had just spent $12 million on new vehicles and warehouses, according to the source.

Online sales impact
EZ Worldwide has 700 employees and provides transportation and shipment services to a handful of major retail companies, including Forever 21 and Amazon Inc., The Wall Street Journal said. The New Jersey-based corporation filed for the chapter 11 protection with the U.S. Bankruptcy Court in Newark and explained its expansion caused a recent deficient in funds. Owned by Ajay Aggarwal and his brother, United Business Xpress, the trucking sector of the company, has also filed for bankruptcy.

The source also added Aggarwal, the company's president, explained to Bankruptcy Judge Stacey Meisel in court papers that despite many retailers having "a satisfactory season, the balance between in-store retail sales and online sales tipped dramatically towards online sales and direct-consumer delivery. Since [EZ Worldwide] businesses serve primarily in-store retail sales, [it] suffered accordingly."

In addition to delivering shipments to retail giants, including J.C. Penney Co., Wal-Mart Inc. and Macy's Inc., The Wall Street Journal revealed that the organization gets approximately 50 percent of its revenue from exclusively handling deliveries to Forever 21.

The shipping provider is also in a dispute with PNC Bank. In November, EZ Worldwide overdrew its account by more than $1.2 million a situation that, according to the source, PNC Bank feels was a "check-kiting scheme."

Future of shipping and distribution centers
Though the logistics industry has already been dealt its fair share of obstacles pertaining to the growth of e-commerce, it is safe to assume the challenges will continue to present themselves as new technologies dominate the market.

A few months ago, Jeff Berman, a group news editor for Logistics Management, highlighted some of the key points made in a speech by FedEx Ground CEO and President Henry Maier at a supply chain management event.

"E-commerce is the biggest driver of change and growth in the transportation industry," Maier said, according to the source. "This year it will top roughly $300 billion, which only represents a little less than 10 percent of total retail sales. It is fast outpacing the growth of traditional brick and mortar."

Berman also added that another major trend Maier said he expects supply chains to see is an increase in companies choosing to ship products directly from stores rather than a distribution center - a model that will speed up delivery time and ultimately give businesses a competitive edge.

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on Tuesday, January 19, 2016 0
Amnesty reveals child labor mining used in major tech supply chains

It's not enough for a company to ensure its immediate operations follow safe and socially responsible practices: It must also make sure the materials it uses are sourced from manufacturers that adhere to basic human rights.

Unfortunately, there have been a number of recent stories indicating this is not always the case.

Amnesty International revealed this week that a handful of major technology corporations, including Apple Inc., Sony and Samsung, are not adequately inspecting supply chains to confirm none of the materials being used are sourced from child workers in the southern Democratic Republic of Congo, or DRC.

The chemical that the human rights organization focused on was cobalt, an element frequently used in the batteries of many electronic devices, such as cell phones and laptops, and which has 50 percent of its total global supply mined in the DRC.

The source reported that many firms in this area use child workers to mine the raw material, often giving them very little protection, if any, making them susceptible to a wide range of health problems. In addition, they are often forced to work grueling days in dangerous work environments.

Supplying conflict
According to Amnesty, between 2014 and 2015 80 miners died underground in the DRC, and those are just the cases that were recorded. UNICEF revealed that in 2014, there were about 40,000 child laborers working in mines throughout the DRC, the source noted.

How do the materials sourced from these unfair and volatile mines find their way into the supply chains of some of the world's biggest, most well-known and successful technology companies?

In Amnesty's investigation, it found that at the top of the pyramid is Huayou Cobalt subsidiary CRM, a leading processor of minerals in the DRC. After it has been processed, three major manufacturers of battery parts purchase the cobalt and sell it to companies that produce lithium batteries which are then supplied to corporations such as Apple and Samsung.

The organization reached out to a total of 16 global companies thought to be customers of these battery makers, but only one business confirmed it had sourced from them, the source reported. Seven said that they either did not have any connection to Huayou Cobalt or that they had never sourced the raw material from the DRC. The rest of the companies said they were either unsure or would look into it. However, Amnesty also noted that there was not one company willing to offer verification details on where its cobalt was mined from.

"The dangers to health and safety make mining one of the worst forms of child labor," Amnesty International Business and Human Rights Researcher Mark Dummett said. "Companies whose global profits total $125 billion cannot credibly claim that they are unable to check where key minerals in their productions come from."

Company compliance
Reuters recently reported that, in a statement, Apple claimed to have "a zero tolerance policy towards child labor and was evaluating ways to improve its identification of labor and environmental risks." Samsung told the source it had thoroughly inspected its supplier network to ensure its supply chain is adhering to human rights and have safe, healthy and ethical practices.

One technology giant that is seemingly ahead of this controversy is Intel Corp. Earlier this month the company announced it would soon be entirely free of conflict materials, a mission it began several years ago with its microprocessors and is now extending throughout all its components and products.

However, there are currently no set standards or regulations for the cobalt market. In the U.S., the chemical element is not considered to be a conflict material like tungsten, tin, tantalum and gold are.

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on Tuesday, January 19, 2016 0
U.S. government announces action against forced labor in supply chains

Over the past year, a number of companies have been investigated for unethical supply chain practices.

Last month, after details of the violent and unfair labor environment of the Thailand fishing industry surfaced, Rep. Carolyn Maloney proposed a legislative bill to Congress calling on it to update the Securities Exchange Act of 1934 and make it so every company is required to disclose any and all steps it has taken to rid its supply chain of human trafficking, forced labor, child labor or modern slavery.

And while this particular bill has not yet  been passed, the United States government is being proactive in its approach to eliminating this issue.

This week, Supply Chain Management reported that the President's Interagency Task Force to Monitor and Combat Trafficking in Persons, or PITF, met for its yearly meeting. During the event, the United States government explained what recent actions have been taken to minimize cases of human trafficking.

The PITF represents 14 divisions of the federal government and was developed to fight against modern slavery, with a recent focus on supply chain and procurement practices, the source revealed. This meeting marks the sixth time the organization has gathered since President Barack Obama was first elected.

Anti-slavery developments
According to the meeting remarks report, which was released by the U.S. Department of State, different government officials spoke throughout the session to highlight and elaborate on what measures have been taken so far.

At the beginning of the convention, senior advisor to the President Valeria Jarrett said that the PITF's agencies "have brought together leaders of foreign governments, the private sector, faith communities, law enforcement, academics and advocates and of course, survivors. And we've made significant progress in the areas of victim services, rule of law, procurement in supply chains, and public awareness and outreach."

Office to Monitor and Combat Trafficking in Persons Ambassador Susan Coppedge said the victim services committee of the Senior Policy Operation Group further developed plans and released an updated status report of the Federal Strategic Action Plan on Services for Victims of Human Trafficking. In addition, she added, members of the procurement and supply chains committee started to specify the meaning of "recruitment" fees so they would be better able to set restrictions against charging them of workers.

Fighting Forced Labor
Deputy Secretary of Labor Chris Lu announced that the Department of Labor has been collaborating with the International Labor Organization, or ILO, on the fight against forced labor and has been involved in an ongoing project that includes providing financial support to ILO, building awareness of the issue worldwide and implementing a new protocol that will provide increased data and insight into supply chain operations and make it easier to defend the abused.

Supply Chain Management also noted that "the US Agency for International Development will partner with an Indian NGO to create a model for identifying human trafficking cases in the lowest tiers of global supply chains."

During the meeting, Secretary of State John Kerry reiterated that addressing the issue of modern slavery is the responsibility of the entire federal government and agencies will be "working across the board" to inspect and regulate procurement practices and improve legislation laws to prevent cases of forced labor.

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