News Items:

Feature Article:

eyeforprocurement's Green Purchasing Report just released

eyeforprocurement's Green Purchasing report highlights both the benefits and obstacles that businesses face when implementing “green” purchasing practices.

“Going green” is no longer an obscure item somewhere near the bottom of a priorities list. It has become a major focus of governments, industry and the general public all over the world.

Not only are industry watchdogs and authorities falling over themselves to introduce recommendations, regulations and penalties for those who contribute unnecessarily to pollution levels, but customers are also beginning to demand that entire supply chains, from raw materials sourcing to final delivery of the finished products, be as eco-friendly as possible.

In an effort to establish the degree to which the purchasing segment is focusing on environmentally friendly strategies, eyeforprocurement conducted the Green Purchasing survey in June-July 2007.

The survey reveals that while green purchasing is a growing trend, few companies are realising any spin-off benefits in terms of reduced costs. In fact, the cost of implementing environmentally friendly purchasing is seen as one of the primary barriers to adoption.

However, nobody said that going green would be easy. Or cheap. But, for those who persevere, there are benefits in the form of long-term cost savings, as well as new and retained customers who would otherwise have taken their business elsewhere.

The results of the survey have been published in the Green Purchasing Report, which can be downloaded from www.eyeforprocurement.com/green/free_report.shtml

Many of the critical issues revealed by the survey will be examined in depth at the Green Purchasing Summit, which takes place on November 29-30, 2007 in Miami, Florida.

For more information on the report or the Green Purchasing Summit, phone Izabela Janecka on +44 (0) 20 7375 7564 or US toll-free 1 800 814 3459 ext 252, or email izabela@eyeforprocurement.com

Newsdesk / eyeforprocurement.com

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Feature Article:

Why Aren't You Optimizing Your Sourcing Decisions?

I could give 8:1 odds that if you are reading this then you are not using strategic sourcing decision optimization and I would make a killing. I could give 6:1 odds that you don't even know what it really is and I could give 4:1 odds that you haven't even used a good decision support system and I would still reap more than a winning long-shot bet at the track. And in a market where raw material costs and transportation costs are continuously rising, I find this very disturbing!
The statistics don't lie. Iasta's 2006 Benchmark Analysis found that only 17% of organizations use decision analysis tools to help them make complex award decisions despite the fact that 81% of these same organizations indicated they make complex award decisions that should warrant the use of a tool. Similar statistics from the 2005 and 2007 advanced sourcing studies from the Aberdeen Group are equally chilling. Despite the hundreds of success stories that can be culled from previous customers of some of the leading vendors, only 21% of companies plan to consider such technologies in the next two years. Why?

I think traditionally the lack of use was due to a number of factors including cost, lack of competition, a fundamental distrust of "black-box" technology, data requirements, and a fundamental lack of understanding of what optimization, and strategic sourcing decision optimization, is, and is not. However, given that the cost has come down (it doesn't cost a million plus anymore for a starter solution), there is a decent amount of competition (Emptoris and CombineNet have come a long way and Iasta's solution is maturing rapidly), we're much more used to "trusting the box" than we used to be (especially when we understand how it works), and organizations now collect, and process, more data on a regular basis than they used to (and there are a number of great tools and third party services to simplify this process), I would think that the big problem today is a lack of understanding. Hopefully I will be able to start rectifying the problem with this brief article.

Back in 2000, when I started building strategic sourcing decision optimization solutions in the sourcing space (at MindFlow Technologies, acquired by Emptoris in early 2006), it was true that there were essentially no resources to help you understand what decision optimization was and how it could help you as a sourcing professional. Fortunately, this is no longer the case. Solution providers like CombineNet and Iasta, realizing that their biggest barrier to continued success is likely a lack of understanding, especially since Aberdeen found that best-in-class companies that employ advanced sourcing strategies such as total cost modeling and optimization save an additional 12% over their counterparts in both their 2005 and 2007 studies, have taken up the charge to bring education to the masses. They have been joined by the industry leading training firm, Next Level Purchasing, and a few independent bloggers and consultants like myself. Now, you have the CombineNet learning center and their (recently extended) Sourcing SuperHero tour (where they'll walk you through total cost modeling and sourcing optimization from end to end using real world examples from sourcing professionals like you), a significant entry on the Iasta sponsored e-Sourcing wiki (with more to come), a new introductory podcast from Next Level Purchasing (with more resources to come in the future), and a significant number of introductory posts on the subject on CombineNet's CombineNotes blog and the Sourcing Innovation blog.
Combined, these resources will introduce you to what strategic sourcing decision optimization is, describe the benefits it offers, provide you with numerous strategies to ensure success when applying it within the context of your total cost of ownership (and total value management) initiatives, provide some "easy" examples where the "obvious" choice will actually cost you millions of dollars more than the optimal solution, describe the types of constraints supported by the various optimization tools and how they can be used to insure you have an accurate representation of your real-world problem (which in turn insures the solution produced is directly implementable), and describe the different types of models you can build to help you save money across your global sourcing operations.

It might seem a little daunting, but once you know that decision optimization is simply the application of rigorous analytical techniques to a well-defined scenario to arrive at the absolute best decision out of a multitude of possible alternatives in a rigorous, repeatable, and provable fashion, that using the what-if? capabilities of the leading optimization tools will allow you to compare how the optimal solution differs under various assumptions and demand levels and select a solution that is more robust than what your spreadsheet will lead you to, and that decision optimization can be applied to just about any moderately complex sourcing event that you can think of, regardless of the commodity or service being sourced, you'll realize that when used properly in your sourcing process, strategic sourcing decision optimization can be your best friend. Furthermore, the relationship will be a lasting one. Whereas reverse auctions are often only good for squeezing the fat out of supplier margins, optimization solutions uncover true efficiencies. So, when your reverse auction fails to deliver any additional savings the third time you run it on the same commodity, decision optimization can still be used to find potential savings through improved inventory management, distribution, or dual-sourcing strategies. Strategic Sourcing Decision Optimization will transform your sourcing process for the better.

Michael Lamoureux,
"The Doctor" of Sourcing Innovation

External Links

Solution Providers:

Combinenet: http://www.combinenet.com/
Emptoris: http://www.emptoris.com/
Iasta: http://www.iasta.com/

Training Providers:

Next Level Purchasing: http://www.nextlevelpurchasing.com/

Blogs:

CombineNotes: www.combinenotes.com/
eSourcing Forum: www.esourcingforum.com/
Sourcing Innovation: http://blog.sourcinginnovation.com/

Resources:

Aberdeen's 2005 "Success Strategies in Advanced Sourcing and Negotiations":
http://www.aberdeen.com/summary/report/benchmark/RA_BPAdvNegotiations_RW.asp
Aberdeen's 2007 "The Advanced Sourcing and Negotiation Benchmark Report":
http://www.aberdeen.com/summary/report/benchmark/RA_AdvancedSourcing_3857.asp
CombineNet Learning Center:
http://www.combinenet.com/documents/learncenter.php
e-Sourcing Wiki:
http://www.esourcingwiki.com/
Next Level Purchasing / Sourcing Innovation Podcast:
http://www.nextlevelpurchasing.com/supply-management-podcast.php
Sourcing Innovation Posts: http://blog.sourcinginnovation.com/categories/Decision%20Optimization.aspx

The Greening of Procurement (Part 1)

In my extensive travels to exotic locales (alright Calgary may not be exotic but it is certainly a great place to visit), purchasing professionals who have attended one of my conferences have rarely if ever broached the subject of environmentally friendly (re green) procurement practice.

Burdened by the more pressing challenges associated with unnecessarily complex initiatives that are behind schedule and over budget, one can certainly understand the reasons for the paucity of inquiries.

However based on the recent spate of newly released studies and reports coupled with the announcement of upcoming conferences (one of which is the November 2007 Green Purchasing Summit referenced at the conclusion of this post as well as under the PI Blog Roll), I was interested in trying to understand the root causes of the discrepancy between expressed interest (or lack thereof) and the increasing market activity.

The EcoMarkets 2007 Survey

At the beginning of May I received an advanced copy of the 2nd annual EcoMarkets Survey. A collaborative effort between the North American Commission for Environmental Cooperation, the Center for a New American Dream and TerraChoice Environmental Marketing (who spearheaded the program) this ongoing research initiative monitors patterns of green procurement practice within the B2B and B2G communities. (If you would like a copy of the complete survey send an e-mail with “Green” in the subject line to procureinsights@rogers.com.)

The survey's results were based upon 692 respondents from a total invitation pool of 10,500 procurement professionals. The conclusions are therefore drawn from a 6.6% sample response rate. The respondents' organizations account for more than $5 billion in combined annual spend.

Clear Answers

Unlike a lengthy dissertation where the desired answers can be somewhat obscured by superfluous (and sometime meandering) statistics, the EcoMarkets 2007 Survey wasted little time in providing meaningful insights. This was no small feat given the fact that the subject matter is simultaneously contradictory in that while green procurement is widely recognized as being important (91% of respondents indicated that they consider green factors at least occasionally) its importance in terms of practical adoption is relatively low. 

From a purely statistical perspective, the survey reached the following conclusions (and I quote):

“It is clear that while environmental factors are being increasingly incorporated into purchasing considerations, the translation of policy to practice is mixed and incomplete.”

“The three most important factors that influence purchases are product performance, durability and price. Environment is a lower priority.”

“A strong majority of respondents (60%) report that they will not pay a price premium for environmentally preferred products.”

The question this raises is quite simply what set of circumstances will elevate green procurement from a nice to do “boutique” status to a more meaningful (and essential) element of a sound purchasing strategy? At the risk of answering my own question, I do not think that green procurement in and of itself will achieve this status, nor do I believe that it is a reasonable goal. At least not in today's dramatically evolving procurement practice climate.

Factors such as the ever expanding talent vacuum combined with the continuing high rate of e-procurement initiative failures will likely dampen organizational enthusiasm for going green.

Governmental influence - the fuel for change?

Another interesting statistic provided by the survey indicated that the majority of government departments or agencies in Canada and the United States have instituted a green purchasing policy. Based on these findings, the report concluded that this is a clear indication that “governments are making the effort to lead by example,” and are less driven by “financial constraints or profit-making.” While it has generally been accepted that government procurement practices are measured by a different set of criteria from the ones employed by their counterparts in the private sector*, in the context of green procurement it is still a notable observation.

* (Note: as chair of the 2006 Summit Roundtable on Federal Government Procurement Practices, I prepared a comprehensive report highlighting the key elements of a successful purchasing program. This of course was based on feedback from a diverse group of participants. One of the points for which a general consensus was reached dealt with the very issue of purchasing guidelines in the public sector.  And I quote, “it is also generally agreed that government is not a corporation and therefore has different priorities and imperatives to meet when procuring goods and service. This acknowledgement takes into account socio-economic implications including the importance of developing key Canadian business sectors or industries. Examples of key sectors or industries include the SME/minority-owned business community, or Canadian-based manufacturing sectors such as shipbuilding where job creation and community financial stability are taken into consideration.” So it is certainly not a stretch to extend the above statement to include green procurement.)

However, looking beyond the realm of its own procurement practice, governments have historically demonstrated a proclivity for fueling environmentally-inspired change. The Province of Ontario's energy efficient lighting program of the early 90's gives testimony to this fact.

Looking for ways to reduce energy consumption, the Province of Ontario offered “significant” subsidies to businesses that made the change from standard compact florescent lighting to energy efficient lighting. With the subsidies covering the majority of the transition/upgrade costs, the rate of conversion skyrocketed as immediate savings were realized with the first electric bill. An unexpected adjunct benefit was also realized through the program as the subsidies also stimulated revenue opportunities for the companies that sold and installed the new fixtures.

Almost 15 years later, the EcoMarkets 2007 survey reflected the continuing enthusiasm for programs like the one offered by the Province of Ontario. The response from survey participants indicated that “energy conservation programs are 3x more common than green electricity purchasing programs.” While I am not familiar with the level or immediacy of the savings associated with the green electricity programs, the success of the energy conservation programs should motivate green marketers to look for parallels between the two initiatives.

This is especially important given Ontario's recent decision to suspend the Provincial Sales Tax (which is 8%) when an energy efficient appliance such as a fridge or stove is purchased. While this program has obviously garnered a universally positive response, to what degree it actually influences consumer buying habits remains to be seen.  That said green marketers should pay close attention especially given the fact that the savings impact is immediate.

The survey's assessment that “being green won't be enough to win customers” rings true. Both direct and indirect savings must be clearly demonstrated and easily understood by the purchaser.

Next Installment: The Greening of Procurement (Part 2)

John Hansen

Procurement Insights Blog: http://procureinsights.wordpress.com/
Procurement Insights Web Site: www.procureinsights.com

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Wal-Mart Stores, Inc. Releases 2006 Ethical Sourcing Report

Wal-Mart's Ethical Standards program audited more factories than any company in the world; high-risk factory violations decreased more than 23 percent; program scope increased to include environmental criteria. Wal-Mart Stores, Inc. has announced the release of its 2006 Ethical Sourcing report, providing information on the company's Ethical Standards Program, its impact on factory working conditions and the lives of factory workers. The report details results of more than 16,000 audits of supplier factories, as well as enhancements to the program during the past year, such as strengthened environmental criteria and increased program scope. The report can be viewed at http://www.walmartstores.com/ethicalstandards.

The report shows that in 2006, Wal-Mart conducted more factory audits than any other company in the world, at 8,873 factories producing goods for Wal-Mart, 15 percent more than in 2005. Unannounced audits made up 26 percent of the audits undertaken, a six percent increase over 2005. High risk violations of the Wal-Mart Standards for Suppliers code decreased 23.5 percent in 2006, mainly due to educational outreach.

"The Wal-Mart Ethical Standards program is in place to do what is right for factory workers and the environment," said Rajan Kamalanathan, vice president of Ethical Standards for Wal-Mart Stores, Inc. "The only way to achieve our objective is by moving beyond monitoring factories to working in collaboration with stakeholders. In this manner, we not only bring sustainable and positive change to working conditions in factories, we also to help build ladders to a better life in the countries where we're sourcing."

Program enhancements detailed in the 2006 report include the expansion of environmental elements into supplier factory audits to include waste identification, waste handling and disposal, wastewater treatment and discharge, and air emissions. Auditors now discuss environmental findings with factory management as part of the audit closing meetings to educate them on the new criteria and on environmental sustainability. In addition, Wal-Mart now includes environmental training in group training sessions for new and existing suppliers.

"Factories that are disapproved may close, and the impact on the factory workers can be devastating. To prevent this, we identify at-risk factories and invite factory management, along with the suppliers they do business with, to meet with members of the Wal-Mart Ethical Standards Team," Kamalanathan said. "We facilitate dialogue on issues of concern and serve as a resource to factory management in a collaborative way. For example, in the Europe Middle East, and Africa region, meetings were held with eight targeted suppliers and factory management, and at the end of 2006, all eight showed substantial improvement, with six achieving our highest audit rating."

In 2006, over 200 Ethical Standards associates were located in five regions around the globe: Southeast Asia; the Indian subcontinent; the Far East; the Americas; and the Middle East, Africa and Europe. The Ethical Standards team monitors supplier factories, engages with stakeholders, manages risk, and works to educate factories and suppliers to help prevent violations of Wal Mart's Standards for Suppliers code. The team is entrusted with verifying that suppliers comply with Wal-Mart's Standards for Suppliers code of conduct and working to improve factory working conditions throughout the industry.

Established in 1992, Wal-Mart's Standards for Suppliers code details the company's expectations for labor practices in the production of merchandise for sale by Wal-Mart. Every supplier must sign an agreement that they, their contractors, and subcontractors will abide by the Standards for Suppliers code. As part of Wal-Mart's agreement with suppliers, a poster of the Standards code, signed by factory management, must be displayed in a location visible to all employees at all facilities that manufacture merchandise for sale by Wal-Mart. A local helpline number and e-mail address is located on the poster for workers to contact Wal-Mart with any concerns they may have.

About Wal-Mart Stores, Inc. (NYSE: WMT)

Wal-Mart Stores, Inc. operates Wal-Mart discount stores, Supercenters, Neighborhood Markets and Sam's Club locations in the United States. The Company operates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. The Company's securities are listed on the New York Stock Exchange under the symbol WMT.

More information about Wal-Mart can be found by visiting www.walmartfacts.com. Online merchandise sales are available at www.walmart.com.

Newsdesk / eyeforprocurement.com

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Emptoris and CPO Agenda Engage European Business Community to Examine Trends in World Class Procurement

Emptoris, a leading provider of Enterprise Supply and Contract Management solutions, and CPO Agenda, a leading global business magazine for procurement professionals, summarized the findings of the first half of the CPO Agenda Executive Debate roundtable sessions, sponsored by Emptoris and Accenture, which focused on examining key trends and practices in achieving world class procurement at Fortune 1000 and Global 2000 organisations across Europe.

The thought leadership discussions were designed to investigate the trends, strategies and challenges experienced by procurement organisations within global organisations. The sessions saw chief procurement officers and senior procurement executives from more than 100 leading companies come together across the past three months in London, Amsterdam, Stockholm, with subsequent events planned in Milan, Paris and Frankfurt.

"World-class procurement is a term that is often used rather glibly," said Geraint John, Editor-in-Chief of CPO Agenda. "This series of discussions, and our subsequent coverage of them, aims to draw out and develop the meaning behind that statement, to identify the vision, policies and practices that truly define world class procurement -- and its resulting impact on the bottom line of global organisations."

What is World Class Procurement?
The first thought leadership discussion, held in London, focused on the overarching theme of the series, 'world class procurement.' As CPO Agenda stated, "Everybody in business these days, it seems, wants to be 'world class,' but what does this actually mean in practice?" The panel of procurement professionals assembled for the discussions with the following key themes emerging:
Need for Clear, Communicated Strategy: The consensus among participants was that a clear strategic vision is critical. Participating CPOs strongly emphasized the need for successful organisations to match procurement's agenda to the company's overall business goals.

Operational Execution and Benchmarking: However, the CPOs cautioned that execution is as important as strategy, and that leaders often emphasize strategy at the cost of effective execution. Throughout the series of debates, leading CPOs continuously emphasized the need to engage in quality benchmarking to ensure and quantify success; the need to "measure operational activities against a set of calibrated standards" was a clear theme of discussion. However, a few CPOs cautioned that over reliance on benchmarking can result in a company becoming a "follower not a leader."

Supplier Collaboration & Partnership: The assembled CPOs encouraged their peers to ensure suppliers are treated as partners not just vendors -- and to ensure that supplier partners deliver advantage to the business that support core objectives, not just deliver cost savings. Also, they urged organisations to ensure suppliers are given room to be "creative." Buyers who don't listen to suppliers and instead just follow defined processes miss out on opportunities brought about by supplier creativity which can reduce costs and improve products.

People Power: World-class procurement requires people skills rather than just technical proficiency. Leaders expressed belief that the emphasis on systems has some times come at the cost of under-using peoples' creativity and instincts.

"Procurement organisations need to position themselves to ensure they're integral to the overall business strategy," said Heather Rodgers, head of general procurement and supplier management at Centrica, the parent company of British Gas. "To me, that's one of the key characteristics that can differentiate procurement departments today."

For the complete discussion on procurement excellence, visit CPO Agenda at: www.cpoagenda.com/previous-articles/spring-2007-issue/executive-debatespring/

Executing Global Sourcing Quickly and Effectively
The second thought leadership debate focused on the challenges of executing global sourcing strategies quickly and effectively. With Low Cost Country Sourcing (LCCS) initiatives so prominent in global procurement in 2007, the industry consensus is that many issues and challenges exist that are hampering the movement of required volumes to emerging markets.

Challenges and Slow Down: Although there seems to be logic in moving as much spend as possible to LCCS to stay competitive, there are a variety of complex issues that need to be addressed in order to be successful in this area. The consensus of leading CPOs seems to be that LCCS is moving slower in most Fortune 1000 organisations than leaders anticipated.

China, India and Beyond: The majority of CPOs discussed the importance of establishing suppliers first in China and India given the size and importance of those markets. However, key CPOs noted the importance of establishing a broader global presence in other emerging economies such as Mexico along with focusing on building supplier relationships in markets where there is a current or future sales market.

Corporate Social Responsibility: Corporate social responsibility policies in procurement is an important strategic objective for most Fortune 1000 and Global 2000 companies; however, CSR has become both a goal and a limiting factor in sourcing decision making for the procurement organisation.

Just Labour?: Several CPOs recommended placing strong emphasis on focusing LCCS efforts on direct materials purchases and on components with high-labour content. However, a few CPOs also discussed the value of sourcing "functional brain power" from emerging markets.

Low Cost Does Not Equate to Low Value: The "low cost" association with emerging market sourcing efforts sometimes gives the impression that these are "low-value" supplier relationships. This isn't the case with most companies and most LCCS relationships, CPOs find these suppliers truly want to collaborate and develop, "not just provide cheap goods."

Developing Supplier Relationships: Several CPOs commented how LCCS was challenging their views on supplier relationships, noting that companies need to be attractive customers to these suppliers as well, and that relationship building was perhaps more important in emerging markets than it is in the economies they have traditionally operated in.

"Scaling of low-cost country sourcing activities, and coping with the day-to-day management of the resulting global supply base, is the key current challenge we see across our customer base. Technology's role is to overcome some of the added complexity that is inherent in the definition and execution of an LCCS initiative. By improving coordination among different buyers and suppliers, industrializing the sourcing process, and acting as a central knowledge base to store and share all supply-related data, supply management platforms should add a dimension of stability and certainty to LCCS that is often lacking today," said Philippe Courregelongue, Emptoris' Director of Consulting Services for Europe (EMEA), for Emptoris.

For further detail and content on this discussion of Low Cost Country Sourcing (LCCS), visit www.cpoagenda.com/currentissue/features/executive-debatesummer/

For a whitepaper on LCCS authored by Emptoris and Accenture, visit www.emptoris.com
Where is the Next Wave of Savings?

In the third session of the series, held in Amsterdam, Netherlands, the assembled CPOs focused on identifying trends and opportunities for the next wave of sourcing savings:
LCCS and Beyond: The assembled CPOs agreed, that LCCS is the current high priority in their cost savings strategy; followed closely by the implementation of enabling technologies. A tone of caution ran throughout the discussions urging procurement peers to balance the drive for savings with a vigilance for quality and sustainability of supply.

Security & Assurance of Supply: A key area of focus in bringing added value through the supply chain was in the area of security. In light of the tainted supplies of pet food and toothpaste that made headlines globally, CPOs were keen to discuss their increased focus on ensuring the security and quality of their supply chain. Pressure from the CEOs suite has shifted slightly from cost savings to security of supply and quality in the wake of recent events.

Leveraging Technology: The CPOs discussed the value and savings they had received with the implementation of sourcing technologies, and how to maximize the value of those technologies. For instance, one CPO discussed how their company had been very successful with auctions, but was focused on adopting a wider e-RFX process to support a more holistic approach to sourcing. The CPOs also discussed the impact of technology on their processes and vice-versa.

Traditional Skills coupled with Leading-Edge Strategies: In terms of what areas companies will focus on beyond LCCS and technology to ensure continued value and savings, the CPOs discussed dozens of topics including process outsourcing; increased supplier collaboration; value engineering; and the continued relevancy and importance of "old fashioned" skills of negotiation.

The CPO Agenda Executive Discussion Series Continues
The CPO Agenda Executive Debate Series sponsored by Emptoris and Accenture continues throughout 2007 with sessions in Milan, Paris and Frankfurt. The series of discussions will cover a range of topics including:

• How supply management can drive greater value and innovation
• How to sustain the benefits of global sourcing
• The role of the procurement organisation in outsourcing
• The technology and processes that deliver greater value
• Procurement's key challenges in the next 10 years

For more information on the CPO Agenda Executive Debates please contact Emptoris' EMEA office at +44 (0) 1189 880 232.

Companies Participating
Companies participating in the discussion series included: AstraZeneca, the global pharmaceutical firm; Accenture, the global consulting firm; BP, the global petroleum company; Barclays, the international banking group; the British Broadcasting Corporation; Britvic, a leading British soft drinks firm; Centrica, the parent company of British Gas; Home Retail Group, which runs the UK stores Homebase and Argos; Fortis, the Belgium-based banking group; InBev, the world's largest brewer; Lloyds TSB, the financial services firm; AP Møller-Maersk, the Danish shipping giant; Novo Nordisk, a world leader in diabetes care; Pilkington, the European glass maker; Stora Enso, one of the world's biggest paper manufacturers; Skanska, one of the world's biggest construction firms; UK Home Office, the government department in charge of the UK's domestic affairs; UK Network Rail, which runs the UK's railway infrastructure financial services group; Wyeth, the global pharmaceutical company.

About Emptoris
Emptoris is a world leader in innovative supply and contract management software solutions that empower enterprises to realize best value and accelerate profitable growth. Emptoris solutions are used by successful Global 2000 companies in every industry. Customers include American Express, Boeing, Dow Corning, GlaxoSmithKline, Motorola, Owens Corning, United Healthcare and Vodafone.

About CPO Agenda
CPO Agenda is a quarterly international business review for procurement leaders published in conjunction with the UK's Chartered Institute of Purchasing and Supply. It reaches several thousand top purchasing, sourcing and supply management professionals worldwide who collectively control hundreds of billions of pounds, dollars and euros of expenditure.

Newsdesk / eyeforprocurement.com

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Optimizing Inventory Management and Supply Chain Finance Practices Improves Working Capital Metrics; Technology Plays an Important Role

Aberdeen, a Harte-Hanks Company, has just released the latest benchmark report on working capital optimization based on a survey of 400 supply chain and finance professionals. This report helps companies identify best practices in moving from working capital optimization theory to practical initiatives that can improve their corporate financial performance.

The top 20% of performers (named Best-in-Class) exhibit noticeable differences in financial metrics compared to the rest of survey respondents (Industry Average and Laggard firms): the cash conversion cycle of the Best-in-Class companies in this study is 5-6 times shorter than that of Average and Lagging companies.

Best-in-Class companies differ significantly in their use of innovative supply chain/inventory and finance strategies and new-generation technologies.

Best-in-Class companies are:

• Almost twice as likely as Laggards to be using an inventory optimization tool
• 2.4 times as likely as Laggards to be using inventory collaboration technology
• 1.6 times as likely as Laggards to be using supply chain/inventory visibility technology
• More than twice as likely as Laggards to be using working capital/cash management tools and the supporting business analytics
• Twice as likely as Laggards to have access to receivables/payables/inventory financing at various stages in their supply chains.

"Supply chain, procurement and finance professionals have an opportunity to use new approaches to working capital management to create a business advantage for their companies. Based on the survey results, technology has emerged as a very important factor in driving long-term working capital improvement," says Viktoriya Sadlovska, supply chain finance and global trade research analyst at Aberdeen. "The top performers are using working capital optimization to fuel growth initiatives at their organizations."

This study is made available to the public through the underwriting of: ABN AMRO, TradeBeam, BMO Capital Markets, Citi, IBM Global Financing, Ariba. Download a complimentary report copy at: www.aberdeen.com/link/sponsor.asp?cid=3996

About Aberdeen Group, a Harte-Hanks Company
Aberdeen is a leading provider of fact-based research and market intelligence that delivers demonstrable results. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to Aberdeen™ for insights that drive decisions.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information - Opportunity - Insight - Engagement - Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen www.aberdeen.com or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to www.harte-hanks.com.

Newsdesk / eyeforprocurement.com

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Dell Launches 'Direct Talk' for Diverse Suppliers

Representatives from diverse businesses across the United States  met with Dell managers to learn about upcoming procurement opportunities and to better understand the company's supplier guidelines and processes related to doing business with Dell.

The first in a series of Direct Talk forums, the session was based on feedback from diverse firms and included one-on-one meetings and extensive information sharing on how to participate in near-term requests-for-quote (RFQ) or how to develop capabilities to participate in future RFQs. During the event, attended by representatives from a dozen firms, Dell procurement managers described the company's needs, high standards and expectations as it seeks to expand its supply chain through diverse partnerships.

"As Dell continues to grow, it's important that our supply-chain partnerships reflect an increasingly diverse set of customers and employees," said David F. Brown, vice president of Dell Worldwide Procurement. "Direct Talk is a means for us to engage directly with a set of potential partners who are eager to grow with us and who mirror our commitment to diversity."

Brown also said that expanding its relationship with diverse firms, which represent a growing customer base for Dell, is "smart business" and an element of the company's strategic growth plan. According to a 2006 report from the U.S. Department of Commerce, the number of U.S. companies from 1997-2002 increased by 2 million, with more than 50 percent of the increase accounted for by minority-owned firms.(1) Since 2001, Dell has increased its spending with diverse suppliers by more than 66 percent, last year spending $2.1 billion.

Dell is focused on diverse supplier development throughout its global supply chain. Earlier this month, the company sponsored the National Minority Supplier Development Council's first Mission to China. The mission was designed to share best practices on minority business development with the Chinese government and help U.S. diverse firms become more knowledgeable and globally competitive by forming business ties with diverse firms in China. Last month, Dell held its first Global Citizenship Workshop in Shenzhen, China, where it encouraged key suppliers to adopt Electronic Industry Code of Conduct workplace standards.

The company this year rose to second place on DiversityBusiness.com's list of the Top 50 Organizations for Multicultural Business Opportunities and received the "2005 Corporation of the Year" award from the Central & South Texas Minority Business Council. The annual award goes to the member corporation that demonstrates the deepest commitment to minority business development. In August 2005, Hispanic Network magazine listed Dell as a Top Company
for Supplier Diversity. One of the leading corporations in supplier diversity, AT&T, recently recognized Dell's efforts in driving supplier diversity with it annual supplier diversity achievement award.

About Dell
Dell Inc. (NASDAQ:DELL) listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell is a leading global systems and services company and No. 34 on the Fortune 500. For more information, visit www.dell.com, or to communicate directly with Dell via a variety of online channels, go to www.dell.com/conversations. To get Dell news direct, visit www.dell.com/RSS.

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Western Importers Express Concerns Over China VAT Refund Policy Changes

Most Western companies that import materials and products from China expect negative effects, including price increases, from China's new VAT refund rate policy, according to a recent survey. The survey, conducted by China strategy consulting firm Technomic Asia, examines the impact this new VAT policy is expected to have on affected companies.

The new VAT refund rate policy, announced by the Chinese government on June 19th, will reduce the amount of VAT refund Chinese exporters will receive. The scope of the new policy's impact will depend on the exporter's corporate structure and the type of product it exports, but this survey shows that this policy change will have a direct impact on the competitiveness of Chinese exports. Foreign and Chinese companies exporting from China, as well as Western companies using China as an export source for foreign market consumption, will be affected.

Some key findings from the survey:

• Approximately 70 percent of respondents were not fully clear on the potential impact from the new VAT policy. Most anticipate some negative fallout, but only 25 percent would expect "very negative" economic consequences.
• Virtually all respondents expect their current suppliers to raise prices. More than 60 percent of respondents expect prices to go up by 3 percent to 5 percent or more.
• 60 percent of respondents believe the VAT change will have greater consequences than the appreciation of the RMB, China's currency, this year.
• Only 10 percent intend to shift supply sources to other countries, though roughly 40 percent are still uncertain and few who intend to establish manufacturing in China will alter their strategy as a result of the VAT refund change.
• A number of different countermeasures will be used to offset the impact of the VAT policy. More than half intend to "share the burden" with existing suppliers. Some respondents even see potential advantage over competition as a result of policy change, notably over low-end Chinese exporters.

"This policy change is a major step by the Chinese government to level the playing field, and it will clearly affect the weaker suppliers," said Steve Ganster, managing director of Technomic Asia. "But in the Western markets where Chinese suppliers enjoy a dominant market share, those suppliers will have the power to pass on the higher costs to their customers."

These findings reflect a survey of 82 Western companies currently sourcing products or materials from China. A summary of survey results is available by contacting Technomic Asia at info@technomicasia.com.

About Technomic Asia
Technomic Asia is a strategic consultancy with more than 20 years of experience helping clients plan and execute Asian growth strategies. Technomic Asia helps companies enter the Asian market or expand their business by providing critical market insight, an understanding of business potential and assistance in designing the optimum strategy for success. Technomic Asia's Steven Ganster and Kent Kedl are co-authors of "The China Ready Company," a book that details the formation of a successful China strategy. (www.technomicasia.com) (www.chinareadycompany.com)

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BCG Study Identifies Ten Practices for Successful Sourcing From China

According to a new report by The Boston Consulting Group (BCG), companies are encountering increasingly tough challenges, both internal and external, as their sourcing operations evolve through four stages of maturity -- each more complex than the last. To progress, companies must continuously renew themselves to meet the emerging challenges. The study suggests that the stronger performers are better able to overcome these challenges. Chief among them is internal resistance, which stems from three main factors: poor understanding of Chinese suppliers' capabilities, lack of incentives for sourcing success, and perceptions of risk. Also important is top-down leadership. "Without top management support and drive to remove roadblocks, it is difficult to drive changes internally," explains Jim Hemerling, coauthor of the report.

Released today by BCG's Operations and Global Advantage practices, the report -- "Sourcing from China: Lessons from the Leaders" -- reveals that companies with the greatest success at China sourcing follow ten best practices. These include:

• Defining a clear sourcing strategy with specific targets and plans. The study revealed that 87 percent of companies have sourcing targets, but only 33 percent have translated those targets into specific action plans.
• Integrating China suppliers and R&D into design. More advanced companies have found that products designed elsewhere limit the benefits of China sourcing. The key is to leverage Chinese supplier's capabilities by integrating the suppliers and China technology centers into product design.
• Gaining 100 percent transparency into sourcing volumes and savings. Leading companies have developed country-specific scorecards and data collection systems that provide clear transparency, but many still operate in the dark.
• Addressing real and perceived risks. These risks include fluctuations in exchange rates, changes in the costs of labor and materials, power outages, quality problems, and transportation delays. Addressing these risks is one of the most important practices for overcoming internal resistance.
  

Other key findings:

• A growing number of companies are consolidating their local and global China sourcing activities to leverage scale and increase their negotiating strength with suppliers. In fact, 64 percent of the companies surveyed have merged these two functions under one organization.
• Savings vary widely from a reported high of 60 percent of landed costs for commodities and products sourced from China, with an average landed-cost savings of more than 20 percent.
• The volume of China sourcing also varies widely by industry and company, depending on how developed the supply base is and how long the companies have been active in China.

China sourcing -- and the skills needed to succeed -- will continue to evolve. Approaches that were best practices just a few years ago are now standard in most China sourcing offices. As coauthor David Lee notes, "To stay ahead in this arena, companies need to continuously reinvent themselves."

To receive a copy of "Sourcing from China: Lessons from the Leaders" or to speak with a BCG officer about its findings and insights, please contact Eric Gregoire at + 1 617 854 4570 (gregoire.eric@bcg.com) or Gu Li at +86 21 2306 4069 (gu.li@bcg.com).

About The Boston Consulting Group
Since its founding in 1963, The Boston Consulting Group has focused on helping clients achieve competitive advantage. Our firm believes that best practices or benchmarks are rarely enough to create lasting value and that positive change requires new insight into economics and markets and the organizational capabilities to chart and deliver on winning strategies. We consider every assignment to be a unique set of opportunities and constraints for which no standard solution will be adequate. BCG has 64 offices in 38 countries and serves companies in all industries and markets. For further information, please visit our Web site at www.bcg.com.

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Brooks Brothers Moves Worldwide Supplier Transactions Onto TradeCard

TradeCard, Inc., the leading provider of global trade solutions for financial and physical supply chain automation has announced that Brooks Brothers, a division of Retail Brand Alliance Inc. (RBA), has extended its TradeCard membership to fully automate transactions with its global suppliers from purchase order through payment.

Moving supplier transactions onto the TradeCard Platform is part of a global strategic initiative at Brooks Brothers to generate supply chain efficiency and support business growth. TradeCard's on-demand platform enables Brooks Brothers to improve infrastructure and grow as a global organization without adding new offices, IT or staff. Transaction automation through TradeCard will improve visibility of processes and ensure better control of goods and money movement.

"Removal of paper and manual processes in our transactions is a catalyst to better visibility and control in our supply chain," said Joe Dixon, Senior Vice President of Sourcing, Production and Technical Services at Brooks Brothers. "TradeCard allows us to improve collaboration with vendors and keep a scorecard to ensure we're making the right decisions with our strategic suppliers overseas. This is an important initiative within our broad strategy to become more agile and operate a smarter global supply chain."

Brooks Brothers works closely with suppliers in the Far East, Europe and the U.S. "Brooks Brothers is a classic TradeCard customer success story," said Kurt Cavano, CEO of TradeCard, Inc. "Brooks Brothers began conducting transactions on the TradeCard Platform in 2005 as part of a strategic relationship with one key supplier. Today, after seeing the impact of automating transactions on our platform, Brooks Brothers is extending TradeCard's value to its suppliers worldwide to improve supply chain visibility and drive business growth." Join Brooks Brothers and TradeCard for a sourcing webinar on September 12, 2007 at Noon ET.

For details: https://tradecardevents.webex.com/tradecardevents/onstage/g.php?t=a&d=661230056. TradeCard connects new buyers and suppliers on its trade platform, which provides online access to a network of more than 3,000 existing trade partner members around the world. TradeCard members are supported by a local "feet on the street" customer support team that speaks 32 languages and assists customers in over 40 countries. TradeCard helps clients that range from $10 million to over $20 billion in revenue to eliminate waste and delay from the sourcing process. Financial services available on the TradeCard Platform help these clients better compete by extending operational agility while improving margin and cash flow.

About Brooks Brothers
Founded in 1818, Brooks Brothers currently operates stores in the United States, Europe, Japan, Hong Kong, China, Malaysia, Singapore, Taiwan, Chile and Dubai. The company also sells its merchandise through a direct mail catalog and e-commerce site, brooksbrothers.com. Brooks Brothers was acquired in December 2001 by Retail Brand Alliance, Inc., a privately owned company which is specialized in manufacturing, merchandising and retailing. Please visit www.brooksbrothers.com for further information and store locations.

About TradeCard
TradeCard is the leading provider of on-demand supply chain management solutions. The TradeCard Platform synchronizes financial transactions with physical events in the global supply chain to help customers automate trade transactions from purchase order to payment and chargebacks. Buyers, sellers and their trading partners manage transactions through a web-based platform with online financial services integrated into the workflow. This turnkey transaction management enables customers to improve margins and enhance growth, with extra-organizational supply chain visibility. TradeCard's on-the-ground trade experts throughout the world assure superior supply chain agility.

TradeCard manages global trade for thousands of users in over 40 countries, including Columbia Sportswear, Rite Aid and Wolverine Worldwide. TradeCard Inc. is headquartered in New York City and has offices in San Francisco, Hong Kong, Brussels, Taipei, Seoul, Tokyo, Colombo, and Shenzhen. TradeCard is located online at www.tradecard.com

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EPA Recognizes Pepsi's Three Anchor Bottlers Among Nation's Top Purchasers of Renewable Energy Certificates

In an effort to extend PepsiCo's sustainability efforts to the supply chain, the three largest Pepsi-Cola bottlers in North America announced today that they are each purchasing renewable energy certificates (RECs) to match 100% of the electricity used by their U.S. operations. Combined, The Pepsi Bottling Group, Inc., PepsiAmericas, Inc. and Pepsi Bottling Ventures, LLC are purchasing nearly 629 million kilowatt hours (kWh) of green power annually through RECs. Together the purchases of these three companies would rank second among the largest purchases within the U.S. Environmental Protection Agency's Green Power Partnership, behind top-ranked PepsiCo.

Green power is produced from renewable resources such as solar, wind, geothermal, biogas, biomass and low-impact hydro. These energy sources are considered cleaner and have a superior environmental profile than conventional sources of electricity. Purchasing RECs helps drive the development of additional green power capacity nationwide.

Today, the U.S. EPA updated each of its top partner lists, highlighting the largest purchasers in the Green Power Partnership. The list highlights EPA Green Power Partners that have completed the largest annual purchases of green power through July 9, 2007. EPA updates its Top Partner lists quarterly, which are available at www.epa.gov/greenpower/partners/top25.htm.

Here are specifics about each of the bottlers' purchases:

• The Pepsi Bottling Group, Inc. is purchasing RECs to match nearly 458 million kWh of power. This individual purchase ranks them No. 4 on EPA's Top 25 list. They are also participating in EPA's Fortune 500 Green Power Challenge and currently rank No. 4 among participating Fortune 500 partners. The goal of this campaign is roughly to double the existing REC purchases among Fortune 500 Green Power Partners in order to exceed 5 billion kWh of collective purchasing annually. Currently, there are nearly 50 Fortune 500 companies in EPA's Green Power Partnership. The Challenge concludes at the end of 2007.
• PepsiAmericas, Inc. is purchasing RECs to match more than 157 million kWh of power. This individual purchase ranks No. 13 on EPA's Top 25 list.
• Pepsi Bottling Ventures, LLC is purchasing RECs to match nearly 15 million kWh of power.

In April, PepsiCo announced it was purchasing RECs to match more than 1.1 billion kWh of power, becoming the largest purchaser to date under EPA's Green Power Partner program. PepsiCo has maintained that leadership position and remains the No. 1 purchaser on EPA's Top 25 list. Following its own purchase, PepsiCo reached out to the three largest Pepsi-Cola bottlers and encouraged them to purchase green power certificates.

"The purchases made by these three bottlers represent a broader effort by our entire system to work together and continue what PepsiCo started in April with its record purchase," said Dawn Hudson, president and CEO of Pepsi-Cola North America. "This represents a collective approach to protecting the environment and becoming more sustainable in the long-term -- something our consumers, customers, employees and investors can feel good about. It's all part of PepsiCo's commitment to Performance with Purpose -- to do better by doing better."

"America is shifting to a 'green culture,' with more and more businesses understanding that environmental responsibility is everyone's responsibility," said Marcus Peacock, EPA's Deputy Administrator. "EPA commends the Pepsi bottlers for making a long-term commitment to protecting the environment."

All three Pepsi bottlers are purchasing RECs from Sterling Planet, a leading green power marketer. The bottlers' purchase of certificates will support the development of a combination of wind, small scale hydro electric, biomass, landfill gas, biogas and geothermal resources. Sterling Planet, a leading green power marketer and supplier of RECs, was also the supplier of RECs for PepsiCo's own green power purchase of more than 1.1 billion kilowatt-hours earlier this year.

Based on national average emissions rates, the U.S. EPA estimates that the three bottlers' aggregate purchase of more than 629 million kWh is the equivalent amount of electricity needed to power nearly 39,000 average American households annually. Additionally, the combined green power purchase of these three individual companies is equivalent to avoiding the carbon dioxide (CO2) emissions of nearly 71,000 passenger cars each year.

Additionally, with these purchases, all three bottlers appear on EPA's 100 Percent Green Power Purchasers list and also qualify as members of EPA's Green Power Leadership Club. The "100 Percent Green Power Purchasers" list features organizations that are buying enough green power to meet 100 percent of their U.S. organization-wide purchased electricity use. This list includes more than 330 partner organizations demonstrating environmental leadership -- from the largest corporations and government entities, down to some of the smallest organizations and businesses in the United States. The Leadership Club honors Green Power Partners that have made exemplary green power certificate purchases that significantly exceed the minimum Green Power Partnership purchase requirements. EPA's Leadership Club purchase requirements are 10 times the minimum requirements to become a Partner.

About The Pepsi Bottling Group
The Pepsi Bottling Group, Inc. (www.pbg.com) is the world's largest manufacturer, seller and distributor of Pepsi-Cola beverages with operations in the U.S., Canada, Mexico, Russia, Spain, Turkey and Greece.

About PepsiAmericas
PepsiAmericas is the world's second-largest manufacturer, seller and distributor of PepsiCo beverages with operations in 19 U.S. states, Central Europe and the Caribbean. For more information on PepsiAmericas, please visit www.pepsiamericas.com.

About Pepsi Bottling Ventures
Pepsi Bottling Ventures, based in Raleigh, N.C., is PepsiCo's third- largest anchor bottler in the United States, serving a population of more than eight million people in central and eastern North Carolina, New York's Nassau and Suffolk Counties, and parts of Delaware, Maryland and Virginia.

About EPA's Green Power Partnership
EPA's Green Power Partnership is a voluntary program that encourages organizations to purchase green power as a way to reduce the environmental impacts associated with conventional electricity use. The Partnership currently has hundreds of Partners voluntarily purchasing billions of kilowatt hours of green power annually. Partners include a wide variety of leading organizations such as Fortune 500 companies, small and medium sized businesses, local, state, and federal governments, trade associations, as well as colleges and universities. For additional information, please visit www.epa.gov/greenpower.

To view a complete listing of EPA's Green Power Partners and information about buying green power, visit www.epa.gov/greenpower/.

For more information on EPA's Top Partner lists, visit www.epa.gov/greenpower/partners/top25.htm.

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Pepsi Tops List Of Green Power Purchasers

The EPA has updated its Top Green Power Purchasers list. The National Top 25 list of Green Power Partners accounts for more than 6 billion kilowatt-hours per year of green power purchasing, more than 60 percent of the total kWh in the Green Power Partnership.

EPA's National Top 25 list ranks Pepsi in first place and two of Pepsi's three independent bottlers at fourth and 13th. In April, Pepsi announced the largest-ever corporate REC purchase, matching the purchased electricity used by all PepsiCo US-based manufacturing facilities, headquarters, distribution centers and regional offices.

The total aggregate purchase of the three independent Pepsi bottlers is nearly 629 million kWh per year. Two of the three bottlers rank on EPA's National Top 25 list, and all three found placement on EPA's 100 percent Green Power Purchaser list, while one bottler also ranks among the more than 45 Fortune 500 corporations participating in EPA's Fortune 500 challenge.

Kohl's Department Stores increased its green power purchases to raise its ranking to eighth nationally. Kohl's recently announced that it is converting more than 75 percent of its department stores in California to solar power. Mohawk Fine Papers places on the list at 22nd. Mohawk recently began offsetting 100 percent of the annual electric power consumption across all its operations in New York and Ohio with the purchase of 100 million kWh of renewable energy certificates.

Here's the updated list in descending order of purchase size as of July 2007.
(kilowatt - hours / year)

1. PepsiCo 1,105,045,154
2. Wells Fargo & Company 550,000,000
3. Whole Foods Market 509,104,786
4. The Pepsi Bottling Group, Inc. 457,851,838
5. U.S. Air Force 457,500,000
6. Johnson & Johnson 400,702,978
7. U.S. Environmental Protection Agency 329,880,513
8. Kohl's Department Stores 201,396,000
9. Los Angeles County Sanitation Districts 196,003,000
10. Starbucks 185,000,000
11. DuPont Company 180,000,000
12. U.S. Department of Energy 157,964,000
13. PepsiAmericas, Inc. 157,062,875
14. Vail Resorts, Inc. 152,000,000
15. Cisco Systems, Inc. 128,204,000
16. HSBC North America 124,544,000
17. Staples 121,800,000
18. New York University 118,616,000
19. The World Bank Group 114,735,000
20. University of Pennsylvania 112,000,000
21. IBM Corporation 110,103,000
22. Mohawk Fine Papers Inc. 100,200,000
23. U.S. Department of Veterans Affairs 90,000,000
24. NatureWorks LLC 89,000,000
25. Sprint Nextel 87,600,000

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Environmental Concerns Distant Priority In IT Purchasing Decisions

Over 60 percent of companies regard cost as the key factor in IT purchasing decisions and over 35 percent view security as the primary concern, according to the latest survey from 1E. Environmental concerns remain a distant third priority, with just three percent of respondents citing these issues as their priority.

1E's study, which surveyed IT managers from 100 UK enterprise organizations, indicates that the more traditional considerations of cost and security continue to dominate the procurement agenda for technology infrastructure, despite increasing corporate and governmental focus on issues such as power consumption and carbon footprints.

More than two-thirds of those companies surveyed are yet to impose any kind of formal policy for the shutting-down of company PCs during evenings and weekends. Findings of a recent National Energy Foundation study, conducted in collaboration with 1E, estimated that 1.7 million corporate PCs are routinely left on by UK companies when not in use, wasting some 1.5kWh of electricity and generating around 700,000 tonnes of unnecessary CO2 each year. 

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