Ethical sourcing has moved on. Earlier this week we covered a story concerning the ditching of Tetley by McDonalds because the tea-giant wasn’t a member of the Rainforest Alliance.

An entirely understandable decision in the modern era you would think, until it transpires that although Tetley (owned by Indian company Tata) isn’t a member of McDonald’s preferred sourcing programme it is a member of the ethical tea parternship – one of the UK’s three recognised tea sourcing initiatives.

All of which suggests that McDonalds has set a dangerous precedent, given that it no longer seems enough to simply source your product according to ethical guidelines (the conclusion in this case appears to be that some guidelines are more ethical than others).

Tetley themselves brushed off the decision, with Percy Siganporia, managing director at Tata Tea, describing the decision as “disappointing”, before reiterating that Tetley retained its “commitment” to the Ethical Tea Partnership.

But whilst every ethical sourcing programme has a distinct set of priorities - the tea partnership, for example, was set up to improve the lives of the millions of people working in tea plantations around the world – it’s their shared goals that really make a difference.

Decisions such as the one seen by McDonalds this week could, in the long-term, prove counter-productive.

In humanitarian terms, it has been a truly terrible week in South Asia. The cyclone in Burma is reported to claimed over 100,000 lives (the real figure may be some way higher), whilst conservative estimates now place the death toll after the earthquake in China’s Sichuan province at 20,000.

These shocking figures give an indication of the scale of the rebuilding task facing two of the world’s most secretive countries and, in a truly global business world, their impact is likely to be felt for some time to come.

Many supply chains now lean so heavily on suppliers based in South Asia that it’s inconceivable that these two tragic events won’t have a serious impact on delivery lead times and production. Intel, for example, has already shut down a chip packaging factory in Chengdu, sending ripples of concern throughout the global PC industry.

"While the current situation is dynamic, we hope to resume operations as soon as possible pending the completion of a seismic assessment of our facilities and restoration of infrastructure in the region," the company said in a statement.

Intel, however, are far from the only company looking nervously East at the current time and, as the increasingly desperate rescue operation continues, the aftershocks are likely to extend well beyond Chinese and Burmese borders.

A s reported by Procurement Leaders, the sourcing policies of one of the world’s biggest companies – despite its protestations to the contrary – have been influenced by a well-financed, but highly effective, ‘viral’ marketing campaign by a leading pressure group.

Greenpeace’s objective was to ensure that Unilever checked the environmental credentials of its palm oil suppliers as part of an ongoing campaign to prevent deforestation.

And although Unilever insisted that their rapid about-turn was already under discussion, the move merely serves to illustrate the power of new media such as the internet, and seems to suggest that the more savvy pressure groups are looking beyond the normal means of protest to achieve their aims.

Another high profile company, Marks and Spencer, has also recently felt the wrath of these new ‘viral’ campaigns after the union, Unite, (somewhat unsuccessfully) attempted to use Google AdWords to highlight what it perceived to be poor employment practices within the company’s supply chain.

This particular campaign failed to achieve its aim, but the growth of viral marketing is likely to spread – and, if companies have anything to hide then, like Unilever, they had better be prepared to have their dirty linen washed in public.

Firstly let us start with a warning that anyone who is baffled by procurement phraseology should look away now.

Supply Chain Digest last week featured a story on comments by General Motors’ vice president of global procurement and supply chain operations – the immaculately coiffered Bo Andersson.

Speaking at an i2 user conference across the pond, Andersson enthusiastically trumpeted a new creation, known (bafflingly) as “Centralised Decentralisation”.

Despite the name, the concept is remarkably simple, and works on the basic premise, to paraphrase SCD, of “centralising the purchasing of individual materials and components to leverage buying power and scale.” Nothing too ground breaking in that, except that, at the current time, GM is doing this for different components across the world, not just out of its central headquarters.

Under the banner of centralised decentralisation (we’re sure that a more catchy name will replace this rather cumbersome phrase in the near future), Andersson argues that sourcing technology will allow his teams to operate at their optimum, wherever they are in the world, and whatever they are buying.

“One day, I decided to just do it,” he said. “We were buying seat belts in a number of locations around the world. We had some people in Mexico who were very good at buying seat belts, so one day I just decided I would have them buy seat belts for all of GM. That’s how I made it happen.

“I told all of our seat belt suppliers worldwide, ‘If you want to sell seat belts to GM, starting now you need to go to Mexico.’”

“In the past, it always seemed to turn out that local buyers for some reason found it necessary to source from local suppliers. Now, buyers and suppliers must take a global view.”

Today it’s seatbelts but tomorrow it could be, well, just about anything. Buyers at GM had better strap themselves in, under Andersson, it seems, they’re going places.

Everyone loves a good myth but, when it’s perpetuated by the media, it doesn’t take long for fact and fiction to become intertwined - which is why Darryl Conley’s recent presentation to delegates at Global Sourcing Live event offered a breath of fresh air.

Using evidence compiled by the Everest Group, Conley set about debunking some of the myths surrounding offshoring that had built up an almost unstoppable momentum over the past 12 months.

Firstly he reported that, despite recent headlines, labour arbitrage would still deliver significant cost benefits for at least the next ten years.

Secondly, Conley attacked exaggerated media coverage of decisions by the likes of Lloyds TSB, Philips and Aviva to bring offshore operations back home, claiming that it offered a “distorted” version of offshoring’s true picture.

He then set about dismantling the claim that only low value work was being offshored. “There is a fair degree of activity right across the value added stack,” he said, before using the example of knowledge process outsourcing as an area of potentially huge growth to further hammer home his point.

All well and good, but what about the bottom line? Everest’s research showed that 70 per cent of buyers were achieving savings of between 30 and 50 per cent. A further two-thirds of respondents also reported improvements in productivity (although on the flip side just 50 per cent noted any enhancement in quality).

Finally, tackling the myth that offshoring is only about India, he told delegates that the growth of areas such as Canada, the Philippines and Mexico (helped by their proximity to the US) meant that these countries were now posing a genuine threat to South Asia’s traditional dominance.

As a piece of myth-busting it was hard to beat.

Like George Clooney and his fellow doomed ship-mates in A Perfect Storm, Eos Airlines appears to be the best example of what can happen when extreme conditions combine to make survival impossible.

The start-up – named after a Greek goddess - appeared to have everything going for it when it started trading in 2005. Times were good, and Eos was offering executives a premium service (with a price to match) for those companies willing to stump up the cash to fly their people across the Atlantic.
 
Now, following hard on the heals of Maxjet, who crashed and burned in December, Eos has filed for bankruptcy. Citing rising fuel costs, the credit crunch (which made it nigh on impossible for the company to refinance their debt) and a reluctance of companies to embrace their business model in turbulent times, Eos has admitted defeat.

Its demise leaves Silverjet and L’Avion – who fly from Paris to New York - as the last remaining companies specialising in business class flights. However, given that Silverjet’s share price has fallen to 14p from a high of £2.09, and reports suggest that it’s French rival is also struggling, it seems unlikely that either will be in it for the long haul.

First Wal-Mart announces they are to restrict rice sales to its customers in the US, then Starbucks’ shares plummet on the back of huge hikes in the price of coffee and the reluctance of US consumers to stump up cash for lattes in the midst of worsening economic conditions across the pond.

It would have been hard to imagine either of these occurrences just 12 months ago but, courtesy of ongoing global instability, neither story caused anything more seismic than a momentary lifting of eyebrows.

“Era of cheap food ends as prices surge”, The Times headlined screamed yesterday as - alongside the revelation that a cheese sandwich now cost 33 per cent more than during the equivalent period last year – it listed the acute shortages that are causing mayhem across the world.

Rice, wheat and vegetable oil are all in short supply, sending prices soaring and leading to food riots in countries such as Bangladesh and Egypt. With this unrest likely to spread, it’s far from inconceivable that trouble in the sourcing hotspots of India, China and Vietnam will follow – with potentially devastating effects for procurement.

Sourcing always throws up some interesting challenges, but Burger King’s product development and innovation department is currently embarking a mission that tops most.

According to a story on BrandRepublic, Burger King’s sourcing team is on the look out for ingredients to put in the UK’s most expensive burger – a take-away could set you back £85.

The idea is nothing new, after all Selfridges was scouring the world for ingredients to include in a similarly priced sandwich not so long ago, but that doesn’t make the job any easier - after all, where’s the best place to source wagyu beef from?

Then again, if food prices keep rising, maybe it won’t be too long before £85 burgers become the norm.

It’s unclear as to how procurement jobs will be directly affected by the global credit crunch but whilst JP Morgan has predicted as many as 40,000 jobs could be shed in London alone, those willing to up sticks and seek their riches elsewhere could be handsomely rewarded.

It’s safe to say that the jobs market in the US and Europe has enjoyed better times (although jobless figures on this side of the Atlantic still give little indication of the slowdown biting), but as long as Asia and other emerging economies, in particular the Middle-East and Russia, continue to expand at their current rate, jobs will, it seems, be there for those willing to look outside their own borders.

Procurement expertise is highly sought after across the globe – and one country’s loss could certainly be another one’s gain.

The credit crunch has dominated the headlines throughout 2008 but for procurement a crunch of another kind could be just around the corner.

A recent survey by consultancy firm, the Everest Group, has found that a ‘talent crunch’ in India’s seven major outsourcing locations – Bangalore, NCR, Mumbai, Pune, Chennai, Hyderabad and Kolkata – is forcing a rethink in the BPO industry.

And as the talent pool in these cities shrinks (at the same rate that costs increase), it seems that more and more firms will be moving out to the business equivalent of the suburbs.

"It is difficult to sustain the growth in Tier I cities because of the rising real estate prices and talent crunch. There is no option but to move to Tier II cities," Everest Group's Country Head (India) Gaurav Gupta said.

 "Movement to lower-cost cities within India is likely to result in additional 15-30 per cent reduction in operating cost despite lower employability and higher management costs," Head of Global Services at Everest Research Institute, Nikhil Rajpal, said.

The shift away from India’s traditional BPO hubs towards places such as Jaipur, appears inevitable, and these new ‘low cost cities’, could do much to alleviate the increasing issue of talent shortages.

How long it will take them to get up to speed remains to be seen but, if you were thinking of investing in a map, now might be a good time to get one.