July 2010

In an earlier post, From mine to mall or mayhem, we looked at the issue of supply chains that work with valuable commodities and minerals. Paul Collier is one commentator who has covered the issue of blood diamonds. See the book “Wars, Guns and Votes” and, the seminal paper, Greed and Grievance. Here´s a closer look at the ethics of the diamond supply chain … 

Diamond ethical supply chain deconstruction 2010
View more presentations from Platipus.

Humanitarian Logistics relates to aid after natural and man-made disasters as well as emergencies caused by war. It operates in a destabalized context that is “clearly unpredictable, turbulent and requiring flexibility” (Oloruntoba and Gray, 2006). This is a highly fragmented area and statistics are complicated by the official and voluntary nature of aid and assistance but this compilation of UN statistics gives an idea of scope. In 2007 there were 34 armed conflicts worldwide and 414 natural disasters affecting 211 million people. There were an estimated 16,000 deaths and, $75 billion was paid out in damages. The World Food Program estimated that 90 million people require food aid with 54 million in Africa alone.[1]

Whilst industrial supply chains in a fully functioning market economy are measured on cost and speed to market; humanitarian logistics respond to different measures that will shift as the effort progresses. Essentially, the market looks for value and the humanitarian effort prioritizes values such as human life. The immediate reaction is measured on sheer speed and then, as needs progress, to longer term sustainability issues like creating the framework for business and self sufficiency to prosper. This effort is fraught with difficulties over mandate as well as efficiency. Humanitarian aid must be characterized by humanity, impartiality and neutrality – all of which have been enshrined in the Geneva Convention (1864) and, the Red Cross Movement (1875) and, Humanitarian aid has to operate on a local; national and international level to make the right impact. This is a complicated agenda which makes the route forward post disaster equally problematic. There is a gap in the logistics lexicon here.

Natural disasters aside, we have those places ravaged by war. Nearly one half of all low-income countries have experienced major conflict since 1980. Iraq, with its oil revenues, is a different case in terms of relative prosperity but the logistics agenda has been the same. I spoke with Iraqis and Kurds now living in the UK who described how Iraq and the Kurdish Region has been affected by the circumstances surrounding regime change. In particular, the story of infrastructure and logistics; without which no regime can build sustainable growth. One logistics professional now living in the UK sums up: “First, we had the war that wrecked the roads and bridges – some by the coalition forces and others by Sadam’s forces. This is normal in war. Then, the military built up the roads and improved connectivity just to move around. In came Humanitarian teams to ensure the supply of essential food and medical supplies reached the people in need. Now, we are in a transitional stage that should see the economy stabalise. The situation is being transformed and trade that had migrated to Jordan is returning as infrastructure and logistics are being built up and confidence is growing.” This logistics journey does not mean “fast forward” to a fully functioning market economy with state-of-the-art supply chains.

This is where transformational logistics comes in to act as a catalyst for the hybrid solutions that the market can provide and a fragile economy can adapt to. (more…)

Earlier today, Rob Bell spoke at the launch of a Supply Chain Training technologies unit at the Logistics Institute at Hull University Business School. His theme was skills… Opening with a photo of Marianne aged 11 he spoke of her musical interests and, as a Stradivarius worth over $5 million came into view on screen, he asked the audience for advice. Should Marianne be let loose on this valuable instrument to learn to play? Plainly – no. However, why do we persist in undervaluing training on all sorts of expensive and ever more complex machinery in all sectors?

Violins, assets and risks too far

The skills agenda is massive. Over 5 million workers in the UK have no qualifications at all. One in six adults do not have the literacy skills of an 11 year old like Marianne. Almost half don’t have functional numeracy skills and half of these can’t find work in any case. And yet, as the Leitch Report (2005) made plain – jobs for unskilled workers are being eliminated year by year. Think of the impact that these figures have on productivity and on the chances for the UK to compete on the world stage. It is estimated that by 2020 at least 4 million adults will not have the literacy levels of an 11 year old and 30 per cent of adults will not have numeracy skills at this level. Open up the radar screen and look into the Emerging and Developing world and we see a huge challenge. The lack of skills is now a serious constraint on sustainable growth in all economies. We have to get real. In terms of Transformational Logistics – logistics and supply chain thinking and practice in emerging and developing countries – skills and skills provision are key. (more…)

Earlier today, Rob Bell spoke at the University of Hull Logistics Institute Conference on Profitable, Sustainable and Ethical global logistics. Opening with highlights from the recent Three F’s Global crisis – Food; Fuel and Finance – he went on to quote Drucker; that demography will dictate the future. With population rising from 6 to 9 billion by 2050 – in 1804 it was 1 billion; it took 123 years to reach 2 billion but the last 4 billion have taken an average of 12 years each to reach – it is not climate that will hit hardest but the need to do more with far less of this worlds scarce resources. Profit can only be a function of dealing with these issues or, we are all bankrupt. So what does this all mean for global logistics?

As Martin Christopher has emphasised, companies no longer compete; supply chains do and, as globalisation forces the pace on sourcing ever cheaper raw materials and manufacturing these supply chains are starting to get squeezed from above – by shareholders looking for better returns – and below – by stakeholders such as the workers who are starting to react at working conditions and insecure livelihoods and, consumers who are starting to factor in ethical considerations to their buying decisions. Let’s not forget that the recent strikes in China’s booming coastal cities have forced a 30 per cent hike in wages in a country that is not soft on dissidents. And, let’s not forget that a video on You Tube of a Kit Kat made of Orang U Tang fingers brutally highlighted the plight of this endangered species and forced Nestle to rethink and act on their sourcing of Palm Oil from unsustainable forests. Activism is on the move for those who do not work their supply chains using sustainable and ethical principles.

The Majority World - opportunity or banana skin?


Writing on the abolition of the British slave trade in 1807, G.M. Trevelyan, the historian, called it “one of the turning circumstances in the history of the world”. As we look to Logistics to make a more transformative impact on global business practice, we could turn to the campaign waged by William Wilberforce and the Abolitionists for inspiration in the quest for an ethical supply chain. Here, T L explores ideas around an inclusive, sustainable and ethical value chain moving goods from source to the consumer; linking it back to ideas set in train by a four hour speech given in the House of Commons in the momentous year of 1789.

Transparency is a must

Globalisation has forced companies to develop better, cheaper and faster routes to market – continuosuly. This has generated huge pressures on companies to shorten lead times; place smaller orders with few longer term commitments and, become footloose in search of lowest cost operators. We have seen the growth of Corporate power – many of the majors bigger than the countries they source from and, the move to outsource non core operations creates layers of suppliers that add capacity to Tier 1 but reduce any chance of transparency and challenge ethical consistency down through the tiers. (more…)