ICYMIM: January 28, 2019

Source One's series for keeping up with the most recent highlights in procurement, strategic sourcing, and supply chain news week-to-week.  Check in with us every Monday to stay up to date with the latest supply management news.

How Do You Find Hidden Costs Part II
Michael Lamoureux, Sourcing Innovation, 1/22/2019
Lamoureux reminds us that there is no cookie-cutter way to formulate costs from production to transportation, and to pricing. In part one to the series, he covers how to find hidden costs in production by looking at the costs for raw materials, energy, labor, and overhead costs. In this follow up, he exposes costs hidden in transportation expenses and expenses associated with transportation--fuel surcharges and extra tariffs are just a couple he mentions. Lamoureux emphasizes, while it may require a lot of analysis to unravel the hidden costs in Supply Chain, its as simple as tracing from end good to raw materials, if you really want to cut down.

A writer at Thomas discusses some concerns many in the supply chain and logistic sphere are buzzing about, considering the new minimum wage increases voted into action in the 2018 midterm election. While we expect labor costs to increase, and thus prices increase to account for the higher compensation, there may be a silver lining for the industry. Better paid employees tend to stay at their jobs longer, lowering turn-over rates, and hiring and training costs. However, supply chain management must be prepared to pay over minimum wage to remain competitive, and procurement departments must be ready to negotiate and consider product cost versus labor costs. Click the link for more ways to prepare for higher minimum wage.

McDonald's Supply Chain May Set Bar on Sourcing Antibiotic-Free Beef, Experts Say
Kyra Senese, Spend Matters, 1/24/2019
McDonald's is trying to set a new standard for the fast-food industry, an interview with professor, Suresh Acharya, discusses potential challenges and what it means for the rest of the industry. Acharya acknowledges the growing area of ethical supply chains and why McDonald's might want to launch an incentive in this arena--people are willing to spend a little more for what they perceive to be healthier. The fast food company's biggest challenge with this launch is finding beef suppliers that will not only say they commit to antibiotic-free beef, but will live up to their words. Audits and certain mechanisms will need to be in place to ensure compliance, and Acharya suggests blockchain methods to help audit and track violators. He ends his interview by noting that if McDonald's is successful in implementing this change, other burger or beef institutions, like Burger King or Arby's will have no choice but to follow suit.
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