Watch Out for Counterfeiting!

(Summary of an article in eSpeak of ISM)

Shocking statistics:
· The FBI estimates that counterfeiting and piracy of intellectual property (IP) amounts to as much as US$250 billion a year. And, according to the World Customs Organization, that figure could reach as high as US$600 billion in lost sales every year.
· Counterfeiting and piracy have resulted in the loss of 750,000 jobs in the United States, according to the U.S. Customs and Border Protection Agency.
· If counterfeiting of auto parts was eliminated, the U.S. Federal Trade Commission estimates the auto industry could hire 250,000 additional workers.
· The U.S. Department of Commerce identified more than 9,000 incidents of counterfeit electronic parts in 2008.
Among the most surprising findings was a preponderance of counterfeit electronic parts incidents in the $1.01 to $10 range, followed closely by parts in the $11 to $100 range. This indicated counterfeit electronic components were showing up in small-ticket items rather than expensive parts, such as microprocessors.
According to the OET, in 2008, 50 percent of counterfeit electronic components were bought from brokers (30 percent) and unauthorized distributors (20 percent). The remaining 50 percent came from more than 13 other sources, with no single source accounting for more than 7 percent.

Action Plan:

Good supply management practice dictates buying from authorized sources:

· Assess the seller's reputation.- Does he honor warranties Does he provide technical and customer support? Even if a seller seems reputable, do you know how reputable everyone else is in its supply chain?
· Determine the seller's financial stability. Does he have sufficient financial resources to honor refunds?
· Practice quality control. Does the seller have quality control and authenticity procedures in place? particularly with regard to functionality, proper handling and storage, chemical composition and so on. Also be skeptical of random-sample testing because counterfeiters frequently “salt” genuine product with counterfeits.
· Determine the product's traceability. Can it trace the product's route back to the original manufacturer?
· Ask for documentation. Can the seller provide documentation regarding product compliance with all laws?
· Assess legal liability. Will the seller assume product liability for penalties? Remember, buying from sources not authorized by the manufacturer might absolve that manufacturer from legal liability, even if the product is genuine. And, if the product is counterfeit, there is no manufacturer liability.

Conclusion:

The best way to avoid counterfeiting risk is to buy exclusively from authorized sellers or resellers — either purchasing directly from the manufacturer or from a distributor or reseller contractually authorized by the product's manufacturer

China No Longer Worth it?

Who says? AMR Research’s newest quarterly report suggests companies seeking to build or enhance outsourcing operations may to be dropping out of China, citing high risk that is no longer worth the reward.
According to the survey, manufacturers are 2-3 times more likely to decrease sourcing in China. The survey found China contributes the most risk in 12 out of 15 categories. At the top of the list is Intellectual Property(IP) infringement, with 59 percent of respondents complaining that China poses the highest risk in the world for outsourcing. 55 percent of respondents saying China poses the most risk worldwide for product quality.
Now that oil is no longer selling at $150 a barrel, manufacturers are going back to what they used to worry about. “Supplier failure is an inherent problem in all supply chains,” she said.

Do you believe this or not? I have always believed this and predict that manufacturing jobs will return to NA.

Managing Supply Chain Risk

Taken from Purchasing.com

What is Our Carbon Footprint?

A carbon footprint is a measure of the impact our activities have on the environment, and in particular climate change. It relates to the amount of greenhouse gases produced in our day-to-day lives through burning fossil fuels for electricity, heating and transportation etc. The carbon footprint is a measurement of all greenhouse gases we individually produce and has units of tonnes (or kg) of carbon dioxide equivalent.

The pie chart above shows the main elements whichmake up the total of an typical person's carbon footprint in the developed world.

A carbon footprint is made up of the sum of two parts, the primary footprint (shown by the green slices of the pie chart) and the secondary footprint (shown as the yellow slices).

1. The primary footprint is a measure of our direct emissions of CO2 from the burning of fossil fuels including domestic energy consumption and transportation (e.g. car and plane). We have direct control of these.

2. The secondary footprint is a measure of the indirect CO2 emissions from the whole lifecycle of products we use - those associated with their manufacture and eventual breakdown. To put it very simply – the more we buy the more emissions will be caused on our behalf.

The Focus of the S&OP in These Troubled Times

While the basic format of the S&OP process—that of running periodic, multi-functional planning meetings—should not change, the areas of discussion and focus should, in order to consider increased supply-demand uncertainties. In this regard, in this regard wthere are five pieces of advice to help forecast and plan with these increased risks:

Since new products and promotions are instituted to gain market share, there is a need for better forecast and planning the supply needed to make them successful. Planners need to communicate more effectively with Sales and Marketing. These promotions and new product launches must be closely monitored to ensure adequate supply.

One must be quick to detect changes in consumption. A change in consumption might come and go before it is detected if one is looking at shipment data alone. We need to better understand the impact of economic volatility on demand. Planners then need to stay abreast of what is going on in the economy to project future impacts.

Minimizing demand uncertainties by focusing on the customer, channel, and product segments that most contribute to revenues and profitability. Leverage formal risk management techniques as supply-demand risks increase. Wemust move away from the use of point forecasting to range forecasting and scenario planning to better recognize demand uncertainties.

Supply planners will need this level of recognition to mitigate risks via the implementation of hedging, buffering, and multi-sourcing strategies aimed at ensuring reliable supply.

The process of S&OP meetings should remain the same, planners can gain from following the above advice during these turbulent times. Companies that focus their S&OP in this way stand a good chance of making it over that last big wave on the way to calmer economic waters—meanwhile, their competitors that don't, might not.