Alan Buxton of Where Next threw another post into the sustainability debate, reminding that auctions are only sustainable if used properly. Done wrong, they can force suppliers to lower their prices to such a degree that they risk being driven out of business (bad for economic stability) and incentivize suppliers to cut corners in order to deliver at such low prices (bad for social and environmental sustainability). However, as has been alluded to in the wiki-paper, reverse auctions can be used sustainably. As Alan points out, the key is to weight the different suppliers so they are competing on a genuinely level playing field and to be prepared to award the contract to a supplier who provides best overall value for money rather than simply best price.
Jon Miller of Gemba Panta Rei asks what we can learn from Boeing’s lean supply chain stumbles. Was it poor planning, poor execution, or a combination of both? Regardless, any plan that does not consider risks and allow for contingencies is not a good plan. Jon also gives us three concrete actions to a better lean supply chain strategy. Develop a mindset of mutual trust and responsibility, organize your SPTT (Supplier Parts Tracking Team), and practice the skill of genchi genbutsu (where you go on-site and be hands-on with the supplier’s team) as a way of life, even in the best of times.
Over on SCM Pulse, Rink Ankrum points out that the Carbon Disclosure Project (CDP), a collaboration of over 315 institutional investors (including Goldman Sachs, Merrill Lynch, Allianz and HSBC) with assets under management of more than $41 Trillion (with a T), is now working with some of the world’s largest companies to help them assess greenhouse gas emissions throughout their supply chain. Furthermore, the CDP SCLC (Supply Chain Leadership Collaboration) now has members that include Dell, HP, PepsiCo, P&G, Nestle, and Unilever. It’s certainly nice to see more heavyweights enter the ring.