Category Archives: rants

Stop Blaming the Supplier! Melamine in the Milk is Your Fault!

Research reveals that only 6% of procurement managers and directors have ever been made aware of unethical activity in their supply chain. (Source: EY.com)

As much as we’d like to believe that only 6% of supply chains have unethical activity, given that almost 86% of North American companies have a supply chain reliance upon China alone for key parts1, that’s a pipe dream. Depending on how rigid you want your definition of ethical to be, I’d guess that the number should be closer to 60%.

So why is it your fault if your supplier does it? Simple. It’s because less than half of your organizations do any due diligence in their supply chains! Only 48% of UK firms do any due diligence at all! Even worse, 14% of respondents to the EY survey did not even know what third-party due diligence meant, for crying out loud! You have to do due diligence and you have to ask tough questions and someone who can be trusted has to do a site visit to major suppliers at some point. If you do all this, and the supplier lies through their teeth, then, while your company may still be held financially responsible, it won’t be held criminally responsible and ethically you will know you did all you could (except cut the supplier loose before they did the unethical act, but at least you can cut them loose as soon as they do).

This is why you need good supply chain visibility, document management, and CSR monitoring. There are companies that do this, including Resilinc, Integration Point, and Ecovadis. (See the Vendor Post Index or Resource Site for more.) Reach out and get these types of solutions if you don’t already have them. They will be worth it.

1 Supply Chain Disruptions, Ted Landgraf, Above the Standard Procurement Group, July 15, 2012

Will Darrell Issa Save the Post Office? Or Put Another Nail in the Coffin?

Early last week, Darrell Issa, a Representative of California and chairman of the the US House Oversight and Government Reform, signed off on H.R. 2748, the Postal Reform Act of 2013 which is designed to bring the United States Postal Service (USPS) to financial solvency with cost-cutting reforms and innovative new sources of revenue.

SI has been asking if the US Post Office can be fixed for a while now, with its most recent post on the subject last summer (Source). Given that the USPS has more debt than 50+ countries have capita, fixing it is a tall order – especially when the US needs to identify immediate savings of almost 20 Billion plus (as it keeps bleeding red with losses of 15.9 Billion in 2012 and 3.2 Billion in the first two quarters of 2013).

Key points of the plan, as summarized in this Logistics Management article, include:

  • moving from door to curbside delivery and neighbourhood boxes, which could save 4 Billion annually,
  • ensuring small and rural post offices are protected from a disproportionate number of closures,
  • creating a Chief Innovation Officer,
  • protecting existing collective bargaining agreements,
  • recalculating projected liabilities for employee pensions, and
  • offering additional relief from retiree health care benefit payments.

While SI has to say it likes the first and third options, that’s not going to be enough to generate the savings required giving that costs are going to keep rising.

SI agrees with Rob Martinez, President and CEO of Shipware Systems Corp, cited in the Logistics Management article, who noted that a comprehensive plan that addresses multiple options is required if the USPS is to become solvent again. However, SI’s approach, which differs from Mr. Martinez’s, would involve the following:

  • maximization of neighbourhood box and curbside deliveries,
  • an immediate end to Saturday mail delivery,
  • global restructuring and consolidation of postal facilities until all are at least break-even*,
  • freedom to revise operational practices to take advantage of savings identified by Procurement and new sources of revenue identified by Marketing and Innovation, and
  • freedom to enter into co-opetition agreements with the major private delivery companies to share resources and routes, for both long-haul and last-mile deliveries, in ways that save both parties money.

SI does not agree with eliminating the pension prepayment mandate, freeing up a percentage of pension funds to ensure ongoing solvency, or cutting contributions to retiree health benefits. Not sufficiently funding these payment obligations is what got the USPS, and a whole bunch of other public and private organizations, into this mess in the first place. (However, SI fully supports a careful recalculation of the unfunded liability to make sure the payments do not exceed what is required.) Plus, it’s the USPS after all. Congress, who dumbly vetoed elimination of Saturday mail delivery, isn’t going to stop lending the USPS money until they find a way out of this mess, so it’s not like the USPS has to worry about bankruptcy. The USPS has to get it right, not exacerbate the problem.

And in SI’s view, the current plan will not save the post office and may even put a nail or two into the coffin because every provision except the provision to move to neighbourhood boxes and curbside delivery is likely to increase costs in the long run.


* SI agrees that every town needs a postal facility and that anyone in a rural area should have a post office within a reasonable distance, but doesn’t agree that this means that existing facilities stay open. They may need to be reduced in capacity and change locations. For example, here in Canada, many locations are sublet in retail establishments, and drug stores in particular (which are open long hours). These micro locations can be staffed by one person and cost next to nothing.

Seventy Five Years Ago Today, The US Department of Justice Took on the Studio System …

… charging violations of the Sherman AntiTrust Act and, ten years later, won! It was a historic suit, and one we have not seen the likes of in years. In order for progress to be made, the US DoJ needs to take down the MPAA and the RIAA, or at least their lobbying arms which continually attempt to introduce acts like the the DMCA, the new Performance Rights Act, and California Senate Bill 550 which allows law enforcement to enter optical-disc plants and seize disc-stamping equipment without a court warrant. Every year the MPAA and RIAA claims of what is required for artistic creativity and expression and IP protection get more and more absurd to the point where they will soon be demanding bills like Florida HB 155 which make any computer and smartphone capable of accessing the internet illegal!

We need to end their existence now before they put an end to innovation permanently! Otherwise, we’ll be lamenting a dark and dreary future where corporations rule the world and we are all slaves to the corporate machine. (In other words, Continuum will become an accurate documentary of our future.)

O Canada! (Reprise)

O Canada!
Our home and native land!
True patriot love until Harper’s command.

With glowing eyes we still despise,
(A) Conservative in charge!

From far and wide,
O Canada, we want a change for thee.

We want our land glorious and free!
O Canada, we want a change for thee.

O Canada, we want a change for thee.

And before you say we’re being too harsh, remember that Harper and his party, among other things:

  • allow CSEC to illegally spy on Canadian citizens (Globe and Mail)
  • support the Trans Pacific Partnership and its provisions that allow Canadian citizens to be thrown in jail just for clicking on a web link (SI / Huffington Post)
  • recently legalized GM alfalfa and other dangerous GM crops in Canada (NDP)

The definition of a conservative is supposed to be someone who follows a political and social philosophy of retaining traditional social institutions, not someone who promotes the introduction of poisonous food, extreme round-the-clock Orwellian dystopian monitoring of fellow citizens, and the introduction of legislation that will allow the innocent to be punished, fined, and jailed while the guilty roam free. Whatever happened to Blackstone’s formulation, which was a view shared by the Federalists, including Benjamin Franklin and John Adams, who penned the constitution that formed the United States of America that we, Canadians, support with our heads, hearts, and, most importantly our dollar (as the USA is our largest trading partner that accounts for over 50% of our imports and almost 75% of our exports)?

I used to think that all big political parties were slow lumbering oxen that were more or less indistinguishable, each with grandiose election promises that wouldn’t be fulfilled, but not that harmful as they moved to slowly and were collectively too mired in their own deadweight to do anything truly evil. But now I know otherwise. In Canada’s case, one party has proven themselves to be truly harmful to our country and has to go.

Will the Patent Pirates finally be Plundered?

The patent pirates have been plundering for way too long. And we should all be fed up. Since SI alerted you to the problem way back in 2006, in a post on how The Software Patent Pirates will Plunder Away, inspired by a post by Dave Stephens on the now defunct Procurement Central, which evolved into “Stephen’s Business and Technology Nexus” (which, is now also defunct), not much has changed. Even though Mr. Obama declared war on the patent trolls on September 16, 2011 when he signed the Leahy-Smith America Invents Act into law, the pirates are still trolling the high seas of business in search of easy prey to pillage and loot.

To date, as covered in 2011 in SI’s post on how Patent Pirates are Still Plundering, patent trolls have cost investors over half a trillion dollars over the last 22 years (as reported in CNN Money on Sept 21, 2011). Half a Trillion Dollars. Think about that. This puts the Somali Pirates, who have figured out how to steal approximately 10 Billion a year from the shipping industry (according to the LA Times), to shame! (The patent trolls are pillaging almost 3 times as much as the Somali pirates from the safety of their penthouse suites!)

The trolls have to be stopped. They now account for approximately half of the roughly 4,000 patent cases a year in America. That’s 2,000 patent cases that are, for the most part, frivolous and unfairly extortive (as small companies cannot afford a lengthy legal battle and are forced to settle to survive). Fortunately, the Obama administration realizes that and has announced new actions and proposals for patent reform. These proposals, designed to reduce anonymity in patent litigation, improve review at the USPTO, give more protection to downstream users, and improve standards at the International Trade Commission, are definitely a step in the right direction. (SI agrees with the TLF that more is needed, but we’ll get to that later.)

Specifically, the administration is recommending the following legislation:

  • Require patentees and applicants to disclose the “Real Party-in-Interest”
  • Permit judges more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees as a sanction for abusive court filings.
  • Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).
  • Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use.
  • Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts.
  • Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public.
  • Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges.

In other words, the proposals are to:

  • Make it public as to who is filing a patent suit,
  • why the suit is being filed,
  • and allow judges to penalize abusive, frivolous, filers with big legal bills.

This is a good start, but it’s not enough. First of all, as per SI’s post on why we need a “loser pays” bill for patent lawsuits, the filer of the frivolous patent should be required to pay a penalty that is at least double the cost of the suit, including the defence’s legal fees, damages, and court costs. (If the penalty won’t hurt, they won’t stop.) Secondly, despite the objection of cash-flush giants like Apple and Microsoft, we have to follow the lead of the EU and New Zealand and abolish software patents. The vast majority are complete and utter bullshit. The one’s that aren’t contain specialized business methods that could be patented separately (just like you can patent unique physical inventions and processes for extracting medicinal compounds from natural plants). (And SI is happy to see that the Technology Liberation Front agrees with this proposal.) Software is just code that encodes algorithms in a machine language that is compiled into a binary instruction set that runs the program. This is essentially a complex mathematical formula, and mathematics, like laws of nature, is NOT supposed to be patentable. And since many of the trolls have armed their arsenal with software patents, this would be the best way to strike back.

For more information on the challenges of taming the trolls, you can start by reviewing the recent report on “Patent Assertion and U.S. Innovation” from the National Economic Council and the Council of Economic Advisors.