From the Desk of the President

Global Sourcing Council’s 3 S Awards are taking place later this month and we are very excited about it. The 3 S Awards stands for Sustainable, Socially Responsible Sourcing.

The Rockefeller Foundation and Microsoft, the two main sponsors to this great event, are both undertaking substantial global projects that affect the lives of millions of people in many ways.

The sustainability of these projects is very important.  People often ask me, how you link global sustainability to projects?  Most people believe that projects are have limited or fixed life-cycle. I agree as projects are defined that way, PMI defines projects as “a project is a temporary endeavor undertaken to create a unique product, service or result” (*PMBOK Ch. 1.) With this definition most people think that projects are not supposed to be inclined to sustainability, instead projects should be focused to their deliverables and duration.  But I am passionate about both areas, i.e. Sustainability and Project Management.

Let’s look at Sustainability and Project Management in the table below**

Functionality

Sustainability

Projects

Terms/Time Line Long Term Oriented Short Term Oriented
Sponsors/ Users Current and Future Generations Stakeholders with Narrow Base
Deliverable Life Cycle Oriented Result oriented
Constraints People, Planet & Profit Scope, Time & Cost
Complexities Increasing and challenging Reducing and manageable
Decision Making Top Down Consensus or bottom up
Decision Making Precautionary Fact Based
Decision Making Systematic, Ecosystems Linear & Mathematical
Financial Justification Triple Bottom Line NPV & IRR

By embedding sustainability into the very culture of an organization, organizations can effectively translate strategy on sustainability into projects and programs that deliver on these goals.

That power becomes even greater with the right project talent that can align the organization’s strategic goals with its sustainability efforts.  “People with the Project Management Professional (PMP)® credential already have an instinct on how to [watch out for] problems, and they are skilled at managing the inflow and outflow of resources.”

“When organisations see the systemic relationship between sustainability and the project goals, they begin to measure every decision against a set of sustainability criteria.”*

The sustainability should be on the agenda of not only Project/Program Managers but on the agenda of every CEO. This is already gaining momentum and as per study* done by Accenture in 2010 that 93 percent of CEO’s responded by saying that “successfully addressing the sustainability issues will be critical to the future success of their businesses”.  Smart organizations have long understood the business benefits of disciplined project management practices: lower costs, greater efficiencies, improved customer and stakeholder satisfaction, and greater competitive advantage. By making sustainability a required and measured part of that process, companies also deliver environmental, social and financial benefits to the business. “Sustainability has become a component of business success, and project management is one of the ways to get there*”.

Based on study of sustainability and its impact on the sustainability can be defined in our contest as below:

  • Sustainability will lead to balancing and harmonizing social, environmental and economic interests of stakeholders.
  • Sustainability will help in both short and long term.
  • Sustainability will help projects both locally and globally.
  • Sustainability will protect the capital resources.
  • Sustainability brings transparency and accountability.
  • Sustainability will bring personal values and ethics.

An example here is The Rockefeller Foundation, one of our main sponsors of 3S Awards.  They help people on different issues such as global health, climate and urbanization, and social and economic security. Projects and programs must have time lines to complete and deliver; however the deliverable or the product of the project has to be sustainable and must have a much longer life cycle then the life cycle of the project.

Another example here is the cosmetics giant Group L’Orèal, which sells its products in more than 130 countries.   Integrating biodiversity at the procurement stage fuels sustainability throughout the life cycle of new product development projects*.

So the message is:  To continue to develop and evolve we need to continue to change and be adoptive and to continue to change, we need to have sustainable projects which will lead us to our objectives and deliver the change.

With above I look forward for engaging our audience’s in more project based approach to sustainability in businesses to bring People, Planet and Profits together. □

Acknowledgements

* – Project Management Institute www.pmi.org White Paper on sustainability

** – Silvius & Shipper, The Integration of Sustainability and Project management

 

Sanjay Sharma has over twenty years of Global experience in Information Technology, Supply Chain and Project Management. Sanjay has managed backend Sourcing and Procurement operations for large organizations in Europe, Far East & Australia. He led procurement operations for a large industrial goods manufacturing organization. Sanjay has articles published in business magazines and publications on the subjects of procurement, supply chain and project management. Sanjay speaks at Conferences, Seminars and Symposiums. He works as consultant for Project Management and Global Sourcing. In addition he teaches Project Management subjects. His email contact is sanjaysrr@gmail.com.

 

The GSC 3S Award Corner:

We are approaching the Grand Finale of this year’s competition. Here are some exciting new developments from the GSC 3S Awards team, before the October 22 Awards Gala, when the 2012 winners will be announced:

The deadline for 2012 People’s Choice Award has been extended until October 17, 2012!!! 

The People’s Choice Award gives the entire global community a chance to support a project of choice. Which company deserves the name of most sustainable and socially responsible in its supply chain operations?

YOU get to determine.  VOTE NOW until Oct. 17!

 Awards Gala tickets now available for purchase!!! 

Mingle with top leaders and strategists of the global sourcing sector; enjoy a delicious dinner & cocktails, as well as entertainment; and, most importantly, meet the contestants and winners of the 2012 GSC 3S Awards competition– people who work to make the global supply chain more ethical and greener. To PURCHASE GALA TICKETS please e-mail Ava Master at ava.gsc3sawards@gscouncil.org

The Awards Gala will take place at Citi Executive Conference Center in New York .

                                    Date: Monday, October 22, 2012 5:30p.m. til 9:00p.m.

                                                            Location:  Citigroup Center

                                                            601 Lexington Ave.  4th Floor

                                                            New York, NY 10022

Randy Lewis to deliver keynote address: “No Greatness Without Goodness”!!!

Randy Lewis is senior vice president of Supply Chain and Logistics for Walgreens, America’s largest drugstore chain. He is responsible for the design and operation of Walgreens supply chain network including operations, engineering, IT systems, and inventory management. In addition to imports, Lewis overseas Walgreens’ domestic network of twenty automated distribution centers and one of the U.S.’s largest private fleets to supply its 8,000 stores throughout the U.S. and Puerto Rico.

For more information visit: www.gsc3sawards.com


Effectively Managing Vendors for Outsourcing: Scorecarding and Double-Sided Scorecarding – A Best Practices Approach

Many organizations use balanced scorecards to monitor and manage performance.

As a best practice I will discuss:

  • Applying the balanced scorecard approach,
  • Developing partnerships and use of “double-sided” scorecards,
  • Partnering ‘continuum’: contract, performance management, monitoring and control and continuous improvement,
  • Guiding principles, practicalities and parameters.

I like the rigour in collaboratively developing the criteria, assigning measurements, applying a rating scheme, performing the evaluation and having that discussion about current results and future directions that the scorecard affords.  This collaboration can result in a true partnership with your suppliers.

Have you ever heard of ‘double-sided’ scorecarding?  No, this does not mean printing a scorecard on both sides of the page!  I learned this while facilitating a senior executive roundtable on ‘IT Outsourcing’.   One executive used it as a metaphor for ‘dialogue and partnership with your suppliers’.  He said many times they experienced a drop in service level or failure to meet established metrics; it was their fault not the supplier’s.  It is important then to look at both sides of the scorecard!  This ‘joint’ or ‘partnered’ approach ensures that measurement and indeed improvement occurs.

Monitoring and control can be exercised using the scorecard. Other forms of measurement include regular reporting or periodic audits to ensure everything is on track.  There is always change happening, both internal and external so that refinements and ‘benchmarking’ enable the quality, cost, and capabilities of the goods and services bought to be aligned with your needs and market conditions.

A few principles to consider include documenting key objectives, working under mutually beneficial parameters, and balancing the interests of all, sometimes very diverse stakeholder groups.  Speaking of practicalities and parameters, it is important to ensure your principles guide you, and the scorecard itself must afford ongoing dialogue as opposed to serving as a platform for argument and dissension.  Adhering to these three Ps- Principles, Practicalities and Parameters – is most certainly a best practice!  □

The contract or agreement is the first step in the ‘partnering’ continuum: both parties must be onside; there must be clarity and protection provided to both.  Performance can be managed using scorecards, running the gamut from quarterly, to end of major event or significant ‘matter’ as is the case when dealing with legal suppliers.  Sometimes the scorecard is tied back to the contract and specific SLAs whereby remedies, penalties and rewards for performance can be applied.

 

Anne Donaldson-Page, with over 20 years of experience of sourcing products and services for organizations like Boston Consulting, BMO- Bank of Montreal, has been providing strategy and sourcing solutions as the Principal of stratAHEAD  Consulting.  In addition she is an author, writer and speaker.  Anne lives in Toronto, Canada and can be contacted at anne@stratHEAD.COM

 

Wuxi Software and Service Outsourcing Leaders Meet with Global Sourcing Council in New York

On October 3rd, 2012, the leaders of China Wuxi Software and Service Outsourcing Services visited New York and met with the Global Sourcing Council to discuss closer collaboration in the area of promoting sustainable and socially responsible sourcing. This meeting was a consequence of a longstanding collaboration between the City of Wuxi and the GSC, dating back to 2010.

The meeting took place in the Offices of Marcum LLP, which has a substantial presence in China.  Wuxi delegation, led by Ms. Xu Ruilan – Director of Wuxi International Outsourcing Service Center, consisted of industry executives, academicians, educators and city leaders.  The group came to New York after ten days in the USA, visiting, among others, the campus of Microsoft and other software industry leaders.  The visit was focused on exploring outsourcing industry development trends, understanding key challenges in talent development, learning best practices and discussing the opportunities for China, and specifically the city of Wuxi, in the new outsourcing landscape.

Wanda Lopuch, the Chair of the GSC 3sAwards and the GSC Board Director, who presented a key note at the Asia Pacific Outsourcing Conference in Wuxi in 2010, outlined the GSC program and indicated potential areas for closer collaboration in training and certification in 3s; William Bierce, the GSC Board Director, who visited Wuxi in 2011, discussed best practices which focus on social responsibility in software outsourcing.  Bharat Ramani and Dane Dickler, GSC Board Directors, participated in the meeting.

Ms Xu Ruilan summarized the discussion by emphasizing a strong desire for Wuxi to strengthen the long-standing cooperation  with GSC by actively participating in the next edition of the GSC Awards in Sustainable and Socially Responsible Sourcing,  as well as adopting best practices through 3s Certification Program.  Other initiatives, such as participation of the GSC in the Wuxi Technology and Business Services awards, were discussed in more detail.

Both sides expressed the need to continue the exchange of information and best practices to strengthen the cause of socially responsible sourcing. □

Outsourcing Social Responsibility: Lessons Learned by Apple and Nintendo

After the Wall Street Journal published its story on suicides at a Foxconn manufacturing plant in May 2010, Steve Jobs learned that his loyal followers were deeply concerned about the working conditions of workers who assemble iPhones and other branded electronic gadgets.  A few weeks later, while Steve Jobs was promoting new iPhone 3 features, Apple users demanded accountability for the Foxconn suicides.  In fact, Apple users went further and demanded accountability for the working conditions at all Apple manufacturing plants, and they demanded it very loudly. Apple has been listening.

For many years, electronic companies like HP, Intel, Motorola, Nokia, Microsoft, Dell and others argued for transparency and broader disclosure to consumers of processes and practices used in sourcing materials for production of their devices.

Over 80% of the world production of minerals commonly used in Smartphones, such as tantalum, tungsten, tin and gold has been sourced from the Democratic Republic of Congo. Profits from mining these minerals are claimed by local warlords, fueling the bloody conflict in Congo and surrounding areas. According to the International Rescue Committee, since 1998 over 5.4 million people have died as a result of this conflict. Many deaths are of children, who are forced to work in very dangerous underground mining operations.

On July 21, 2011 President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which contained a controversial section 1502(c), referred to as the Conflict Minerals provision.  The State Department and the SEC were mandated to develop specifics of the policies within a year.

Details on a months-long, highly charged debate on the Dodd-Frank Act are dramatic.  At the 11th hour of debate, the Conflict Minerals provision was inserted, requiring public companies that are manufacturers of electronic products, to implement a two stage certification system for metals used in the production of their devices: (1) an independent third-party supply chain traceability audit, and (2) reporting the result of the audit to the SEC and to the public.

The Conflict Minerals provision was a significant victory for the companies united around the principle of sourcing transparency. However, there continue to be many critics of this provision, such as Paul Griffin, a professor in the Graduate School of Management at the University of California, Davis, who argue that the audit requirements will increase the cost of electronic products and reduce competitiveness of US electronic manufacturers.

For years, watchdog organizations and some media outlets have followed electronic manufacturers and their sourcing transparency policies. One such organization, The Enough Project, has rated 24 electronic companies on their progress towards responsible sourcing of minerals. On one end of the spectrum, companies such as HP, Intel, Motorola, Nokia, Microsoft and Dell lead the pack with implementing audit and disclosure requirements voluntarily. On the other end of the spectrum, Nintendo, Sharp, Canon and Panasonic have not made any progress towards transparency in their sourcing.

On August 16th, CNN reported on the state of conflict minerals and pointed out that Nintendo received a score of 0 for its transparency practices of mineral mining. Nintendo told CNN that it “outsources the manufacture and assembly of all Nintendo products to our production partners and therefore is not directly involved in the sourcing of raw materials that are ultimately used in our products.” However, Nintendo added, “we nonetheless take our social responsibility as a global company very seriously and we expect our production partners to do the same.”

Nintendo’s attitude is a recent example of the ways in which global companies extol the virtues of responsible sourcing but fail to act in accordance. Reading between the lines, Nintendo’s policy may sound more or less like this: We, Nintendo management, outsource manufacturing to lower cost destinations so we can increase our profits and deliver the highest returns on capital to our shareholders. This is, after all, the principle of capitalism.  Profit, not values, is the goal of capitalism.

For Nike in the 1980s and Apple in 2010, values translated into consumers’ support, which in turn translated directly into the price of stock.  Therefore, values do in fact carry a tangible material value, which can greatly impact the return on capital to shareholders.  That’s why companies aggressively protect their brands, as brands represent values. This is a lesson that Nintendo has failed to learn.

Or perhaps they did, but still decided to gamble.  This author cannot help but wonder if the Nintendo policy of outsourcing social responsibility was calculated based on the fact that, unfortunately, many Nintendo consumers do not even know where Democratic Republic of Congo is, or what drives the bloody conflict there.  And for Nintendo users, unlike for Apple users, “blood phones are cool” – as expressed by numerous bloggers.

On August 22nd, the SEC voted to uphold the requirement of third-party audits and disclosure of the source of conflict minerals. Therefore, the Nintendo-style (and Sharp-style, and Canon-style) outsourcing social responsibility practice will not be sufficient, or even legal, under US law. Nintendo and other similar companies are obligated to implement the audit and report the source of conflict minerals.

Thus these values have been written into the capitalistic profit equation for the US public companies. We have now entered a new phase of outsourcing social responsibility: the phase of bringing values and social accountability into a global financial accounting systems.  Indirectly, but clearly, values are making their ways into P&L statements.  And more is to come.

Stay tuned for additional developments in the debate of outsourcing and social responsibility.  In a follow-up article, I will discuss how Apple and Foxconn, unlikely partners in accepting social responsibility, passed the outsourcing social responsibility test with impressive marks. □

Dr. Wanda Lopuch is the Past Chair of the Board of the Global Sourcing Council as well as leading MDA Associates, Inc., a consulting organization focusing on “greening” global operations and their supply chains while improving economic outcomes of businesses in the life sciences, IT, FMCG and financial sectors. Prior to joining MDA Associates Inc., Ms. Lopuch was the president of Medical Data Management Inc., the company she founded and grew into a multi-million dollar business with locations in seven countries. After the successful acquisition of Medical Data Management by Dendrite International, Wanda served as the Vice President and General Manager of Dendrite Central and Eastern Europe. Ms. Lopuch holds a Ph.D. in Administration and Supervision from Marquette University, Milwaukee, WI, and an MS in Computer Sciences from the Wroclaw University of Technology, Wroclaw, Poland.  She may be contacted at wanda@lopuch.com