Category Archives: Risk Management

And the Siemens Bribery Scandal Continues

Siemens, who just a few years ago was found guilty of serious bribery and fraud under the FCPA and who was required to to pay a record $800M in fines and disgorgement of profits, is facing legal action again. Already found guilty of fraud that spanned at least half a dozen countries, including Germany, Italy, US, UK, Switzerland, Russia, and Nigeria, and dozens of subsidiaries, Siemens is now facing legal action in Greece after an 11-month parliamentary investigation that estimated the cost to Greek taxpayers of the alleged bribery at 2 Billion Euros.

The bribery, which allegedly took place between 1997 and 2002, and which affected contracts and security prior to the 2004 Athens Olympics, included bribing of Ministers. According to this article from BBC News, a former Transport Minister told the investigating committee that he had accepted the equivalent of 100,000 Euros in 1998.

It just goes to show the importance of having an FCPA Compliance Strategy in place.

Do You Know Just How Risky Your Supply Chain Is?

Or that even seemingly unrelated natural disasters can put it on hold? Or that it’s not just unpredictable disasters, like the eruption of Eyjafjallajokull that can bring things to a halt? Even completely predictable events like floods, which occur fairly regularly in most regions over the course of decades, can have devastating effects well beyond the coastal areas.

Consider the recent flooding in Australia’s Queensland slate. It did more than just make coastal areas unusable. It also resulted in significantly increased coal output. BHP, the world’s biggest producer, minded most of its coal products in Australia’s Queensland’s Bowen Basin from three of the world’s largest coking coal mines — Goonyella Riverside, Blackwater and Peak Downs. As a result of the flooding, all three mines were temporarily out of commission and mining is still constrained. This has caused BHPs production of coal to fall 30%. All because of a little extra water. This is not something that would come to mind if you asked an average organization about its supply chain risks.

So do you know just how risky your supply chain is? If not, maybe it’s time you did an assessment.

Is the Dreamliner Just a Dream?

I used to think vapourware was unique to IT. But after hearing that the Dreamliner, which was originally scheduled to ship back in May 2008, has been delayed yet again, I am beginning to think that Boeing has found a way to effectively translate the concept into aviation. Yes they have planes, and yes some of them fly, but they never seem to work. At this point I am starting to wonder if they are anything more than 767s with a new outer shell and a few cosmetic upgrades to the interior. If movie sets can recreate entire towns with nothing more than drywall and a few 2×4’s and pull the wool over our eyes everyday, why can’t aviation companies?

I guess we just wait for the next analysis of the continuing fiasco from Bob:

or Doug:

  • Aircraft Materials’ Battle Heats Up
  • Boeing Develops Technologies to Recycle Carbon Fibers
  • Boeing Races to Redesign Weight Out of Dreamliner 787

Always Remember That Only Your Supply Disruptions Will Be Remembered

As proof, consider the top 50 news stories of 2010. While most of the big stories were related to the economy, election, and terror (because the three major news networks that reach over 3/4s of the US population love to promote terror), the 3rd biggest story of 2010 was the BP Oil Spill (that will still be talked about in decades to come just like the Exxon Valdez oil spill is still talked about today) and the 10th biggest story of 2010 was the Toyota (Gas Pedal) Recall that affected most of the Toyota Vehicle Line-Up, including the Avalon, Camry, Corolla, ES 350, Highlander, IS 250, IS 350, Lexus, Matrix, Prius, RAV4, Sequoia, Tacoma, Tundra, and Venza. While the recall may have been limited to components manufactured by one supplier, it had devastating effects across the Toyota line.

In comparison, not one of the top 50 new stories revolved around a supply chain success. In fact, only the continued debate on the economy and the Toyota recall revolved around business. The majority of the top stories revolved around politics (28), and the rest were rather evenly split between bad news (7), natural disasters (6), and culture (7). The media doesn’t care about your success, only your failures. Make this the year your organization gets those risk management systems and processes in place so that it doesn’t end up being the top news story of 2011.

Another Reason to Be Wary of Outsourcing

As per this recent article in Industry Week on how the “New CPSC Complaint Database Is Trap for the Unwary”, as of March 2011, the US is going to have a searchable electronic database of consumer complaints, implemented by the Consumer Product Safety Commission (CPSC). In a mere four months, instead of having to file a request to the CPSC for the release of documents and wait for the results of a manual search, a consumer will be able to go online and do their own search at any time — and retrieve all complaints that are over 10 days old unless the manufacturer has proven (and the CPSC agrees) that the reports are inaccurate.

However, instead of having 15 days to review a complaint, a company will now have as little as 5 days (as the CPSC will have 5 days to forward a complaint to the manufacturer) to review a complaint and, whereas before the CPSC would not release the documents until the manufacturer’s response was reviewed (provided the response was provided by the deadline), the CPSC is now required to release all complaints after 10 days, whether the manufacturer’s response has been reviewed or not.

As per the article:


[I]ncorrect reports are likely to be included in the database and available to consumers, reporters or advocacy groups. … [T]he CPSC could perform compilations that may lead it to believe that a substantial hazard is presented by your product. Finally, plaintiff’s attorneys will use these complaints to prepare class action petitions, which will require significant resources to derail or defeat.

In other words, if a product that you manufacture fails, you could be in serious trouble … even if you outsourced the manufacturing to a contract manufacturer. It’s yet another reason to be wary of outsourcing, because if your contract manufacturer doesn’t enforce strict quality control, and the product fails, not only will everyone be able to find out each and every complaint 10 days after it is filed, but every class action lawyer in the country looking to make a quick buck will be automatically compiling evidence against you!

Maybe it’s time to bring (some of) your core supply chain back in house?

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