@ Supply Chain Management

After a month of being deluged at work, I could do with a bit of warming – Will this Winter ever pass? I could do with a little bit of Global Warming right now. I’d settle for Local Warming too. Ahhhh Spring – How sweet thy sound? The title of this post is a little misleading though – I’m not warming up to Sustainability of any sort. I have no idea what it is that I’m supposed to be sustaining to begin with other than some mythical notion of some state of the world prior to the industrial age or the medieval age. Or the dark ages. Or …

For example, I, for one, would contend that it would be impossible to run out of oil as long as it is sold on the open market. Cheap oil? Sure, we could run out of cheap oil – cheap as we knew it once (there is no $10 a barrel oil available anywhere, no $40 a barrel and no $65 a barrel oil to be had). Perhaps one day in the near future, we might have $200 a barrel oil – we would still be pumping gas into our cars, I certainly don’t think that it would be half of what we do right now (assuming nothing else has changed). We’d still be driving. There is one switch that Americans hold when it comes to the price of oil – as one of the major consumers of oil. Threaten to go on a diet, get moody and pessimistic about the world at large, oil speculators fearing a top and the price of oil might just crash.

Here’s something to read from just ten years ago about how oil was viewed: Living with $10 oil

On the other hand it’s equally hard to see a sustained bounce back to $20 a barrel levels. OPEC only accounts for 40%of world production. Total stocks are high. And demand is barely growing.

Also, the temptation among cash-strapped producers to break ranks and start pumping more oil remains strong. It’s worth recalling that OPEC’s 1998 package of cuts achieved only 65% compliance.

So, being prudent, our financial planning continues to be based on the challenging assumption that Brent-based crude oil prices will average around $11 a barrel.

Today’s price of oil is about 10 times what it was less than 10 years ago. Dr. Smith contended then that demand for oil was barely moving then – demand for oil is booming today. Other than the threat of terrorism and political instability in oil producing countries, what accounts for a ten fold increase in oil prices in the face of burgeoning demand? Are we getting to Peak Oil? I think we’re about to find out soon enough. Why? As Dr. Smith points out in the article above, oil companies really didn’t want to make any investments in oil production when the price of oil was low and the profit margins to be had were slim. That is not the case right now – we’re at the threshold of determining the truth about Peak Oil.

On the other hand, did you notice that we’re not driving that much lesser either in the face of a ten fold increase in the price of oil?

Keeping with the notion of Sustainability from the previous threads – Sustainability – Solutions in search of problems and A brief background on sustainability issues, my intention was to delve a little deeper into the issue of Global Warming. I have no idea whether Global Warming is occurring or not – for the time being, let me take the word of scientists that it is happening and furthermore that human beings are causing it as well. So I pose this question to you – If you buy into the notion of global warming, what is the one thing that you should see happening (or will see happening in the years to come)?

Read the rest of this entry »

In the last post of this series – A brief background on Sustainability Issues, I tried to outline the various streams of thought flowing about the issue of Sustainability, specifically through the notion of Sustainable Development . I also touched upon a few metrics/indices surrounding sustainable development and linked to a number of reports from a select group of multinational firms as well.

However, it occurs to me that sustainable development is a response to some problem – what, in very broad strokes, problem (or problems)? Much of the discussion around sustainable development starts off without a statement of the problem and with the ready assumption that there is a problem to be solved, and therefore a series of policy visions, suitable solutions and metrics/indices are proposed. Take the following pithy summary (I’m using the summary only to broadly outline the purpose of sustainability) from the Brundtland report:

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

which is a great idea until one realizes that we don’t know what the needs of the future generations are – not in any specific sense anyway. Perhaps, we can hazard a guess about some vital ingredients of life no matter what form, where and when. Suppose we were to cut down drastically on the use of crude oil so that future generations have access to it – What use will crude oil be to a future generation that have technologies that do not even use crude oil in any form to generate power or harness mobility needs? The crucial (unstated) assumption in the above summary is technological stasis which is an idea that shouldn’t be sustained. In fact, it points to a deeper issue with the very language of sustainable development – that most proponents of sustainability miss out on the fundamental nature of technology (and its abstraction which is human creativity).

Imagine the following scenario about 150 years in the past – A B

I think that it is a necessary first step to outline the scope of what Sustainability entails. Before I begin this first rough cut exploration, let me reiterate the context of this post i.e. the first blog carnival of 2008 hosted at Sourcing Innovation by Michael Lamoureux. To that end, I reiterate my solicitation from you my readers toward contributions, comments, disagreement (mild or vehement), skepticism et al.

So, what is Sustainability? In some sense, Sustainability is a superset of a Sustainable Development, which is the most common route of foundational definition that I have come across so far. Even so, different individuals and committees (on account of their professions, persuasions etc) define it in different ways but here’s a first stab at it:

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

This definition of Sustainable development owes its elucidation to the Brundtland Report (Brundtland Commission, formally the World Commission on Environment and Development (WCED), known by the name of its Chair Gro Harlem Brundtland, convened by the United Nations in 1983).

Here is a graphic that succinctly describes the UN’s hopes concerning sustainable development. I used the word "hopes" quite deliberately because that is the reality of it.

But do take heed,

Sustainable Development is an ambiguous concept, as a wide array of views fall under its umbrella. The concept has included notions of weak sustainability, strong sustainability and deep ecology. Different conceptions also reveal a strong tension between ecocentrism and anthropocentrism. Thus, the concept remains weakly defined and contains a large amount of debate as to its precise definition.
During the last ten years, different organizations have tried to measure and monitor the proximity to what they consider sustainability by implementing what has been called sustainability metric and indices.

Nevertheless, such a concept – Sustainable Development would be a cause dead on arrival if there were no metrics/indices to track where the world at large is with respect to it. And exceeding one’s expectation, there are a host of them – some of them being (summarized from Sustainability metric and indices):

1. The "Daly Rules" – suggested are the following three operational rules (or more like guidelines)

1. Renewable resources such as fish, soil, and groundwater must be used no faster than the rate at which they regenerate.
2. Nonrenewable resources such as minerals and fossil fuels must be used no faster than renewable substitutes for them can be put into place.
3. Pollution and wastes must be emitted no faster than natural systems can absorb them, recycle them, or render them harmless.

2. The Natural Step/System Conditions of Sustainability – Within this framework, In a sustainable society, nature is not subject to systematically increasing:

1. concentrations of substances extracted from the Earth’s crust;
2. concentrations of substances produced by society;
3. degradation by physical means and, in that society. . .
4. people are not subject to conditions that systematically undermine their capacity to meet their needs.

3. Life Cycle Assessment – The resultant is a composite measure of sustainability.

It analyses the environmental performance of products and services through all phases of their life cycle: extracting and processing raw materials; manufacturing, transportation and distribution; use, re-use,maintenance; recycling, and final disposal.

4. Energy, Emergy and Sustainability Index (SI) – Emergy (Embodied energy) is defined as,

the quantity of energy required to manufacture, and supply to the point of use, a product, material or service.

Emergy Yield Ratio is Emergy of an output divided by Emergy of all inputs and Environmental Loading Ratio is purchased and nonrenewable indigenous emergy to free (or renewable) environmental emergy.

5. The World Business Council for Sustainable Development approach – Lastly, since everyone has so far been talking about how to let businesses run, how long would it be before businesses themselves got into the act.

1. Throughout the economy there are widespread untapped potential resource productivity improvements to be made to be coupled with effective design.
2. There has been a significant shift in understanding over the last three decades of what creates lasting competitiveness of a firm.
3. There is now a critical mass of enabling technologies in eco-innovations that make integrated approaches to sustainable development economically viable.
4. Since many of the costs of what economists call
   

I want to wish all of you a Happy New Year ahead – challenging and fun filled days ahead. I am sure that there are surprising things in store, "Aha" as well as "Ahem" moments – I hope we persevere through them and come out on top. Lastly, I hope we get to share them stories too!!

Again, a very Happy New Year to one and all!!

Tags: Wish you a Happy New Year!

As the new year approaches, Michael Lamoureux of Sourcing Innovation has put forth invitations for 2008’s first blog carnival – Sustainability. He writes in his invitation:

Ask any executive for their top three concerns, and I’m sure that either Sustainability, Social Corporate Responsibility, Green, Carbon FootPrint, or the Environment is likely to escape their lips. That’s why the first cross-blog series of 2008, starting on January 21, will be Sustainability.

So I’ve got to get going on that because I am sure that in a sea of sustainable orchestration, I’m going to be the out of rhythm and out of tune cymbalist – you know the kind whose jarring performance turns heads. Inappropriately, inopportune… The question really is (to continue the metaphor) – what is the rhythm at stake?

Meanwhile, I will invite my readers also for contributions which you may instruct to be posted at this site or I will forward it to Michael’s site. Draw deep my readers, drink well!

Tags: Supply Chain, Sustainability, Blog carnival, Social Corporate Responsibility, Green, Carbon Footprint, Environment

Do not buy a Dell! So says, Ernesto DiGiambattista at his site in an article that he pens. If you remember (or worse – had a Dell battery fire up on you – pun intended), Dell has caught quite a bit of flak in recent years – the golden boy of supply chain management has had its share of snafus – some of them captured on YouTube too. No longer do I have to only imagine what this era of populist digital journalism has in for us:

As you can see, the sort of publicity that the internet age creates, distributes and recycles at light speed cannot but produce severe shocks in any organization (Dell is but one organization that has been taken to the woodshed). However, Ernesto’s experience with Dell was not as smooth as it could have been:

In conclusion: Dell may have policies and procedures within their organizations but no one knows what they are!!!!! I was told by Dell Financial Services to call Dell Customer Service to call Dell Financial Services. This was the worst experience in my life in buying any product!

And neither was mine – I had a problem with my laptop keyboard (which just typed a few random letters on its own here and there – a runaway keyboard, so to speak). So I called Dell and asked them to replace it. 1 week later, my keyboard has proven itself in creating unexpected conversations and gibberish code but no replacement. I called Dell again and reminded them that my keyboard was communicating to the chat specialist at a furious pace and not I (Empirical evidence?) but managed to call them and speak to them too.

One week later, no keyboard. So, I called them again – as you can already imagine that my faith in my keyboard being an agent of transcribing faithfully my intent, thoughts and emotions to Dell personnel had waned considerably. Not my voice though – which was on the order a hundred times more exasperated as my right index finger in diligently pressing the delete key whenever my keyboard went into a digital exaration. The end result is that I got Dell to expedite another keyboard to me which arrived 2 days later. Lo and behold! – the first keyboard wound up at my company’s headquarters (despite my repeated instructions to the customer service personnel asking them to send it to my home office) and then was rerouted to me, arriving the following week.

So I can understand it full well when someone says that Dell’s customer service is beating to a different tune – I distinctly remember the erstwhile Dell ads about the clueless interns who toured various Dell stations. Perhaps, the clueless interns became fulltime employees?

The more interesting story about Dell is the return of Michael Dell to the helm, how another poster child for supply chain effectiveness and the pull model of meeting customer demand is now talking (and doing already?) about retailing through Walmart – a hybrid push-pull model? That’s a rather long article that I’ve begun working on and I hope to have that up soon enough.

Tags: SCM, Dell’s supply chain, Do not buy a Dell!, My experience with Dell customer service, Dell’s battery recall

It’s Thanksgiving today – I wish a happy day to one and all!

I happened to come across the first Thanksgiving proclamation of the Continental congress:

November 1, 1777
FORASMUCH as it is the indispensable Duty of all Men to adore the superintending Providence of Almighty God; to acknowledge with Gratitude their Obligation to him for Benefits received, and to implore such farther Blessings as they stand in Need of: And it having pleased him in his abundant Mercy, not only to continue to us the innumerable Bounties of his common Providence; but also to smile upon us in the Prosecution of a just and necessary War, for the Defense and Establishment of our unalienable Rights and Liberties; particularly in that he hath been pleased, in so great a Measure, to prosper the Means used for the Support of our Troops, and to crown our Arms with most signal success:
It is therefore recommended to the legislative or executive Powers of these UNITED STATES to set apart THURSDAY, the eighteenth Day of December next, for SOLEMN THANKSGIVING and PRAISE: That at one Time and with one Voice, the good People may express the grateful Feelings of their Hearts, and consecrate themselves to the Service of their Divine Benefactor; and that, together with their sincere Acknowledgments and Offerings, they may join the penitent Confession of their manifold Sins, whereby they had forfeited every Favor; and their humble and earnest Supplication that it may please GOD through the Merits of JESUS CHRIST, mercifully to forgive and blot them out of Remembrance; That it may please him graciously to afford his Blessing on the Governments of these States respectively, and prosper the public Council of the whole: To inspire our Commanders, both by Land and Sea, and all under them, with that Wisdom and Fortitude which may render them fit Instruments, under the Providence of Almighty GOD, to secure for these United States, the greatest of all human Blessings, INDEPENDENCE and PEACE: That it may please him, to prosper the Trade and Manufactures of the People, and the Labor of the Husbandman, that our Land may yield its Increase: To take Schools and Seminaries of Education, so necessary for cultivating the Principles of true Liberty, Virtue and Piety, under his nurturing Hand; and to prosper the Means of Religion, for the promotion and enlargement of that Kingdom, which consisteth “in Righteousness, Peace and Joy in the Holy Ghost.”
And it is further recommended, That servile Labor, and such Recreation, as, though at other Times innocent, may be unbecoming the Purpose of this Appointment, be omitted on so solemn an Occasion.

Tags: Happy Thanksgiving, 1777 Thanksgiving Proclamation