Monthly Archives: July 2007

JLP Responsible Sourcing Part IV: Health, Safety, and Hygiene

In our last post, we discussed forced labour and the issues it entails, corresponding to section C of the report.

In today’s post, we cover section D of The John Lewis Partnership‘s “Responsible Sourcing Supplier Workbook” which tackles health, safety, and hygiene issues.

Health and safety includes fire safety, machine and chemical usage, protective equipment, sanitary facilities, adequate first aid, and health and safety training.

Key problems include:

  • varying perceptions of what is safe and what is hazardous
  • lack of information about the risks and hazards
  • health and safety conditions are likely to be worse in subcontractor facilities

These problems are significant. JLP’s research has determined that:

  • more fatalities have occurred in the workplace than during war-time: almost 270 million accidents are recorded yearly, of which 2.2 million are fatal
  • over 208 million workers suffer from work related diseases
  • in China alone, the cost of occupational illnesses and work-related injuries is 100 Billion Yuan in direct losses, with indirect losses estimated to be double that, and 727,945 work-related accidents, including 126,760 work-related deaths, were reported in 2005 with an unknown number going unreported
  • in Africa, HIV prevents approximately 2 million people from going to work at any given moment, and this number is expected to double by 2015
  • this is an area where more than 60% of all non-compliances tend to occur during social audits, despite being one of the simplest to tackle and most heavily regulated

These, and other problems, are addressed by the JLP code which states:

  • a clean, safe, and healthy workplace in compliance with all applicable laws will be maintained
  • employers must take adequate steps to prevent accidents and injuries
  • health and safety risk assessments must be carried out regularly
  • regular health and safety training is to be provided to all workers
  • appropriate personal protective equipment is to be provided, free of charge, to all workers
  • workers shall be provided with access to clean drinking water and sanitary facilities at all time
  • on-site accommodations will be clean, safe, secure, and meet all basic needs
  • transport will meet national legal standards and minimize risks to the workforce
  • in geographically isolated areas, an employer will provide support services, including schooling, medical and health facilities, and recreational facilities
  • any food, beverages, and goods offered for sale by an employer must not cost more than average local costs

In order to insure that you comply with all regulations and provide a healthy, safe, and hygienic workplace, you should, at a minimum:

  • conduct regular risk assessments on your production sites (at least annually)
  • promptly identify any-and-all risks and take immediate actions to minimize, and if possible, remove these risks
  • provide workers with appropriate personal protective equipment free of charge and insure that they wear it at all time in hazardous areas
  • insure that all workers receive regular health and safety training appropriate to their jobs
  • insure the site contains sufficient fire exits and that these are clearly marked
  • insure all production areas have sufficient fire-fighting equipment
  • insure all workers who work with hazardous materials receive regular medical check-ups
  • have a formal, documented, health and safety policy
  • have clear procedures on what to do in the event of an emergency
  • insure there are a sufficient number of properly equipped first aid boxes readily available on the production site
  • insure a sufficient number of your staff are properly trained in first aid
  • clearly document safe usage instructions, in the workers’ native language, for all machinery
  • guard all dangerous parts of machinery and maintain them regularly
  • adhere to all the guidelines of the JLP code

The workbook also contains a methodology for conducting a proper risk assessment, an overview of what constitutes an effective training session, a process for setting up a health and safety committee, and tips on how to handle the issues surrounding the use of hazardous chemicals.

In our next post, we’ll tackle the fourth major issue addressed by the workbook, the issue of discipline. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)

Summertime Blues

Well, it’s time to raise a fuss
  and it’s time to raise a holler
About diminishing returns
  from the corporate dollar
I just heard from my boss
  who governs me
If I don’t save the cash
  he’s gonna fire me

Sometimes I wonder
What I’m gonna do
If there ain’t no cure
For the summertime blues

The purchaser he told me to
  go beat on the supplier
That his margins must be high
  while ours are under the wire
So I talked to the supplier
  he said that costs were elevated
He was losing all his money
  at the rates we had created

Sometimes I wonder
What I’m gonna do
If there ain’t no cure
For the summertime blues

So I found a consultant
  told her about my problems
She discovered that
  the supplier was just stalling
Material costs were falling
  and the exchange rate was fair
I had wasted all my time
  just pulling out all my hair

Next time I have a problem
  I’ll find me a solution
I’ll find a sourcing expert
  and get my retribution

No more will I wonder
  What I’m gonna do
I’ll find me a cure
  For the summertime blues

The Cynical Sorcerer Comes Out of His Shell

Perhaps not yet ready to stop celebrating US independence, the elusive Tony Poshek, the inventor of The Puddy Principle to Strategic Sourcing, and our very own Cynical Sorcer(er), has decided to stop throwing us bloggers scraps and yesterday, for the first time, offered us a glimpse into the mind of the manic marauder with his inaugural post on Spend Matters (Paris Hiltons dog dead due to pet food from China*) that lamented the cruel fate that may yet befall the Paris’ Pup.

The post, which lamented the recent run of bad luck to befall our eastern exchange partner, whose citizens have apparently just discovered Weird Al’s 1985 hit Dare to Be Stupid and decided to add a verse or two of their own:

Put down your Mobal and listen to me
It’s time for us to join in the trade
It’s time to let our babies to grow up to be cowboys
It’s time to remove the blockade

It’s time to make diethylene glycol toothpaste
It’s time to paint our toy trains with lead
It’s time to lace pet food with melamine
It’s time to leave the gum out of the tread …

points out that as simultaneously entertaining and terrifying as the referenced stories are, the most interesting ones are the smaller stories that deal with consumers actually trying to boycott products from China, such as How one woman said ‘No’ to Chinese imports and
“U.S. family tries living without China” (Yahoo News).

All I can say is that I hope we see more posts in the future. He’s no Spend Fool (but then again, who is?), but his swift style is scandalously satirical, and that’s a breath of Chicago air we all need once and again.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Eye-For-Procurement Technology For Procurement Highlights II: John LaPorta’s Presentation

John LaPorta’s (Procurement, IBM) presentation on “It’s not just about the technology: How to accelerate procurement skills and gain a real competitive advantage” was one of the best presentations at the Technology for Procurement Forum in San Francisco, put on by EyeForProcurement last month, and my favorite.

In this presentation, John tackled a favorite topic of mine, the talent crunch and how the most severe shortage of skilled labor in history is nearly upon us. ( Now might be a good time to start getting on your leading’s blogger priority customer list, before it’s too late. ) In this presentation, he reminded us of the following frightening statistics:

  • 25% of the world’s population will reach retirement age in the next three (3) years
  • employers estimate that 39% of their current workforce and 26% of new hires will have basic skill deficiencies

In other words, you could lose a quarter of your workforce in the next few years, but with the increasing skill requirements of knowledge requirement jobs, even if you can find a replacement (which is not guaranteed in an economy where the unemployment rate has dropped below the lowest rate during the recent IT bubble), he or she is not likely to have all the skills you need.

To this end, John is recommending that you, like IBM (and you can never go wrong with IBM, right? – well, okay, you can argue that sometimes you can, but they’re right on the money this time), develop or adopt a Procurement Capability Accelerator program to teach new hires the skills they need to have in months, and not years, using tailored development and coaching programs that compress two-to-three years of experiential learning into six months through heavy use of mentoring. I know you might not think you can spare your senior employees for these large buckets of time, but just think about how much worse this problem will be when they retire and take their knowledge with them.

John notes, rightly so, that one of the keys to this approach is finding the right tools and technologies that your employees can learn and adapt to quickly as well as identifying any tools and technologies that you can use to make the learning, and specifically the e-learning, process more efficient. It’s all about the right people, processes, and technology and the key is not to overlook any one of these focal points and attack all three with the appropriate level of attention and rigor.

I know you’d rather be an ostrich and stick your head in the sand then truly contemplate the magnitude of the talent problem sneaking up on you, but the sooner you realize that the only way to tackle the problem is to act now and turn your procurement officers into performance officers, the better off you’ll be in the long run. Moreover, if you’re prepared for the coming workforce turnover, you’ll have a significant competitive advantage. While your competitors are unsuccessfully scrambling to find talent that just isn’t available, you’ll have it in place.

And remember, as Deming said, if there’s a problem on the floor, it’s management, not the people. So act now.

Informance: Manufacturing Performance Management in Disguise

Last week I re-introduced you to Aravo, a hidden gem in the supply chain space with their mastery of Supplier Information Management (SIM) that goes so far above and beyond what you get with traditional packaged e-Sourcing suites that even Oracle, one of the few companies that not only eats its own dog food and drinks its own champagne but also tries fervently to have it for every meal, and Google, one of the few powerhouse research labs left in existence thanks to the short-sighted venture craze and short-term return strategies of the last decade that saw the likes of some of the greatest labs (like Xerox Park, Bell Labs, etc) more-or-less disappear from existence, have decided to adopt the solution.

This week I’m going to introduce you to another hidden gem in the supply chain space that you might not notice otherwise – and it goes by the name of Informance (acquired by Epicor). Although I did introduce them to you back in this post in January, I doubt you took much notice as I didn’t go too much beyond the press release and web-site in my introduction as I was still struggling to understand where the true value of their solution lies.

However, thanks to a concerted effort by their new Chief Marketing Officer, the infamous Sudy Bharadwaj (who temporarily replaced Tim “Mr. Perfect” Minahan at Aberdeen before the arrival of Vance Checketts after market-making stints at MindFlow and i2), their messaging (and website) has been considerably cleaned up and clarified and their knowledge center has exploded. (Their recent series of benchmark studies, reminiscent of Sudy’s record-breaking research performance at Aberdeen of 5 studies in 7 months, is particularly enlightening as to the importance of the type of solution they offer.) After reviewing the cleaned up messaging, the new materials, and a few discussions with Sudy, I’ve finally figured out what Informance really does and how it goes beyond traditional manufacturing solutions to allow centralized operations and contract manufacturing customers to improve their distributed and outsourced manufacturing processes.

In a nutshell, even though they are currently advertising their solution as Enterprise Manufacturing Intelligence (EMI, not to be confused with the EMI Group), what they are really doing is Manufacturing Performance Management (MPM) – which could be explained as next generation Supplier Performance Management (SPM). In Supplier Performance Management (as promoted by Ariba (acquired by SAP), Emptoris (acquired by IBM and sunset in 2017), and Ketera (acquired by Deem), among others), you collect, analyze, and disseminate relevant supplier performance metrics to determine where your suppliers are performing well and where they are performing poorly. You then use this information to optimize your supply base, identify your strategic suppliers, and collaborate with them to root out identified performance issues and develop processes for improvement.

Manufacturing Performance Management (MPM) takes supplier performance management to the next level by not only identifying where performance is lacking (relative to best-in-class) at the plant level but also by providing actionable information upon which you can base performance improvements. By tapping into bi-directional information flows, what-if scenario analytic capabilities, six sigma, lean, and TPM knowledge bases, and heuristic improvement strategies, the system can not only tell you that production is down, but it can pinpoint the specific manufacturing line within the specific manufacturing plant that is not producing its fair share of units, determine the reason for the decreased production (breakdown, lack-of-inventory shutdown, labor shortage, etc), and provide you with a solution to fix the problem (increase safety stock, redesign your transportation network to prevent delays, increase staff levels, etc).

The importance of being able to go beyond identifying a problem to identifying one or more potential solutions in your manufacturing and contract manufacturing operations cannot be over-stressed. Just one of the benchmark studies I referenced above serves to highlight the drastic performance gaps between laggards and best-in-class performers. The Food and Beverage benchmark study found that best-in-class performers have 6,800% fewer process failures (0.25% vs 17%), 828% fewer equipment failures (1.69% vs 14%), and 33,333% fewer shutdowns (0.03% vs 10%). In addition, best-in-class have 10,909% fewer changeovers (0.11% vs 12%), 1,145% less operational downtime (0.96% vs 11%), and over 60,000% fewer production adjustments (0.01%, rounded up, vs 6%).

In addition to the bi-directional information flows, what-if scenario analysis, and actionable insight, Informance also offers real-time performance monitoring, proactive before-the-fact notifications, and multi-level dashboard monitoring that starts at the plant floor manager and goes all the way up to the COO. This is not to downplay their plant solution, which I’d still consider labelling EMI (Enterprise Manufacturing Intelligence), since contract manufacturers can also proactively use this solution to improve their operations and become supplier of choice to their customers, but merely to note the extent to which their enterprise solution goes beyond traditional EMI into the beginnings of true MPM. So be sure to check them out, and their expanding knowledge center in particular.