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Sourcing vs. Travel Planners

                    Travel Planning - Is Sourcing Welcome Here?

I was reading Business Travel News last month and saw a small article that indicated that Sourcing groups aren't always welcome partners within a company's travel planning group. (see www.btonline.com, 1/28/2008, "Survey: Corporate Mtg. Planners Wary of Procurement, See Spending Rise")

I was particularly interested in this sound bite:

"As the role of procurement increases in the industry, many buyers said they still are not happy with the relationship. Of the 150 buyers who responded to the survey's questions about procurement, including but not limited to corporate buyers, 42 percent said their procurement departments had "created significant frustration or difficulty" in the meeting planning process."

What's critical about this comment/survey finding is that it implies that:

• sourcing is making deeper inroads into travel and entertainment expenditures
• change management, as a part of sourcing rollout initiatives, may need to become a larger part of sourcing program rollouts
• sourcing efforts must become faster as slow processes adversely impact the ability of workers in other disciplines to complete their tasks

When groups complain of another entity's encroachment into their part of the business, this can indicate that a bad case of sour grapes is underway; one group has lost political power or headcount; or, the new group is providing a service at level different than the prior incumbents.

If your firm is hearing sourcing and travel are feuding, pay very close attention to the rhetoric coming from both sides to understand what the real issues are. Make sure corporate savings and needed service levels are being met and stay away from refereeing some childish carping.

Sourcing: Sustainability or Durability?

Sustainable Technology?

This weekend, I had some help cleaning up the office.  In the course of that effort, we discovered a Dell laptop with all of its accessories still in the box.  This device can't have more than 15 hours of usage on it; however, because it is an older machine with Windows ME as the operating system and an insufficient hard drive, it is hopelessly obsolete.  This is a shame as it’s actually a fantastic system but in today’s marketplace it has zero value.

We also found a Fujitsu laptop that is even older and less capable of being upgraded.  There's also a Sony VAIO laptop with Windows 98 SE on it.  This machine is probably eight years old but it does a phenomenal job of supporting multimedia tasks but, alas, it is no longer current.

Holding the floor down, I have an E-Machine desktop unit with a fried motherboard.  I've been slowly cannibalizing parts from this device and will continue to do so for some time.

Lastly, we emptied out five boxes of miscellaneous cell phones and cell phone accessories (to paraphrase Hank Hill).  Some of those date back to two cell phone generations. I've retained them because I sometimes need them when my current phone drops and breaks.

The cell phones are an interesting technology because my older Nokia cell phones took incredible abuse over the years.  Sure, some of those older Nokia's weren’t very attractive (I still have one with a monochrome screen) and yet they still work just fine today.  With the Nokia's, all I needed to do was move the SIM card from one phone to the next and I was done.  Earlier generation Nokia phones required me to visit the cell phone store and switch the ESN number whenever I needed to change devices.  However, for the most part, the Nokia devices and their accessories were long-lasting with a high degree of interchangeable parts.

Today's cell phones are far from that.  The phones my son and daughter possess rarely make it through the first 30 days without some material break or failure.  They aren't made to be durable or to last.  Just like our laptops and desktop computers, failure and/or planned obsolescence is running at an ever more rapid clip.  The throwaway nature of technology is clearly running counter to the concepts of sustainability and corporate social responsibility.

Yes, I'm aware that computer hardware manufacturers are getting more aggressive in recycling their own products; however, before we applaud their recycling efforts we should ask what they are doing to extend the lives of the products they sell in the first place.

Let's go back to those laptops I discussed at the beginning of this post.  These devices are obsolete because Microsoft no longer supports security patches for the operating systems found on each.  To complicate matters, the minimum memory and hard drive storage requirements that newer operating systems like XP require are well beyond the disk/memory capacity or capabilities of these machines. I have offered these devices to many people who might have uses for them only to find that they want to immediately connect them to the Internet.  To do so would be almost irresponsible in this day and age knowing that these devices cannot be protected from hackers and other malcontents.

The first and most important step in improving the sustainability of technology is to develop technology that:

• can be upgraded easily
• is durable
• is supported for 10 years not 10 months

I don't want the technology I use contributing to the toxicity of other lands and people.  Nor, I do not I do not want my technology purchases filling up landfills needlessly and quickly.

Oh, check this out, I just found a bunch of old AOL installation CDs.  I wonder how I can recycle these?

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(If you ever get a sick iPod were soon be sure to check out www.rapidrepair.com . It could save you some serious coin and save the environment from other piece of technology headed for the landfill.)

Putting Sustainability into Practice

Sourcing: A Sustainability Case Study

For some time, I have commented via blogs and sourcing conferences as to the need for sourcing professionals to consider a broader range of information prior to committing to sourcing transactions.  Much of that dialogue has been focused on examining macro economic conditions, GDP variations, inflation rate projections, currency exchange rate movement, trade and fiscal deficits/surpluses, supplier financial condition and other data points.

Today's post, though, will focus on sustainability instead.  To put a sharper point on today's discussion, I would like to use a recent plant acquisition I facilitated as a reminder of the decisions great sourcing professionals should consider.

One of the first decisions we came to terms with was whether the new location should be a green field, existing or brown field site. Several green field sites would have required additional cost and time delays due to the need for clearing of trees, grading (and/or compacting) of land and installation of appropriate utilities.  Existing sites were often unsuitable for the planned use of the facility if they were affordable and all.  Zoning restrictions eliminated most pre-existing facilities.  Brown field sites had some material environmental issues; however, one side was eventually chosen. This was because of its extraordinarily low cost and also because of significant tax advantages that the federal government affords to those firms willing to make capital improvements in known brown field locations.

The tax advantages in a brown field site are numerous but the most significant permits depreciation of 50% of the capital improvements in the second year of operation.  Not only is this a huge win for shareholders, it also benefits the local community as it will see its tax base improve and new jobs moving into a depressed and distressed area.  The other major beneficiaries are the unspoiled lands that will remain so because of the decision to reuse previously developed property.

Sourcing of the capital equipment required for the new facility has also taken a greener and sustainable approach.  Almost all of the equipment being installed in this facility has been sourced from auctions, secondhand equipment brokers and other aftermarket sources.  Not only have these transactions resulted in significant capital savings, they have spared landfills and junkyards from further debris.

Even the workforce for this facility is being recycled.  The previous occupant of this facility was in a related business and some of its employees are being retrained for positions in this organization.  Sourcing of talent in an operation like this is often as critical as the sourcing of land, capital equipment and raw material.

Much of the discussion involving the feedstock for this facility centered around possible use of alternative technologies that would permit greater utilization of recycled materials.  Interestingly, one technology that would permit greater usage of lower grade raw materials was rejected because of zoning issues. Nonetheless, the new facility will utilize recycled materials for virtually all of its feedstock.  Sourcing personnel are now being challenged to find significant quantities of this secondhand material to support the additional production capacity.  This will require sourcing professionals to locate a form factor greater quantity of used material.

All in all, the sourcing challenges for this type of business expansion have been both illuminating and challenging for this firm’s sourcing group.  It is becoming abundantly clear that different individuals have different capabilities with regard to sourcing.  Many are adept at buying commodities through established markets and online sources.  They may be skilled at utilizing techniques like RFPs and reverse auctions.  However, many traditional sourcing techniques like these are not used frequently in the acquisition of alternative or secondhand assets and materials.  Sourcing of these items is often driven by one's ability to be a great detective, a fearless chaser of leads via the telephone and/or a creative person capable of sniffing out all new sources of supply up and down the value chain.

Creating a sustainability mindset within a sourcing organization may be more than just a training or sensitivity matter.  The skills required to excel in traditional sourcing disciplines as well as in more environmentally conscious spaces may be different and may require a different kind of sourcing professional.  How this transpires over time will be interesting to watch.