World Supply Chain Management Landscape Taking Shape - But What Shape?

The world landscape, from a business and supply chain management standpoint, is always changing. However, the change is progressive (for the most part) and towards and unknown final condition. One expert, Dr. Mahender Singh, feels that three potential shapes exist: flat, rocky and somewhere in between.

Flat, or something close to flat.

Dr. Singh refers to this as synchronicity. Globalization will have settled in and all countries are participating. Trust exists and protectionism is dropped in favour of the highest value solution always winning out - whether it be domestic, near-shored or off-shored.

Rocky, and ugly.

In fact, this isn’t too far off from what we have today. Globalization and off-shoring has largely focused on cost reductions when assessing value in procurement. The green shift is starting to change this calculation of value (for the better), and possibly social costs will gain strength in the coming years. People, corporations and governments will be acting locally and for their own best interests - not that of the greater cause. This is similar to some multi-national arrangements in corporations, and is a real shame. The net present value of an opportunity diminishes over time.

The in-between.

Here globalization is much more regulated. Governments selectively pick battles regarding protectionistic opportunities, in an effort to maximize non-domestic contracts. Some industries receive preferential treatment (such as aerospace in Canada, can you say Bombardier?) while others are much more open to tenders from international firms. Government spend and procurement is not “locked down” but strategic for the given time and national outlook.

What about Supply Chain Management in North America?

Well, this is an interesting one. Innovation has largely been US based over the past many years; however, the winds of change have been blowing for a while. Europe is gaining strength, as is Asia. More than likely the end result will depend on human resources, or capital — the knowledge economy may be the bottleneck impacting the strength of a given firm within its’ industry. Globalization can help to support this, as can carefully structured immigration policies and support.

What will the effects be for North American industries? Diversity supporting cultural challenges, communication and geographic specific market research will be key.

Ideally, in a complex system or process such as this, any firm would have a path forward that addresses all variables; whether known or unknown. Since this isn’t the case (or maybe even possible) contingencies are developed with some variable conditions being completely ignored. Most firms should be focusing on diversity, strategy and strength in employee knowledge, skills and abilities. Those are in no particular order by the way… all are extremely valuable in combatting the challenges of today’s landscape. After all, today’s landscape helps shape that of tomorrow.

After thought

It is interesting when one changes her/his perspective. In the Western hemisphere we are starting with the cart and moving towards the horse. Managing the supply chain and complexity, from culture to available human resources, is a bigger challenge whereas other geopolitical locations are skilled and experienced in these areas and are simply looking for the established business and commodities.

The original article quoting Dr. Singh can be found here, and was written by Larry Lapide of Supply Chain Management Review: A Flat Future - Don’t Bet on It

Forest Management Moving Towards Green Initiatives and Sustainability

The backbone of environmental action by corporations is social responsibility, or at least it used to be. After becoming somewhat read on the subject no one should be naive enough to think that social responsibility alone would be the fuel for the green movement — revenues and reduced costs would have to take the spotlight. One of the world giants in retail, whose name I ‘W’on’t mention, is a prime example; this firm has recently taken on a green tinge by harnessing wind and solar power. But not because it was the right thing to do, because it was less expensive.

Can environmental and cost based factors both drive sustainability?

Some recent articles and blog posts discussing green initiatives in supply chain management, distribution and transportation had us thinking about a blog post of our own. After reading this article by Sullivan we got to thinking: how quickly will the power of the carbon trading market take over?

Without question the means to monetize will drive social benefit when it comes to environmental responsibility. Few corporations are willing to reduce profits in the name of social justice, especially those that are publicly held. The corporation exists to serve the shareholder (and management usually comes out looking pretty good too). What if the owners of these faceless, publicly held corporations could become and problem and solution? Enter carbon trading.

The Value of the Forest

Carbon trading completely changes the way a government or land owner calculates the value of the land. Having a means to monetize on a stand of trees without actually cutting them down is novel, but a reality in the future. Think about this: Mrs. & Mr. John Smith, Corporation or Government receive an annual payment for the carbon offset their land provides. The land is left in tact, preserved for the wildlife and ready to act as is was meant. Carbon is continually captured.

Okay, this may be a little too ideal, but the principle is simple to understand. If a forest is best served by leaving it “as is” from both a revenue and environmental perspective, why think about harvesting it? Simple question, complex answer.

Looking Forward

If the pool of global participants is large enough and the supply on the market limited enough then carbon trading could be a profitable business. If governments are willing to increase demand and make emission standards even tighter then the picture is even rosier. Can the power of the dollar cause developing nations to back away from commodity harvesting? Hard to say at this point. The possibility looks much stronger in those nations that identify with and look to protect their society and environment, whether developed or not remains to be seen.

Interesting Links

The article written by Sullivan in the Globe & Mail can be found at this URL: Value in Old Growth Forests?

Another site worth looking over, being dedicated to forest land owners who and associated carbon trading: Carbon Trading

An interesting discussion hosted on the CBC web site that provides some background in carbon offsets and trading: Carbon Offsetting: How Does it Work?

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