Category Archives: In The Press

US Pacific-Rim Trade Deal Hanging in the Balance

The future of a massive US trade deal looks to be in jeopardy following a US Senate vote on Friday.
United States Capitol Building

Democrats voted against a major part of the bill, despite a last-minute personal plea from the President himself. Without this bill being approved, there is a danger for Obama that the deal will fail to progress into law.

With many seeing the deal as ‘legacy defining’ for President Obama, it is clear that he will need to work hard to heal a schism in his own party before a second vote this week.

In a Nutshell

Nearly a decade in the making, the Trans-Pacific Partnership (TPP) would partner the USA with 11 other countries around the Pacific Rim, securing enhanced trade relations and lower tariffs on exports, ultimately strengthening the US economy.

Significantly, China would not be involved in this partnership, with the US aiming to increase their influence in the region and have a greater say in policies and standard. This could then be used to improve labour and environmental standards in a number of countries.

With US trade in the region valued at an estimated $1,607 billion, this would further increase the revenues US service organisations, give organisations greater access to big markets in Japan and Canada, while providing protection for holders of patents and intellectual property in a region where infringements are common.

This would be particularly good news for California, which counts trade as a key driver of its own economy. Much of California’s trade, plus exports that are shipped through its major ports, goes to the Pacific Rim region and the countries involved in the wider negotiations.

Sounds Great, What Happened?

The key component of the bill, which was ultimately passed, centred on giving ‘fast-track authority’ to the President to negotiate future trade deals. However, this was one part of a two-part bill, with both parts needing to be passed in order for legislation to be created.

The second part of the bill dealt with Trade Adjustment Assistance (TAA), assistance for retraining workers displaced or negatively affected by the movement of trade. US Democrats have traditionally been strong advocates for these provisions, but were unhappy with the strength of legislation within the bill protecting US employees.

Such weak legislation has been blamed in the past for a fall in US manufacturing and growing inequalities. Fearing similar consequences from the trade deal, the party rebelled and voted against the second half of the bill, halting its progress and creating an awkward situation for the President.

With the deal not hanging in the balance, its supporters fear that a failure will lead to countries such as Vietnam and Japan reversing economic reforms and policies allowing them entry to trade zones with the USA, as well as China strengthening its own position in the region.

All is Not Lost

There are positives to take on both sides. For the President, he has managed to pass half of the bill, for the trade deal itself, while keeping his own party on side, but at the same time garnering significant bi-partisan support from the Republican party.

This support is likely to continue this week when votes are recast. For the opponents of the bill, this allows a further week of negotiations and potentially concessions from the White House in their favour.

Whatever the outcome, the vote, and potential passing of the bill into law, will have a huge impact not only on the remainder of Obama’s presidency, but also the legacy he leaves behind.

Are you following this story in the US? Do you have an opinion on the trade deal or are you directly affected by its outcome? Get in touch with Procurious and let us know.

Meanwhile, here are the key headlines in the procurement and supply chain space this week.

Walmart’s corporate spin can’t defend shady food suppliers

  • A new report from the Food Chain Workers Alliance (FCWA) dives into the labor and environmental records of 22 of Walmart’s suppliers of popular food items, from chicken to bread to blueberries. The report, “Walmart at the Crossroads: the Environmental and Labor Impact of Its Food Supply Chain” (PDF) uncovers far more important problems than relaxing the worker dress code and increasing store temperatures…
  • According to Walmart’s “ethical sourcing” standards (PDF), all suppliers and their manufacturing facilities at a minimum “must fully comply with all applicable national and/or local laws and regulations, including but not limited to those related to labor, immigration, health and safety, and the environment.”
  • The report finds that Walmart has failed to enforce supplier compliance with its code of ethics for labor practices, environmental sustainability and local sourcing of food. Workers in Walmart’s stores and in its food supply chain endure a slew of labor abuses, including gender and racial discrimination, unfair treatment of immigrants, low pay, violations of freedom of association and even workplace accidents and fatalities.

Read more at Aljazeera America

Build Australia’s submarines in Adelaide, says former commission of audit chair

  • Tony Shepherd, a former president of the Business Council of Australia, said the government should have confidence that future submarines and frigates could be successfully built in Australia, if given the right procurement procedures and contractual arrangements and with construction in privately operated dockyards. .
  • He said it wasn’t fair to use the troubled air warfare destroyer project, running three years late and $1.2bn over budget, as the key criterion for decisions about local defence industry capability to undertake future naval construction in Australia. “We should have confidence that we can successfully build complex warships here, adding to our high technology base and giving us the intellectual property and local capability to maintain, modify and update naval vessels over a 30-year operating life,” Shepherd said in an article on the Australian Strategic Policy Institute website.
  • The government is now evaluating three international contenders for replacements of the ageing Collins-class submarines. It hasn’t stipulated that the new vessels be constructed in Australia. “The Abbott government should follow this well-proven, risk-reduction path,” he said.

Read more on The Guardian

In 2 years, 40,000 tonnes of grain went down the drain

  • At a time when fears of another drought year are looming large, an RTI application filed by TOI has revealed that the quantity of foodgrains damaged in Food Corporation of India godowns across the country recorded a drastic jump over the last two years when the country lost more than 40,000 tonnes.
  • Though the losses are attributed to natural calamities like cyclone and floods, experts say it is also an indication of poor storage facilities, pilferage and transit loss. The reply from FCI, responsible for procurement and distribution of foodgrains, shows that the damaged quantity rose threefold in five years — from 6,346 tonnes in 2010-11 to 18,847.22 tonnes in 2014-15.
  • The FCI reply is especially significant after a recent United Nations annual hunger report estimated that India had the highest number of hungry people in the world at 194 million. As on June 1, there were 568.34 lakh tonnes of foodgrains with the FCI’s central pool.
  • Former Union minister of state for food K V Thomas told TOI that the percentage of foodgrains damaged had reduced from 2.5 per cent of the total procurement in 2010 to 0.07 per cent of the total procurement in 2013. “The UPA government had taken several initiatives to bring this down. We renovated most of the existing godowns and also increased the storage capacity. The procurement rate of foodgrains was also higher compared to the current year.”

Read more at The Times of India

Boeing believed to have slashed hundreds of millions from Apache helicopter bid

  • Aerospace giant Boeing is believed to have sliced hundreds of millions of pounds off of its bid to make 50 Apache attack helicopters for the UK Ministry of Defence (MoD).
  • In a dramatic step taken to improve its chances of securing the contract, the US aircraft manufacturer has reportedly offered what is a “very significant discount”, according to sources cited by the Mail on Sunday.
  • The company has made the move in the face of a rival bid submitted by AgustaWestland, a UK company owned by Italian defence group Finmeccanica. It made the Apache helicopters that are currently used by the Army under licence from Boeing.
  • According to the newspaper, sources from Boeing said the maintenance of the helicopters could be carried out by its UK arm, ensuring the majority of the government’s spend remained in the UK.

Read more at Digital Look

CCG abandons NHS 111 procurement after being unable to find ‘acceptable’ provider

  • One of the largest NHS 111 services in the UK has had to ‘abandon’ re-procurement of its service after they were unable to attract an adequate permanent provider.
  • NHS Sandwell and West Birmingham CCG have been unable to find a NHS 111 provider to take over the service across 16 West Midlands CCGs from the local ambulance trust, which took over from NHS Direct on a temporary basis in November 2013.
  • Commissioners said that no bid – including the West Midlands Ambulance Service Trust – had demonstrated ‘value for money’ in delivering the scheme’s future ambitions, such as integrating with GP services or offering better mental health support.
  • The procurement process to deliver 111 services in the region for the next four years was launched on 28 November 2014, but now WMAST will retain the existing contract until the CCG launches its second procurement attempt this autumn.

Read more at Pulse

Lenovo expands commitment to supply chain visibility

Lenovo has run its supply chain on GT Nexus since 2010.

Lenovo expands commitment to supply chain visibility with GT Nexus

GT Nexus has renewed its cloud supply chain commitment to support business growth on the GT Nexus platform.

Supply chain visibility combined with analytics, rooted in deep trading partner connectivity on GT Nexus, enables Lenovo to operate a customer-centric supply chain and drive data and analytics in the chain, while continually identifying opportunities to improve performance and reduce cost. 

A $39 billion global Fortune 500 company, Lenovo is the world’s No. 1 PC manufacturer and a leader in providing innovative consumer, commercial, and enterprise technology. 

In comments supplied to Procurious Gareth Davies, director of Global Provider Management – Lenovo, said “GT Nexus gives us greater visibility and insights into the supply chain, enabling us to reduce transportation lead time variability, decrease in-transit inventory, and improve our customer centric perfect order fulfillment goals.” He continued: “Operating smarter and more efficiently through cloud based connectivity helps us better serve our customers.”

Lenovo tracks products as they move from manufacturing locations to retailers and end-consumers, using GT Nexus. Visibility spans transportation modes, geographies and business lines, enabling Lenovo to more accurately manage supply chain performance and segmentation. Orders often consisting of dozens of units are organised and tracked to provide the end customer direct visibility into expected arrival time.

“Supply chain visibility and intelligence are essential attributes at Lenovo, but the real competitive weapon is the ability to rapidly execute on this intelligence,” said Sean Feeney, CEO of GT Nexus. “Operating as a network allows Lenovo to be agile, responsive and adaptive to changes on both the supply and demand side. This is essential in the high tech industry where challenges such as product obsolescence, complex outsourced supply chains and demanding customers are prevalent.”  

Google reports progress in removing conflict minerals from supply chain

Google HQ

Google has reported on the company’s continued commitment to removing ‘conflict’ minerals from its supply chain.

In a report (which makes up part of the level of disclosure required by the US government to eliminate the sale of raw materials from West Africa and Asia to fund violence and terrorism), the tech giant filed significant improvements in its performance over the last year.

The firm can now say with some certainty that 57 per cent of its facilities do not pull on ‘conflict’ minerals to support production. While this figure may appear meagre, when you consider that last year the firm could only manage the same claim for 36 per cent of its facilities, it’s clear to see that significant progress has been made.

Apple too has shown similar improvements in this area, with the firm reporting in February of this year that 60 per cent of its facilities met a requisite level of compliance as opposed to only 30 per cent in the previous year.

These moves further highlight the fact that both consumers and governments now see supply chain activity as a direct reflection (and responsibility) of the buying organisation.

The Apple Company came under intense scrutiny earlier this year when a BBC inquiry and television show highlighted both slavery and questionable environmental practices taking place within the firm’s downstream sourcing activities. Read more here.

Regulation, relationships and waste leave a nasty taste in the mouth

All facets of the food supply chain came under scrutiny this week, but all for very different reasons. From relationships with suppliers to a sustainable way of cutting down on food waste, the supply chain that impacts us all is working hard to stay ahead of the game.

Why the food supply chain is making headlines this week

Conservative estimates put weekly food spend for families in the UK at £58.80, making for approximately £3,050 per year. In the USA, the figure is an average of $127 per week ($6,602 per year). However, it could be argued we could all do with taking a keener interest in where our food is coming from.

The often-cited examples of the Tesco horse meat scandal, the Nanna’s berry re-call in Australia and the potential large-scale issue of undeclared peanut use have all highlighted that organisations need a greater focus throughout their supply chains.

Poultry Supply Chain

New measures have been announced by a number of UK retailers to reduce campylobacter levels in chickens.

Between February 2014 and February 2015, the Food Standards Agency (FSA), found that nearly three-quarters of all chickens tested positive for the campylobacter. For those of you who are unfamiliar with this particular parasite, it’s the biggest cause of food poisoning in the UK.

In light of this, UK retailers have begun working with supply chains to reduce instances of the bug. Measures include rapid surface chilling, on-farm testing, new scientific research and the sharing of best practice, all aimed at increasing the levels of biosafety and reducing infection rates.

Supply Chain Exploitation

A recent report in Australia has highlighted ‘slave-like’ conditions in the food supply chains of some of the country’s biggest retailers. Four Corners, a ABC network programme, found that the biggest culprits were some labour hire contractors, using migrant workers with expired or invalid work visas.

It is widely believed that these practices are linked to supermarkets’ ‘race to the bottom’ on pricing. Increasing price pressures have lead to other companies in the supply chains looking at alternative methods to bring costs down.

Supply Chain Practices

Unethical practices and organisational responsibility have been pinpointed in a new report published regarding Wal-Mart’s supply chain. In the report, the Food Chain Workers Alliance (FCWA) alleges that Wal-Mart has not made good on promises to improve labour and ethical standards in its supply chain.

The report also details a number of violations of Wal-Mart’s own sourcing code of ethics in relation to workers, environmental impact and treatment of animals. Although Wal-Mart has yet to respond to the report, it is hoped that it may compel the retail giant to make changes to its supply chain.

Relationships and Regulations

Many of these issues can be traced back to the importance of having good relationships in the supply chain. At the British Meat Processors Association annual conference last week, BMPA president Peter Mitchell, argued that good supply chains are vital to the success of the meat industry.

Mitchell also argued that closer relationships with the FSA and UK government departments, as well as tighter regulations, were vital to the future of the meat supply chain.

Malcolm Johnstone, president of the Food Storage & Distribution Federation, also cited regulations in relation to meeting the exacting standards of the UK food industry. He called on the members of the Federation find new ways of managing facilities in line with regulations to increase efficiencies and keep pace with the market.

Food Waste

And finally, to finish on a positive note, Tesco have been in the news for good reasons as they announced new measure to combat the volume of food waste its stores produce.

A partnership with Fareshare, a food distribution charity, will link Tesco to local charities in order to hand over some of the estimated 30,000 tonnes of wasted food. Initially this will cover 10 stores, but Dave Lewis, Tesco CEO, hopes to roll this out across the UK and in other countries where Tesco operates.

The company is also backing proposed legislation in the UK to ban supermarkets from throwing away food that is approaching its best-before date, instead giving it to charities.

Do any of you work in the food supply chain? Do you have any examples of good practices that could be shared? Get in touch with Procurious and let us know.

Meanwhile, here are some of the procurement and supply chain headlines from this week.

Amazon Just Changed Its Iconic Shipping Boxes

  • As reported by Time magazine, Amazon now gets the honour of reportedly being the first company to use its packaging to advertise an un-related product. This marks the first time Amazon has allowed a third party to feature on its delivery material, reports the LA Times.
  • The company is rolling out ads on its delivery boxes in bright yellow to boost the new Minions movie from the Despicable Me franchise.
  • Boxes began being sent to customers last week. There are three different types of ads.There’s also a link on the box to a Minions page on the e-commerce site.
  •  While Amazon has used its packaging in the past to market its own products, this is the first time that it has done so for a non-Amazon product.

Read more at SupplyChain247

Cath Kidston promotes supply chain director to COO role

  • Cath Kidston has promoted its director of global supply chain and product development, Geert Peeters, to the role of chief operating officer.
  • The move comes after what the home furnishings and fashion brand described as “three successful years” of managing the business’s global supply chain.
  • Peeters’ supply chain career to date spans more than 25 years, and he has previously held senior roles at the likes of Levi’s, Bacardi and VF Corporation.
  • Commenting on his promotion, Cath Kidston CEO Kenny Wilson said: “I am very pleased to be recognising the significant contributions that Geert has made in helping Cath Kidston grow to where it is today.

Read more at Essential Retail

Shadow banking boom pushes China to edge of debt sustainability

  • Booming shadow banking growth has pushed China to the outer limits of its ability to service debt and keep its economy functioning smoothly, though spillover risks from a bursting of the credit bubble are containable, experts said on Monday.
  • With total leverage in the Chinese economy now topping 280 per cent of gross domestic product, it was clear that credit quality was deteriorating, Primavera Capital Group founder and chairman Fred Hu told delegates at a Fung Global Institute forum. “It is not yet the end of the world, but it is approaching the limit of debt sustainability,” Hu said.
  • Debt sustainability, the ability to service debts, is a key measure of solvency. Analysis by the McKinsey Global Institute earlier this year showed debt in the Chinese economy had roughly quadrupled between 2007 and the middle of last year to US$28 trillion, leaving it with a debt-to-GDP ratio more than twice that of crisis-wracked Greece.

Read more at South China Morning Post

The case for exempting projects from open procurement

An opinion piece from Public Finance.co.uk says that the proposed Garden Bridge across the Thames is an object lesson in how political initiatives can rub up against technocratic process. Reforming EU procurement legislation could allow big ideas to bloom.

It continues: Open and transparent procurement is an important defence against corruption, kickbacks and simple waste, but the European regulations set technocratic process against political accountability.  Mayors and other politicians will be approached with bright ideas from time to time. Surely they should have political space to judge how bright these are, and to implement them, subject to safeguards and controls – not least, the electorate’s ability to eject politicians who pursue vanity projects?

Read more at Public Finance

G7 leaders urge tough line on Russia at Alpine summit

  • Group of Seven (G7) leaders vowed at a summit in the Bavarian Alps on Sunday to keep sanctions against Russia in place until President Vladimir Putin and Moscow-backed separatists fully implement the terms of a peace deal for Ukraine.
  • The Ukraine conflict and a long-running debt standoff between Greece and its European partners dominated the first day of the annual meeting hosted by Chancellor Angela Merkel at Schloss Elmau, a luxury Alpine hotel in southern Germany.
  • Merkel is hoping to secure commitments from her G7 guests to tackle global warming ahead of a major United Nations climate summit in Paris in December.

Read more at Reuters

5 critical ways the UK needs to view supply chains differently

Jan Godsell on keeping Britain at the heart of global manufacturing with the help of supply chain companies.

Keeping Britain at the heart of global manufacturing with the help of supply chain companies

Jan Godsell, Professor of Operations and Supply Chain, WMG at University of Warwick, has provided Procurious with her thoughts on the importance of Britain needing to have a greater understanding of its supply chains across industry.

Jan says: “Today, many supply chains are misunderstood, neglected but brimming with potential, much to the detriment of the UK’s entire industrial base. Big opportunities that could set the UK on the path to becoming an important hub for international supply chains are currently being ignored.”

As evidence continues to mount that production is increasingly being re-shored back to the UK, certain questions spring to mind: Does Britain have the right logistical and communication structures in place to support a new wave of manufacturing activity? Are supply chains integrated and streamlined enough for smaller companies to operate leanly and efficiently? What are the restrictions on the supply side and how can they be broken down? And, what are the opportunities in the UK and abroad if businesses develop their supply chain capacity to reach their full potential?

Professor Jan Godsell covered these key issues during the Crimson & Co’s annual supply chain academy on 27 April, which is dedicated to sharing worldwide best practice across the end-to-end supply chain. Jan also noted her insights on the issues affecting global supply chains in the recent APMG Term Paper.

“The supply chain has been de-scoped to focus primarily on procurement and supply management. In today’s globalised world, such a narrow perspective can be damaging to the UK industry. It’s about recognising global demand and configuring the right global supply chains to meet this demand effectively (meeting the customer requirements in terms of cost, quality, time and increasingly environmental and social sustainability). Failure to do so will see the UK become increasingly marginalised with no recognised role or expertise to contribute to the global supply chain network. The good news is that it’s not too late for the UK.”

Godsell explains that with the aftershock of the global financial crisis still reverberating and traditional models being challenged by the internet, the time is right to revisit the role that the UK plays in global supply networks. Whether this be local supply to meet the demands of the UK market, regional supply for the European market or global supply for the world. To capitalise on this opportunity and redefine the UK’s role at the heart of the global supply chain network, there are five critical ways in which the UK needs to view supply chain’s differently.

Jan continues:

1. Functional to holistic perspective

“The UK needs to return to the origins of the supply chain and view it more holistically. Within a company, this means recognising the full scope of all the operational processes that define the supply chain. The core processes are Planning, Procurement, Manufacturing, Logistics and Return (which covers reverse logistics, repair, remanufacture and recycling). These processes are used to understand customer demand and translate it into effective and efficient supply.

2. Manufacturing to planning centric

“If the UK wishes to maximise the role that it plays within a global supply chain network, it needs to consider the different ways in which the UK can contribute to manufacturing. The success of a global supply chain network relies on the correct positioning of the factories, suppliers and warehouses around the globe, to serve different markets. Planning is the “glue” that holds the supply chain together yet it is poorly represented. There is a huge opportunity for the UK to continue to develop a full range of supply chain planning capabilities, and to position the UK as the supply chain planning hub of the world.

3. Re-shoring to right-shoring

“Manufacturing is returning to the UK and one of the main reasons why this is happening is because businesses have started to look at their cost base more holistically and in relation to their competitive priorities. They are no longer fixated with production costs (and labour costs in particular) but are taking a more holistic view of the total cost of sourcing. The challenge for organisations is identifying the most appropriate supply chain network to support their business in order to determine which elements of their production should be made locally, regionally and indeed globally. It’s not about re-shoring but right-shoring. We should enable our businesses to right-shore, as it allows them to understand their strategic priorities and core capabilities, to develop the right global supply chain network and essentially to ensure the success of individual businesses and the UK economy.

4. ‘After thought’ to an integral part of strategy

“UK businesses need to ensure that supply chain strategy is an integral part of their business strategy and find innovative ways to both increase sales today and reduce costs tomorrow. This will require increased presence of those with supply chain expertise at the board level.

5. Specialist function to a pervasive part of our social fabric

“All roles in the supply chain are equal, as a supply chain is only as strong as its weakest link. We need a nation where our boards have good supply chain representation and have congruent strategies to enable competitiveness today whilst building capability for tomorrow, where everyone in the UK understands the importance of our supply chains and the critical role that each and everyone plays in supporting our nation. Together, we have the opportunity to put the UK back at the heart of the network of global supply chains, back at the heart of the global economy.” 

UK Automotive Sector To Leave Other Supply Chains In The Dust

Healthy UK Automotive Industry

New investments, economic recovery, overseas demand and continued technological advances, all point to continued substantial increases in UK vehicle production in the coming years.

This means significant opportunities for those domestic suppliers able to respond.  (Currently only 40 per cent of components are sourced from the UK).

To ensure the industry is equipped with the right skills to support this growth, the Automotive Industrial Partnership – the recently formed body that brings the industry and government together to secure the sector’s skills pipeline – is conducting the biggest ever survey of its kind aimed at vehicle manufacturers and the 2,0002 UK based supply chain employers.

Jo Lopes, Chair of the Automotive Industrial Partnership is calling upon the industry to grasp this opportunity and participate to the full.

“This initiative is unprecedented,” said Jo.

“There have been many other surveys covering the engineering and manufacturing sectors as a whole – but none that drill down to this level of detail and meet the unique needs of automotive manufacturing industry.

“It’s vital that we know the views of employers of all sizes if we are to take the right action now to ensure an effective pipeline of future talent – from new entrant technicians through to the specialist engineers and managers we will need.

“By working together we have the opportunity to mould the future of our industry – and address the very real challenges that we face.”

The findings will be used by the Automotive Industrial Partnership to determine where, when and how future skills investment should be prioritised. In turn, this will inform the development of learning solutions that are relevant and accessible to the whole industry, including smaller employers.

Among the household names driving the Automotive Industrial Partnership are; Bentley, BMW, Ford, GKN, Honda, Jaguar Land Rover, Nissan, Toyota and Vauxhall.

Interested? Take part in the survey by visiting automotiveip.co.uk

We knew about reshoring manufacturing, but now business processes too?

new_shoring_made_in_usa_products

Earlier this year Barack Obama brought reshoring into the media spotlight when, in his state of the union speech he claimed:

“More than half of manufacturing executives have said they’re actively looking to bring jobs back from China, so let’s give them a reason to get that done.”

The stats add up as well. America is seeing somewhat of a resurgence in its manufacturing sector. According to a study by the Boston Consulting Group, 54 per cent of executives are planning on or considering reshoring roles they had previously moved overseas. This figure is a marked increase on 2012 numbers where only 37 per cent suggested they we considering making such moves.

It’s not all talk either. While the figures above refer only to intentions of reshoring, the same BCG study outlined that more firms are actively reshoring workers than in previous years. In 2012, only 7 per cent of firms reported they were reshoring roles, the latest study suggests that 16 per cent of firms are currently bringing jobs back to US soil.

The Wheels Turn Again

After a decade of decline starting around 2001, US manufacturing employment hours and earnings have begun to steadily climb in recent years. There are a number of proposed reasons attributed to this resurgence.

Firstly, the cost of producing in the traditional outsourcing hubs of China and India has been rising over the past decade. As these markets mature and more citizens move towards a middle class existence this trend is likely to continue.

The cost of producing at home has also contributed to the increases in manufacturing activity in the US. Energy costs in the US, one of the greatest cost drivers in the manufacturing industry, have dropped greatly in recent years. This is thanks in part to fracking, which provides cheap energy and has the US on track to once again become the world’s largest oil producer by 2017.

The shift to home production has also been catalysed by consumer preferences. Large retailers like Walmart and Costco have made commitments to source more products from the US in order to match consumer sentiment, which is showing a preference for domestically produced goods.

Manufacturing Sure… But Business Services?

New research from The Hackett Group is suggesting that the tendency to reshore is not limited to the manufacturing sector. The report highlights that decreased labour costs, lower employee turnover rates and proximity to company headquarters are sparking a drive for US firms to bring finance, IT and other business services back to home soil.

The Hackett Group’s study takes a further step of analysing potential locations across the US for reshoring activities to take place. In the company’s own words, the report is deigned:

To reflect the decision criteria used by companies today to select a destination for establishing Global Business Services centres, The Hackett Group’s Global Research Centre analyses 42 countries based on more than 30 key indicators. Five principal dimensions are taken into consideration when calculating factors that may be used to determine location choice. These are:

  1. Economic considerations: Location choice is primarily determined by labour arbitrage. In addition, office rent, telecom costs and other major cost components are considered.
  2. Business environment: Ease of doing business, wage inflation, economic health, tax burden and quality of life.
  3. Workforce quality: Availability and quality of the labor force in the context of factors such as the flexibility and business-friendliness of local labour laws and regulations.
  4. Infrastructure: Although greatly improved over the last decade, infrastructure quality (office, electricity, transport) may still inhibit location attractiveness when travel time is excessive, services are unreliable or costs are prohibitive. Though weighted to a lesser extent, this dimension is also taken into consideration.
  5. Risk assessment: Factors that may be hurdles to reliability and costs, such as potential for fraud, risk of political and social unrest, weak protection of data and intellectual property.

To access an abstract of the Hackett Group report click here.

As a postscript, it’s important to note that this recovery is only moderate and we are unlikely to see manufacturing employment numbers in the US rival those of the 80’s and 90’s (we’ve got technology to thank for that), but the developments are certainly encouraging for US job seekers.

Fallout Still Being Felt After Strikes At Port of Los Angeles

West Coast Port Strikes Start to Play Out

Port of Los Angeles Strike Effects

Earlier this year we covered a story about delays caused by industrial action at ports on the US West Coast. This week, the Port of Los Angeles has released some troubling statistics that point to the long-term impact of this action.

Despite a significant rise in container volumes for the month of March, cargo volumes at the port have dropped drastically in April.

Expectations of a full recovery were bolstered by strong showings in the month of March, after an agreement was finally reached with West Coast port employees and the longshore workers union. The agreement led to the clearance of a backlog of ships that had been present at the Los Angeles port for months.

March was in fact, the second busiest month in history for the Los Angeles Port facility. However, the huge 11.8 per cent drop in cargo volume recorded in April suggests that the increased activity was merely clearing the backlog and that cargo figures may remain low on an ongoing basis.

Major US ports have long been seen as an indicator of the health of the US retail sector. Normally, when shipping volumes are decreasing the retail sector follows and starts to slow. However, further highlighting the concerns of West Coast ports, is the fact that cargo volumes at Los Angeles are falling at a far greater rate than at other ports across the nation. This suggests that rather than broad sectoral problems, this issue is specific to the port and the industrial action.

It is thought that during the months-long dispute (where work essentially ground to a halt), many firms made alternate arrangements and instead shipped into Mexico, Canada or ports on the US east coast.

It will likely take some time to determine exactly where the chips will fall in this matter. Major importers will be reluctant to walk away from the huge infrastructure and warehousing investments they’ve made near the Port of Los Angeles and will likely return to shipping goods through the port. However, the many small and medium sized firms that established alternate shipping routes to deal with the delays brought on by industrial action may be less inclined to return to the port.

Supply Chain Disruption – When Rockets Blow Up

Stick a rocket up your supply chain…

Exploding rockets in your supply chain

When we talk about supply chains, we often discuss the ‘critical path’. The term is used to give firms an understanding of the earliest and latest a certain activity can take place without having an impact on a projects overall timeline. It is also used to point out areas of importance and concern within a supply chain.

Earlier this week, Inmarsat, a British provider of global satellite communications, saw a significant issue reoccur on its critical path. The rockets the firm uses to deliver its satellites into space keep blowing up!

On Monday, the firm was forced to announce a further delay to the launch of a third satellite for its global broadband service, Global Xpress, (designed to provide high speed broadband to users at sea, in the air, and in remote regions). The delay was due to an ongoing investigation into a Russian supplier that provides the firm with the rockets used to put its satellites into orbit.

The supplier has faced numerous issues with its 53m tall Proton-M rocket in the last five years. The most recent of which occurred last week when a Proton-M rocket (the same model used by Inmarsat), carrying a Mexican satellite, exploded shortly (eight minutes) after take off. Fortunately, the explosion took place at an altitude where any debris was burnt off before returning to earth.

This is the third time Inmarsat has faced delays due to issues with Russian rockets. In 2013 the second satellite in the program was delayed after a similar explosion cast doubt over the mission.

The recent issues have forced the Russian Space Agency to postpone all activities until a full investigation has been carried out. As suggested by Inmarsat CEO, Rupert Pearce, these investigations could take some time and will have a significant impact on when the Global Xpress programme can resume.

“This is the third time our Global Xpress programme has suffered launch delays because of Proton launch failures. Although in the past, Proton has returned to flight within a few months of a launch failure, it will not be possible to determine the length of the delay in the launch of I-5 F3 until the cause of the Centenario launch failure is established. Customers are understandably anxious to see the delivery of GX services on a global basis, and as soon as we have sufficient information to ascertain the new launch date for I-5 F3, we will make the information public, as well as comment further on the impact of the delayed launch of I-5 F3.” He said.

The issues and delays caused by the faulty rockets have caused the organisation’s share price to slip and no doubt are causing significant headaches for the company’s operational team.

The challenges holding back true collaborative working in enterprise

Challenges must be overcome before true collaborative working becomes a reality in the enterprise

There is a growing awareness in the enterprise that collaborative working could deliver business benefits such as greater agility and reduced time to market. But there are challenges that first need to be overcome, and the first concerns what we really mean by collaborative working…

Facebook inside your business is not the answer. And neither is Yammer or any other Enterprise Social Network. They have their place in certain use cases, but they were not built to change how we work; just offer an alternative communication channel. To change how we work in the enterprise today is a far more challenging subject to tackle.

Change Managers are hampered by the fact that for the last 25 years, workers have been conditioned to working on a desktop PC; a pre-internet invention. The desktop and its attendant file and folder based working approach actively prevent collaboration, as content authoring is done in a silo before the secondary act of sharing occurs.

The second big issue to consider concerns organisational structure and the relationship desktop working has with it.

Teams within an organisation are tasked with specific remits and outputs, but they are also part of the same common goal; the company output. Often referred to as the Critical Path, the process of coordinating different teams’ activities to deliver company output reliably and on time can be a fraught process as, too often, one team doesn’t know what another is doing. This lack of visibility, despite ongoing efforts to restructure team reporting, can be traced to a body of critical work being authored in silos, with no obvious way of sharing in real time changes in plans and processes that often occur in day to day business.

Start with selfishness

In order for the promise of “collaboration” to be delivered on, it needs to be clear what specific collaborative processes need to be introduced and for whom. How can we recreate a sense of ‘synchronicity’ for businesses that have teams in different offices, often spread across multiple sites, and maybe even different countries?

It is not enough for just one team to introduce a collaborative working platform; the whole business needs to be networked in order to work synchronously and deliver on an optimum Critical Path. In order to create this ‘network effect’ businesses need to appeal to their employees’ most selfish instincts.

Before they change their behaviour, most individuals will want to know what’s in it for them – so businesses need to promote the benefits of collaborative working not just for the group, but for each employee. Start by showing how these new tools can make each person’s workload easier, for example, and how it can support their learning and development. More effective collaboration will also make them more productive and showcase their personal successes more clearly.

Forget about the file

The modern workplace also needs to reflect the world it operates in. Internet connectivity and speed have improved significantly in recent years, paving the way for on-demand content services and cloud storage. Firms like Spotify and Netflix have already smashed Apple’s iTunes dominance of the music and film market by negating the need to download a file before playing it. You just stream it when you want it.

We have this reality in our personal lives, and as a result, employees are starting to expect an application to deliver their work directly to the audience that needs to see and interact with it. Imagine if you had to write a Facebook update, upload it, notify people that it is available and then send them a link to go and read it – who would bother? Today’s workers want to work within a ‘followable’ environment that enables seamless, real-time information sharing automatically.

Share actions, not words

Businesses need to appreciate that collaboration is a behaviour, but one that struggles to work well with the wrong tools. Teams working within the same business are completely dependent on each other, and ‘cc’ emails, file sharing and social network postings are all blunt tools for keeping everyone up to date on what has been done and, more importantly, what needs to be done.

These forms of communication can lead to information overload via cc’ing, version control confusion through file sharing and channel fatigue through another social network. As a result some employees are left out of the loop and others buried under a deluge of information they don’t actually need to see. The next step along this inefficient path is then the ‘team meeting’, which tends to focus on what teams have been doing, rather than what they are doing or need to do.

Effective collaborative working removes communication lag and enables teams to see what is happening right now. It also has the knock-on effect of making it much easier to measure performance of teams across the enterprise. After all, it’s nearly impossible to measure productivity and effectiveness accurately when work is only being shared after it is completed. By comparison, if work is being measured and evaluated in real-time, within a cloud-base working environment, it is very easy to gain useful and actionable business intelligence.

The main benefit of this approach, however, is that more work actually gets done, instead of just being talked about. By having immediate access to different teams’ knowledge, work and progress, it is possible to create a truly dynamic working environment on a global scale. Businesses that are ready, willing and able to adopt this enlightened approach to collaboration will therefore continue to grow and flourish in the years ahead. Alternatively, you could just post an update about this article to your Enterprise Social Network.

The article was written exclusively for Procurious by Tristan Rogers, CEO of Concrete, the global enterprise collaboration platform used by retailers including J Crew, Gap, Kate Spade, Tesco F&F, George and Marks & Spencer.