The New York Times ran an article last weekend called How the US Lost out on iPhone work that has been making the rounds on supply chain and general business blogs. It offers a great look at the level of flexibility, responsiveness, and technical expertise that certain companies in China can bring to the table for a client like Apple. My favorite part of the article tells a story about a meeting in 2007 where Steve Jobs expressed frustration over the scratches on his plastic-screened iPhone prototype and demanded his team rebuild the device with a glass screen. According to the article he said, “I want a glass screen, and I want it perfect in six weeks.” The article continues, “After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.” The article offers a number of additional examples of flexibility and responsiveness found in Chinese operations.
People who have experience outsourcing work to companies in China have known for a long time that the benefits of doing so go far beyond labor costs. And people who have experience working around the world will no doubt have experienced regional differences in flexibility. I think this is the most important aspect of the article and the area where companies most need to focus. As fuel prices and labor costs in China increase, certain manufacturing and supply chain activities will naturally migrate to other parts of the world. But the need for companies to be responsive, flexible, and agile will remain constant – particularly in rapidly changing markets like consumer electronics. The challenge for companies will be to drive the same culture of flexibility that Chinese companies have embraced in their operations around the world.
What is your company doing to become (or remain) flexible and responsive to rapidly changing client needs?
This post, written by Robert J. Bowman, originally appeared in the SupplyChainBrain THINK TANK blog and is reposted with permission from SupplyChainBrain.
It’s easy for a top executive who’s concerned about corporate image to profess a solid commitment to sustainability. When it comes to gauging actual progress toward that goal, however, the reality is one of mixed messages.
A study by Accenture, released in the spring of 2011, highlights the dilemma. The firm reached out to 247 C-suite executives in the U.S., U.K. and China. Ninety-three percent said they had sustainability initiatives in place. Seventy-two percent declared that the benefits from those efforts – in the form of enhanced corporate reputation and trust, lower cost and improved brands – had exceeded expectations. And 68 percent viewed sustainability as an integral part of their business.
Seems like a pretty encouraging picture, but being a glass-half-empty kind of guy, I need to point out that a solid one-third of respondents to the Accenture survey saw sustainability as peripheral to their operations. Slightly more, 34 percent, considered it more of a cost than an investment, and 28 percent believed their companies were already spending too much in that area.
In fact, cost continues to be the biggest barrier to achieving corporate sustainability, as specified by 41 percent of the respondents. Other obstacles cited included an inability to measure the results of sustainability initiatives (31 percent), lack of government incentives (30 percent), and a belief that one company can’t make much of a difference in the effort to combat global warming (29 percent).
Turn now to a more positive study, this one by BSR, a global network of more than 250 businesses dedicated to implementing corporate policies that promote sustainability, accountability and human rights. Conducted in tandem with the research consultancy GlobeScan, the survey polled 498 executives from more two-thirds of BSR’s member companies. Eighty-four percent said they were optimistic that global businesses would embrace sustainability and corporate social responsibility as part of their core strategies within the next five years.
Commented BSR president and chief executive officer Aron Cramer: “Recession or not, it seems very clear that companies are maintaining if not extending their commitments to sustainability.” Positive signs include the rise of the chief sustainability officer and increasing attention being paid to the topic by corporate boards. Speaking at a press conference at BSR’s annual conference in San Francisco, Cramer said companies are realizing that sustainability has intrinsic value. They are coming to see it as “one way to future-proof their strategies.”
I’ll buy that to an extent, while noting the self-selecting nature of a group of companies already devoted to achieving sustainability by way of membership in the same organization that’s polling their interest in that very subject. And BSR’s portrait wasn’t all roses. It identified a serious shortfall in efforts to integrate sustainability into core business functions.
More than two-thirds of respondents said their corporate communications and public affairs departments were the most engaged functions in sustainability and CSR. (No surprise there – what else are corporate communications and public affairs for? Can you say “greenwashing”?) But the numbers slide precipitously when it comes to areas such as marketing (42 percent), research and development (41 percent), human resources (37 percent) and finance (18 percent). In fact, the biggest surprise to the 2011 study’s authors was “the level of engagement of sustainability across the enterprise and how little connectivity there is,” said GlobeScan senior vice president Chris Coulter. “The disconnection is really a challenge.”
Former Vice President Al Gore, now the world’s most high-profile cheerleader in the fight to reverse global warming, was the BSR conference’s keynote speaker. He said efforts by CEOs to integrate sustainability into their operations have become “a global movement.” At the same time, he acknowledged a persistent tendency by companies to focus on the short term. Investors are the chief culprits, pressuring businesses to show ever-rising profits on a quarter-to-quarter basis. Such a mentality, Gore said, “is a terribly debilitating force in the market.” Demands from the investment community supply a “constant headwind” for executives struggling to look beyond the next reporting period.
So we’re faced with plenty of good intentions, some progress and an institutional aversion to the kind of long-term thinking that is crucial to the success of any corporate sustainability effort. BSR seems to feel that this attitude is changing rather quickly. And Gore’s message was positive on balance, even though he continues to deride the kind of “magical thinking” that denies the reality of global warming.
It would appear that true progress toward sustainable supply chains won’t be made until all businesses come to see the issue not solely as one of corporate beneficence but of self-interest. Considering the positive impact of efforts such as economizing on fuel, cutting back on packaging, shortening supply lines and making better use of finite resources, that should be an easy case to make.
On January 1st, a new law took effect in California. The California Transparency in Supply Chains Act of 2010 requires any retailer or manufacturer doing business in California and with greater than $100 Million in annual revenue to train employees and publish their approach to eliminating forced labor and human trafficking in their supply chains. The effective date of this legislation comes at a time of increased interest in the social implications of how products are made and distributed. And the interest extends well beyond the industry; I have begun to see people raise this topic on social networking sites like Facebook and Twitter.
The increased focus on socially responsible supply chains is clearly a good thing. Any improvements made in this area – whether as a result of legislation, corporate action, or consumer attention – are unarguably positive. That said, I believe that many of the people outside the supply chain industry who have recently begun to take an interest in social responsibility in the supply chain would be pleased to learn what companies are doing in this area.
In order to comply with the new California law, companies have published their approach to preventing forced labor in their supply chains on their websites. (Here are examples from HP, IBM.) But for most companies (certainly including HP and IBM), a commitment to a socially responsible supply chain is nothing new. For many companies (including ModusLink and many of our clients), joining the Electronic Industry Citizenship Coalition (EICC) was one way to ensure an industry-standard approach to social responsibility. A large number of companies have adopted and published codes of conduct and comprehensive Corporate Social Responsibility (CSR) Reports (view ModusLink’s CSR report) that go well beyond the standards of the EICC. In other words, many of the world’s leading companies are leading by example.
As part of the Professional Services team at ModusLink, I am in the privileged position of collaborating with our clients and analysing the design and execution of their supply chains. This affords me access to detailed data on some of the most complex and robust supply chains in the world. I get visibility into key metrics, such as inventory turns, cost of goods sold, time to market, capacity constraints and general bottle necks and challenges in the supply chain.
While talking with clients and discussing their own supply chain metrics, I am often asked how their supply chains compare to those of our other clients similar in size, scope or industry. It can be very difficult for supply chain leaders within an organization to have insight into the supply chain metrics of other organizations, as they do not necessarily have access to detailed supply chain data either outside their business or even in the industry. The most comprehensive deep dive into the supply chain data and processes of the world’s best brands is found in the annual Gartner Supply Chain Top 25.
But one tool supply chain practitioners can use for benchmarking and business process mapping of their own organization is the SCOR® (Supply Chain Operations Reference) model. The SCOR model was conceived by the Supply Chain Council to describe business activities associated with all phases of satisfying customer demand. It integrates business process engineering, benchmarking and process measurement into a cross-functional framework.
The model encompasses the key supply chain elements of:
- Plan – Processes involved in planning
- Source – Processes involved in procuring goods and services to meet planned demand
- Make – Processes to transform product to a finished state (make to order, make to stock etc.) to meet demand
- Deliver – Processes including warehousing and distribution to meet demand
- Return – Return processes
The processes also translate into detailed metrics for the supply chain, including financial and performance metrics. These metrics can be utilized to benchmark your company’s performance against a wide variety of other companies in a range of industries.
So if you are being challenged on the effectiveness of your supply chain or are doing a review of operations, the SCOR model is a good start on this worthwhile journey.
During the past year our global blog team has shared insight on everything from the need for change in China manufacturing to supplier collaboration to Harry Potter’s perspective on supply chain. In this first post of the New Year, we would like to share with you our top five most popular posts from 2011.
- Incoterms 2010: Why You Should Care
Author: David Stonich
Originally Posted: February 28, 2011
- Increasing Complexity of Managing a Global e-Commerce Function
Author: Robert Koornneef
Originally Posted: April 8, 2011
- Your Supply Chain Challenges May Not Be as Unique as You Think
Author: Jeremiah Benge
Originally Posted: March 2, 2011
- e-Business in China: A Growing Market with Huge Opportunities
Author: Eoghan Dillon
Originally Posted: February 24, 2011
- Global e-Commerce in the Cloud
Author: Robert Koornneef
Originally Posted: September 29, 2011
What was your favorite post from last year? Please share in the comments section below.