Readers may have been blasted from various media sources by a recent press release from IBM announcing its new Carbon Tradeoff Modeler, which IBM claims will help companies analyze tradeoffs of key supply chain business strategies and manage the consequent overall climate impact of said decisions on their supply chains.  This tool was jointly developed by IBM Research and the Global Business Services group, and provides a combination of software analysis as well as a five step services assessment from IBM Services.

This author had the opportunity to also review a linked White Paper authored by the IBM Institute for Business Value, entitled “Mastering Carbon Management.”  This paper can be downloaded here. What caught my interest was the following quote: “The trade-offs in the supply chain are no longer just about cost, service, and quality- but cost, service, quality and carbon. By incorporating carbon reduction into their overall SCM strategy, companies can help reduce their environmental emissions footprint, strengthen their brand image and develop competitive advantage…. Reducing the supply chain’s carbon footprint will become an inescapable obligation”

The fact that IBM has now endorsed the need for green supply chain analysis and strategy should not go unnoticed.  As pointed out in our April post- Implementing the Green Supply Chain- Highlights from the MIT Forum for Supply Chain Innovation, green supply chain strategy development makes sense from an overall business perspective, but the vast majority of companies are in the early stages of their strategy development.  In this authors view, while previous announcements from various best-of-breed or point solution technology vendors have cited this emerging need, this recent announcement from “Big Blue” is an endorsement of the longer-term magnitude.

In addition to IBM, supply chain technology vendors ILOG- LogicTools Applications Suite, LLamasoft, and Infor have also announced carbon footprint analysis and tradeoff tools.

Bob Ferrari

About a month ago, I penned a post regarding Boeing and the ongoing lessons on managing risk across a rather complex global supply chain.    We pointed out the importance for adopting the appropriate management processes to monitor and buffer complex risk across the global supplier network, as well as some evidence of different views among Boeing senior management.

It was therefore interesting to note through both recent postings at the Chicago Tribune online, as well as an article in the Wall Street Journal Online (subscription required), that Boeing senior management has publicly acknowledged the importance of proper alignment in supply chain strategy. “We should be managing the supply chain as if corporate borders do not exist”, indicated CEO James McNerney, “we still believe that the global supply chain model is the way to do this.  We just didn’t get it right the first time.”

As pointed out in our original post on this topic, Airbus was able to move on from its near fatal supply chain issues when its CEO acknowledged that blame was not cast on any one group, that the problem was acknowledged with transparent communications, and would be resolved in a supplier team focused  environment. This author trusted that Boeing and its supplier teams would address their risk challenge in a similar positive manner.  Supply Chain Matters applauds Boeing CEO McNerney and other senior managers in now taking this series of positive steps.

Bob Ferrari

Under the sponsorship of the Global Supply Chain Professional Development Committee, a task team within the Supply Chain Operations Council (SCOR),  AMR Research recently produced a very interesting research report (Supply Chain Talent: State of the Discipline), which outlines a growing skills gap across global supply chains.  This report is yet another indicator that a growing number of companies recognize that the increasing complexity of business needs, complexity, and risks associated with the move toward extended global supply chains has created an overall skills gap. You can download this report from the resource center site of Supply Chain Management Review located here.

This research report summarizes survey responses of 198 organizations spanning 15 industries, and included organizations belonging to SCOR.  In the spirit of full-disclosure, this author is a member of the North America Leadership team for SCOR. 

Respondents represented upper levels of organization with 76% at director level or above.  While the report is somewhat slanted and marketed toward AMR’s supply chain research model, it does provide five important take-aways which our important to our discipline.  Also included in the report are valuable figures outlining the weighting of skill attributes required in each of the major supply chain process areas.  The two most significant report conclusions relate to organization design and the cumulative effects of globalization.

The survey responses reinforced that for the most part, supply chain organization is still stovepipe centric, with few companies including important areas of manufacturing and new product development within the definition and span of control of supply chain, which many leading innovating companies currently do. This is rather surprising, since so much of manufacturing is being outsourced today, and by default, is falling under the purview of either the procurement or strategic sourcing group.  As reinforcement, Supply Chain Matters readers may have read a recent announcement from troubled automaker Ford indicating that it will merge global purchasing with product development.  “Better alignment of our resources not only helps Ford- it will also improve the way we do business with our global supply base by simplifying our sourcing process” indicates Ford’s group vice-president of purchasing, Tony Brown.

The report findings also point to the fact that a general flattening and global broadening of supply chain organizations, and a trend toward centralized supply chain structures, has accelerated the need for a more extensive set of complex skills and competencies.    The impact of flattening implies a need for much broader sets of skills, with less time for an organization to train and develop talent.  Companies must now look to external entities such as universities, certification mechanisms such as APICS CSCP, or other training mechanisms to fill-in the widening gap of skills.

Bob Ferrari

Bob Ferrari is the Managing Director for the Ferrari Consulting and Research Group, a global supply chain consultancy for manufacturing, retail, and technology companies. Bob can be contacted at bob.ferrari@theferrarigroup.com.

Supply Chain Matters has had multiple posts since February regarding the incident of contaminated supplies of the drug Heparin being shipped to the U.S. from China.  In insuring due diligence, we highlight in this post the latest update from the U.S. Food and Drug Administration (FDA) as reported today in an AP story.

“We have put in place processes that we believe can ensure the safety of the heparin supply within the United States” declared U.S. Health and Human Services secretary Mike Leavitt in an interview on Monday in Shanghai.  ‘What you will see from the United States is a substantial change in our strategy” noting plans to station FDA inspectors in China and other countries. Mr. Leavitt however further cautioned “we believe the system that we have for ensuring safety is a good one but completely inadequate for the future”.

As commented in our Drug Imports from China- Controls Are Mandatory, as well as Drug Imports From China- a Wider Problem posts, this again reiterates that regulatory agencies are ill equipped to keep-up with the pace of current outsourcing of the pharmaceutical and drug supply chain, and risk mitigation must stem from internal and external controls built within such supply chains.  Sourcing materials solely for pure cost savings, is penny wise and pound foolish in the drug manufacturing value chain.  The sourcing or procurement group, nor the U.S. FDA do not hold the sole bag for product quality, the complete value-chain, and all groups involved, collectively need to own that responsibility.

Bob Ferrari

 News of Monday’s massive earthquake that struck central China continues to filter in through various media and Internet-related news sources.  The 7.8 magnitude earthquake is considered a catastrophic event, and already initial reports indicate in excess of 9000 dead, and thousands injured. Surely more tragic numbers will follow.

The quake was located about 60 miles northwest of the city of Chengdu, in Sichuan province and an AP story indicates that 80 percent of the buildings had collapsed in Beichuan county. The city of Chengdu alone has a population of 10 million, larger that that of New York City. In 1976, China’s most deadliest earthquake in modern history killed 240,000 people.

In addition to the tragic loss of life and human injury, the overall disruption and impacts to industry supply chains will most likely present itself over the coming days and weeks.  There are already reports of a chemical plant collapse in Shifang city, sending more than 80 tons of toxic liquid ammonia leaking from that site. Power, water, telecommunications and other utilities within the quake area have all been temporarily disrupted.

Sichuan province and the area of Chengdu provide an important industrial base for China. While the area accounts for only 3.9 percent of the country’s overall GDP, it is a growing area, with aerospace, aluminum, chemicals, cutting tools, fertilizer, machinery and metallurgy presence. This area also provides a growing high technology manufacturing and semiconductor packaging area, offering high tech manufacturers a lower-cost alternative to the Shanghai coastal region. Intel has constructed a large semiconductor packaging facility, and Motorola is in this area as well.

In transportation, Chengdu serves a major rail hub with links to 12 major cities including Beijing and Shanghai. According to a report by the Xinhua news agency, China’s Ministry of Railways reported that 31 passenger trains and 149 cargo trains had been stopped because railway bridges or rail beds had been damaged or destroyed.

Stories of natural disaster for the Southeast Asia region continue at an unprecedented rate.  There were major snowstorms in China in January and February, the tragic cyclone that struck the country of Myanmar with 32,000 deaths reported thus far, and now this earthquake in China.  The overall impact to China’s and certain industry supply chains from this latest tragedy bears close scrutiny as to any effects on today’s just-in-time and lean focused supply chains.

Bob Ferrari