Archive for December, 2008

Thinking globally but sourcing locally can have positive impact on the planet.

Friday, December 5th, 2008

As the price of oil and related fossil fuel costs continue to erode, companies will go right back to sourcing more and more products from off shore instead of looking locally for similar goods. Is this necessary or good for the carbon footprint we leave?

Greenhouse gases increased by 1.4% during 2007 in the United States according to the Energy Department. This is a direct result of people using more coal, oil and natural gas during the year because of a colder winter and more electricity during a warmer summer. During 2007 the United States created eight billion tons of greenhouse gases. Carbon dioxide accounted for eighty three percent (83%) of the total according to the Energy Information Administration or EIA.

The question this begs is how much greenhouse gas were we responsible for globally that might be reduced by local sourcing. If a container ship is registered in another country we obviously do not count the emissions from the burning of fossil fuels associated with the ocean freight headed for our shores. I’m also not sure we count all of the overland freight emissions from fleets in other parts of the world delivering goods to stores owned an operated by retailers with headquarters located in the North America.

Many companies claim that greenhouse gases caused by ocean freight are one of their top contributing categories to their overall carbon footprint. It only makes sense that if retailers sourced fewer products from offshore, which in turn would decrease the amount of ocean freight required to move these products that our overall contribution of greenhouse gases would come down.

In order to support local sourcing, North American retail companies need to have a source that can tell them where suppliers within the trade zone are located by category and product. It is also important that the supplier community be able to register at such a site in order to be easily accessible to regional retailers.

A tool of this nature already which can tell retailers where there are 928 general merchandise suppliers located in Mexico, 1,585 Grocery Suppliers located in Canada, and 1,940 Pharmaceutical suppliers located in the United States. Please visit the SafeSourcing Query Tool to learn more.

We appreciate and look forward to your comments.

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Why high quality e-procurement programs require officer level sponsorship and support!

Thursday, December 4th, 2008

According to a variety of sources, the role of e- procurement continues to become more and more strategic each year. Driving cost of goods and services control is one of the most important above the line initiatives a company can undertake. Given the dramatic financial impact driven by these types of tools and the potential positive impact on earnings these initiatives should have the visisibility and oversight of senior executives.

Experience indicates that in order to successfully implement an enterprise wide e-procurement initiative, executive management must provide sponsorship and visibly promote these projects within their organizations. Executive sponsorship is required by the Chief Executive Officer, Chief Financial Officer, Chief Procurement Officer or Chief Logistics Officer. The potential impact to earnings regardless of Industry vertical are so significant with a properly deployed e-procurement program that officer level executives require visibility based on the impact to stockholders and stakeholders alike.

In fact Sarbanes-Oxley section 404 requires the following of all companies.

1. Demonstrate reasonable & consistent governance & compliance monitoring.

2. Assure proper use of tools that have been placed into practice.

3. Employ proper reporting & management oversight. Implementing e-procurement tools has the potential to offer significant earnings changes.

Once executive management has sponsored these initiatives, some form of accountability must be implemented to ensure maximum participation in order fully realize organization wide savings opportunities. A company’s successful transition to e-procurement requires a transition from a cumbersome paper RFX processes to one that focuses on using the speed and efficiency of an electronic forum. Successful change management professionals focused on sustainability realize that this shift must be a combination of the use of not only the latest software advances, but also reengineering of internal processes in order to drive sustainable results.

We appreciate and look forward to your comments

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What are e-procurement best practices? Does your company use them? Should you care?

Wednesday, December 3rd, 2008

According to Wikpedia a best practice asserts that there is a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome than any other technique, method, process, etc.

So when a company indicates to you that they use best practices, does this mean they are supporting what is the best practice for the entire industry they serve such as e- procurement. Or does it mean they are the best practices for just their product family?

This author does not believe that best practice is just following a standard way of doing things that can be carried out by multiple organizations. A best practice is a life long process that must evolve over time as tools, businesses, and existing processes change.

If one uses best practices, should not the result be an ideal state that a person or an organization set out to achieve in the first place. In fact if the process used is actually a best practice shouldn’t all of a companies customers use the same process. I’m not sure that this is ever a question one asks when looking for a referral about a companies service offerings. Please tell me about these companies’ best practices. Are they consistent and carried out each and every time to the desired result.

One way to ensure good quality results is to provide templates that can be used over and over again and are evaluated at the completion of each practice and changed when need be. This then requires passage to other customers in order to insure the integrity of the process. This elevates the actual process beyond just a buzzword and moves a particular process in the direction of becoming a best practice that drives similar results on a consistent basis.

We will continue to call our services offerings high quality process techniques focused on continuous improvement that deliver anticipated results. Our goal will continue to be to save tour customers as much money as possible in the shortest period of time possible while also improving quality and mitigating risk associted with lapses in safety . We continue to believe that is the best practice of all.

We look forward to and appreaciate your comments.

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Part II of II What should grocery product procurement professionals know and do about Melamine.

Tuesday, December 2nd, 2008

What is melamine? Melamine is a small, nitrogen-containing molecule that has a number of industrial uses and is not approved for direct addition to human or animal foods marketed in the United States.

According to the FDA, in food products other than infant formula, the FDA concludes levels of melamine and melamine-related compounds below 2.5 parts per million (ppm) do not raise health concerns. This conclusion assumes a worst case exposure scenario in which 50% of a person’s diet is contaminated at this level, and applies a 10-fold safety factor to the Tolerable Daily Intake (TDI) to account for any uncertainties. The TDI is an estimate of the maximum amount of an agent to which an individual could be exposed on a daily basis over the course of a lifetime without an appreciable health risk.

As the melamine in milk products from China problem continues to grow apace, Sciencebase presents a succinct list of melamine contaminated food list culled from the most recent news results on the subject. This is by no means an exhaustive list nor is it a condemnation of any particular products; it’s here merely to raise awareness of what is happening with regard to the melamine in milk scandal.

• Powdered baby milk.
• HK finds melamine in Chinese-made cheesecake.
• Cookies With Melamine Found in Netherlands.
• Mr Brown coffee products.
• Manufacturing giant Unilever recalls melamine tainted tea. CNN is also reporting that the Hong Kong authorities Sunday (October 5) announced that two recalled candy products made by British confectioner Cadbury had high levels of melamine.
• Melamine Detected in Two More Ritz Snacks.
• More Chinese-made sweets recalled in Japan.
• White Rabbit brand Chinese candy contaminated: Asian health officials.
• Lipton, Glico and Ritz the latest businesses to be affected by milk powder scandal.
• Hong Kong finds traces of melamine in Cadbury products.
• Recalled Melamine Milk Products include Asian versions of Bairong grape cream crackers, Dove chocolate, Dreyers cake mix, Dutch Lady candy, First Choice crackers, Kraft Oreo wafer sticks, M&Ms, Magnum ice cream, Mentos bottle yoghurt, Snickers funsize, Yili hi-cal milk, Youcan sesame snacks and others. Testing of some of those has already proven negative.
• Melamine Found in More China-Made Products, including Heinz DHA+AA baby cereal.
• 305 Chinese dairy-based products temporarily banned in Korea.
• US bloggers have gone so far as to uncover dozens of products recalled in China that were still on the shelves of their local supermarkets.
• 31 new milk powder brands found tainted.

With the above knowledge, procurement professionals should also make it part of their normal information gathering of RFI process to ask where the products they are buying come from, particularly if you buy from a distributor or broker. In addition, have this document signed by the supplier. Further, you should specifically ask the following question. Do any of your products to your knowledge contain Melamine or any other additives that are not approved by the FDA and other governing bodies.. Although not a scientific solution, it does protect one more level of protection for you and your customers.

We appreciate and look forward to your comments.

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Part I of II. What should grocery procurement professionals know about Melamine?

Monday, December 1st, 2008

The FDA opens and office in China and Melamine shows up in U.S. baby formula. Should we be concerned?

The FDA has taken a positive step in trying to control the introduction of products that should not be included in food from reaching U.S. markets by opening an office in China. At the same time we hear that Melamine has been found in U.S. baby formula. This is a time that procurement professionals in the food distribution business need to be vigilant.

The following is for your education.

Just what is Melamine? According to Wikipedia, Melamine is an organic base and a trimer of cyanamide, with a 1, 3,5-triazine skeleton. Like cyanamide, it contains 66% nitrogen by mass and, if mixed with resins, has fire retardant properties due to its release of nitrogen gas when burned or charred, and has several other industrial uses. Sounds like something we should be including in our food products right? Further from Wikipedia, Melamine is sometimes illegally added to food products in order to increase the apparent protein content. Standard tests such as the Kjeldahl and Dumas tests estimate protein levels by measuring the nitrogen content, so they can be misled by adding nitrogen-rich compounds such as melamine.

Here’s what’s possible when Melamine is ingested.

The following information is taken from a Monday October 20th Yahoo news article By Gillian Wong a writer for the associated press.

Beijing – Some 1,500 dogs bred for their raccoon-like fur have died after eating feed tainted with melamine, a veterinarian said Monday, raising questions about how widespread the industrial chemical is in China’s food chain.

The revelation comes amid a crisis over dairy products tainted with melamine that has caused kidney stones in tens of thousands of Chinese children and has been linked to the deaths of four infants.

Melamine was also the product that caused the massive United States pet food recall during 2007. When discussing toxicity, Wikipedia tells us that Melamine is described as being “Harmful if swallowed, inhaled or absorbed through the skin. Chronic exposure may cause cancer or reproductive damage.

Tomorrow we’ll take a look at the products that are purported to contain Melamine and the questions procurement professionals should ask in order to best mitigate your risk.

We appreciate and look forward to your comments.

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