Setting the Agenda for Social Responsibility

I was reading an article this morning from the Seattle Times about some folks that took issue with some content that Starbucks was printing on the side of its cups. The organization said the content was too liberal and not "balanced." While I'm not going to get into a conservative versus liberal argument in this blog, the fact that the coffee conglomerate is playing a role with social issues is a step in the right direction, even though the path is filled with land mines.

With deep pockets, leading and visionary corporations have a responsibility to set the agenda not only for their industry, but also for society and social matters, including the proper retirement age, diversity in the workplace or support for a controversial organization. For example, in 1944 IBM became the first corporation to support the United Negro College Fund. Did we have to? Certainly, not. I'm sure at the time it was a very risky, but looking back IBM is proud of it because we knew then what we still know today -- leaders can afford to take these risks in order for social progress.

You may be asking yourself, what does this have to do with the supply chain? Well, doing business with suppliers all over the world has its pros and cons. While many corporations take advantage of the low costs of doing business overseas, many look the other way when it comes to finding out why those costs are so low. In some cases, the cheap wages are due to child labor or due to a lack of adequate working conditions, such as clean restrooms and air conditioning. Many countries in Asia don't have governing bodies to regulate these issues, which employees in the US and Europe take for granted. Again, this is a case when leading corporations need to step in, even if they risk offending the local policy makers.

In IBM's case, we've mandated a list of supplier conduct principles that all 33,000 suppliers must adhere to if they want to continue to do business with IBM. We feel so strongly about this that we conduct random inspections throughout the year to make sure the suppliers, as well as their suppliers, are in compliance.

A PDF of the principles can be downloaded here. List's like this are what differentiate a good company from a great one.

Blame the Supply Chain for $2 Bottled Water

My brother and I often don't see eye to eye. He is a vegan (doesn't eat anything with eyes), while as you know from my Seattle posting, I'll take some Alaskan crab legs with melted butter any day of the week. We often clash on a variety of topics such as new construction in our beloved Brooklyn, current events and most recently on the cost of bottled water. I think I won the argument, but you would never know if you asked him. He just doesn't understand why "corporate America", as he puts it, needs to charge so much for water, which is why he refuses to drink it. His case, which he based on a recent NY Times article is ounce for ounce, bottled water costs more than gas, even with the $3.00 per gallon costs we have today. Bottled water also costs 250 to 10,000 times more than tap water, creating a $46 billion industry. He views it as corporate America being a capitalist pig, while I argued that it makes good business sense. [Note: the water to gas argument is flawed, since gas is heavily taxed and water is not, but I kept this in my back pocket.]

Using my vast supply chain knowledge (well, compared to him anyway) and a few searches in Yahoo! I made my case. According to a study at Duke University called "Economies of Scale of Bottled Water" the logistics/transportation to get water from the bottling plant to the retailers is more expensive then the water itself. In fact, according to the report, for water that costs one cent per gallon, it may cost up to five cents per gallon to ship it.

So drum roll please, here is where I sealed my argument....the reality is the $2 you pay for a pint of the finest, clear beverage on Earth (besides vodka, that is) actually is for the convenience of having it where you want it and when you want it and not for the actually product. So if you want to blame anything, blame the supply chain. This is often the case in many commodity products, such as fruits and vegetables and even lumber and gravel. Logistics providers need to make a living and you can only discount freight costs so much, where else are they going to go? On a smaller scale, I told him to think about how much it would cost him in transportation costs to go to Maine for a glass of water from the Evergreen Springs?

The next time I see my brother I'll have to tell him that major cities, including Kansas City and San Francisco, have started bottling tap water. The same water Kansas City locals get for a few pennies a gallon is now being sold to them at the store by the local government for .40 cents per 20 ounce bottle. In San Fran, they are charging $1.24 for 19.9 ounces. Who is the pig now?

Visiting the Port of Seattle on my vacation

I know, I know. But I just couldn't help visiting one of the busiest ports in the US while I had the chance and it sure was worth it. To give you some basic facts, in 2004, the Port of Seattle was responsible for receiving 16 million metric tons of goods shipped by more than 1000 vessels. Not too shabby for a Port that has been around since 1911. A large portion of the 16 million is comprised of fresh seafood and who can't appreciate fresh seafood? In fact, a significant portion of the seafood that is consumed west of Chicago, Ill is from the Port of Seattle. The photo included with this post was shot by yours truly at Pikes Seafood Market a few piers down from the Port. I was happy to see security was very tight and they even offer free Wi-Fi. This is particularly important for the cruise liners and private boats that dock at the port or nearby. So the next time you are in Seattle, Baltimore or Jacksonville, be sure to check out the Ports. I think you will be pleasantly surprised to witness first hand everything that takes place to get you fresh crab legs from Alaska to your local restaurant.

New Blog Feature: RoHS Countdown Clock

At absolutely no cost to you my loyal supply chain fanatics I have added a RoHS countdown clock to this blog. If you scroll down on the right hand side you'll see it just below the archives.

What? Not familiar with RoHS? Read on... Beginning July 1, 2006 new electrical and electronic equipment sold within the European Union (EU) cannot contain lead, mercury, cadmium, hexavalent chromium, polybrominated bihenyls or poly brominated diphenyl ethers. These substances can be found in anything from computers to radios to refrigerators. Eliminating them will be no easy task. These substances must be replaced by other, presumably less hazardous substances. If you are a movie buff hexavalent chromium may ring a bell. It's the chemical that was poisoning a town in the movie Erin Brockovich (played by Julia Roberts). So this is a good thing that the EU has passed this legislation.

Supply chains will be crucial in ensuring that products comply. A company such as IBM for example has 33,000 suppliers. We need to make sure that all of them sell us RoHS compliant parts, because at the end of the day we are responsible. I recently was briefed on the process that has been put in place to elminate errors and it thankfully is fool proof.

Electronic manufacturers cannot avoid RoHS if theywant to do business in the European Union. So non-compliance is not an option. For further information click here.

Forbes Puts Logistics Front and Center

Exclusive. You read it hear first. On August 15th, Forbes Magazine is launching a supply chain logistics destination website to the business section of its Forbes.com website. Managed by supply chain pundit, Bob Malone, the site will feature original news content in both written and video formats.

You may be saying to yourself, "big deal." But actually it is. Up until recently logistics related news has been only covered in detail by the trade media, such as Inbound Logistics, Logistics Today and Logistics Management. The fact that a recognized and prestigious publication such as Forbes is dedicating some virtual real estate on the topic means that logistics is escalating in importance to business leaders -- a good sign for us all as we look to take the supply chain from the basement and into the board rooms.