Can Beer Build a Better Business?

And now that I’ve got your attention, yes SI is serious!

As per a recent article over on Inside Supply Management (ISM) on “Brewing a Better Future”, Heineken plans to Improve, Empower, and Make an Impact! As part of its three-part strategic initiative, Heineken plans to increase partnerships, source local, and, most importantly, reduce CO2 emissions and water consumption.

With respect to CO2 emissions and water consumption, Heineken plans to:

  • reduce emissions by 40% in its breweries,
  • reduce and track emissions throughout the value chain,
  • implement the concept of a CO2 neutral brewery in at least three sites (by 2015), and
  • reduce water usage by 20%.

That’s one heck of a sustainability initiative, especially for a brewery where water consumption can be as much as 8 cubic meters per cubic meter of beer produced and where CO2 production can be as much as 10 kg per hecto-liter. If it succeeds, the improvements will be very significant, with over a liter of water being saved per liter of beer (as consumption will be reduced from 5.1 to 3.7) and kgs of CO2 emissions disappearing per hecto-liter (as output will decrease from 10.4 kg/hl in 2008 to 6.4 kg/hl in 2020).

If Heineken succeeds, the innovations that it will introduce could revolutionize not only the brewing industry, but the food and beverage industry as a whole. Let’s all hope that they manage to brew a better business (without sacrificing the quality of the beer, of course).

To Get The Most Out Of Supplier Reports, Read Between the Lines

SIG recently ran a good article on Getting the Most out of Supplier Reports (that now appears to be hidden behind a registration/membership wall in their newly redesigned site) that made some good points. Many suppliers are just beginning their reporting journey, and don’t always know what is important or what the customer really wants. Plus, and this is even more important, if a supplier is really doing poor in one area, it may not want you to know, especially if renewal time is coming up.

So how do you get the most out of the reports?

First, go beyond the facts. As the article notes, the reports should include quantitative and qualitative information. Have the supplier go beyond just spend, on time delivery, and other hard metrics and include customer service ratings, quality reviews, and overall compliance levels. The supplier might be hitting the cost targets, delivery times, or resolution times, but your internal stakeholders, the customers, might be extremely unhappy with the supplier.

Then, and this is SI’s advice, pick a couple of metrics that are poor and a couple of metrics that are good and dig, dig, dig. For example, let’s say on time delivery is poor. Find out why. When the supplier says that the production rate is 80% of predicted throughput, don’t just say to speed up, dig. Is it labor issues? Is the supplier short-handed? Is it mechanical issues? Does key equipment keep breaking down? Is it supply? Is a second tier supplier repeatedly late? Don’t stop until you find the root cause and make sure it gets appropriately addressed. Then choose a good metric. For example, let’s say the supplier hit the savings target. Why? Every cost has components, and where a supplier is concerned, there will be supply costs, labour costs, and overhead costs. Make sure you understand which costs were reduced and to what degree. There might still be gold in the veins. For example, let’s say that supply costs dropped 10%. If market costs dropped 12%, then the supplier might not have done anything! If the supplier was supposed to reduce supply costs and overhead costs, and leaves one cost untouched, the supplier can still do better.

But don’t stop there. As the article indicates, make sure you have the supplier compare its performance serving you to its average performance serving other customers. This will help you identify metrics that you need to monitor for improvement.

And audit. (But not too often.) This will allow you to maintain control and give you more insight into the supplier’s performance. (However, if done too often, will be too time-consuming, instill angst in the supplier, and not produce any results if no issues are found.)

Doing this will allow you to read between the lines and extract true value from your supplier reports.

CASSH starts with Canada!

Wall Street is about to go gonzo again and you can …

Blame Canada! Blame Canada!

With all our beady little eyes
And flapping heads so full of lies

Blame Canada! Blame Canada!

Time to form a full assault
It’s all Canada’s fault!

Yes, it’s all our fault. Because of our strong risk aversion and sound fiscal and financial management policies (with the exception of any policy Harper wants to implement), we are emerging from the global financial crisis in a comparatively healthy state. We don’t have a fiscal cliff, a systemic debt crisis, grossly unbalanced budgets or high levels of unemployment. We tend to make good policy decisions (with the aforementioned example) and, as per this recent article on CNN, we have hidden value.

And, like the other CASSH countries (Australia, Singapore, Switzerland, and Hong Kong), we’re looking at a 3% increase in GDP in 2013, compared to the 2% expected in the United States and Japan and the 1% in the EuroZone. We’re becoming the GDP leaders of the developed world! We’re stealing your thunder! (That’s right, you’ve been ThunderStruck.)

So what does this mean? For those of you South of the border, it’s time to take a closer look at your northern neighbour for investments of all kinds. Need a new R&D lab? Put it here! (And maybe even save some tax dollars while you’re at it. You can save Millions in taxes with SR&ED if you qualify, for example.) Need a new high tech manufacturing facility? Put it here! (And in addition to our productivity gains, take advantage of our highly educated workforce – our University completion rate is over 25%, meaning over 1/4th of the population between 25 and 64 has a degree.) Need a new corporate headquarters? Put it here! (Our banks won’t go bankrupt and take your cash with them!)

And, again, you can:

Blame Canada! Blame Canada!
It seems that everything’s gone wrong
Since Canada came along

Blame Canada!
Blame Canada!
We’re not even a real country anyway

:-;

Wrong on So Many Levels

Editor’s Note: Today’s guest post is from Dick Locke. Dick, who has delivered seminars to over 100 companies across the globe, is a seasoned expert on International Sourcing and Procurement who wrote the book. (Check out his archived posts.)

The fire that killed 112 Bangladeshi garment workers has brought out some appalling purchasing practices that seem rampant in the garment industry. And this is the second such fire in three months. The previous fire killed more than 300 people in Pakistan.
The New York Times has had several articles on the issue. Here are some quotes. This picture is wrong on so many levels.

From one article:

“… mounds of flammable yarn and fabric were illegally stored on the ground floor near electrical generators. Had the fabric been stored in an enclosed, fireproof room, as required by law, the fire could have been contained and the workers could have escaped.”

“After the fire, Walmart, Sears and other retailers made the same startling admission: They say they did not know that Tazreen Fashions was making their clothing.”

“Much of the factory’s business came through opaque networks of subcontracts with suppliers or local buying houses.”

“The factory’s owner, Delowar Hossain, said his managers arranged work through local middlemen. ‘We don’t know the buyers’, Mr. Hossain said in an interview. ‘The local man is important. The buyer – I don’t care’.”

“The Bangladeshi government has started inspecting the country’s 4,500 garment factories; it has already found fire code violations in almost a third of the hundreds it has examined.”

From another article:

“Sridevi Kalavakolanu, a Walmart director of ethical sourcing, along with an official from another major apparel retailer, noted that the proposed improvements in electrical and fire safety would involve as many as 4,500 factories and would be ‘in most cases’ a ‘very extensive and costly modification’.

‘It is not financially feasible for the brands to make such investments’, the minutes said”.

Folks, this is so basic. You need to know your suppliers personally, wherever in the world they may be. You also need to know where your products are being built. It’s time to bring garment purchasing into the modern world. If you can’t afford to have your own people in the suppliers’ country, you can’t afford to buy there.

Thanks, Dick. (Global Supply Training)