It’s hard to have too much sympathy with one of the UK’s biggest discount retailers, but the recent experience of Primark and the controversy surrounding their somewhat dubious supply chain practices merely illustrates the potential pitfalls of global sourcing in such a highly competitive industry.

Panorama discovered that suppliers in Indian had sub-contracted work to home workers – a practice that had escaped the attention of those who audit the company’s factories in India.

However, it’s unlikely that Primark – who subsequently dumped the suppliers following the BBC investigation – is alone in falling victim to this kind of sub-contracting, which begs the question of whether the role of the supply chain auditors should be expanded.

As the procurement functions in the western world grow ever-more demanding then so the pressure on suppliers in the developing world grow. And tighter deadlines and order turnaround times in the current economic climate have inevitably placed suppliers, many of whom cannot afford to lose valuable business, in a difficult position.

Few would argue that auditors have a duty to look beyond the factories that supply some of the world’s most powerful companies, but how they gain access to the somewhat murkier world of sub-contracting remains to be seen.

And until they find a way, ethical sourcing concerns will abound.

What to do about the cost of oil is fast becoming the $64,000 question of our time.

World leaders were sweating in Saudi Arabia this weekend (not just because of the stifling heat but also because of the pressure they’re all feeling in their home countries as fuel prices continue their seemingly inexorable rise) and, at least, one thing is now clear – there’s a consensus that something needs to be done before global business suffers lasting damage.

There are still those at Opec who continue to blame speculators, and not supply issues, for the price hikes but recent events in Nigeria, and ongoing instability in the Middle-East appear, from this end at least, to suggest that both are culpable.

From a procurement perspective the noises coming from Jeddah are finally offering some crumbs of comfort that an area of spend that has risen beyond all predictions could soon return to more manageable levels.

Don’t get too excited though. The final communiqué from the conference made no mention of increasing supply, although Saudi Arabia did concede that more oil would be pumped from the region “if demand for such quantities materializes and our customers tell us they are needed.”

With that statement in mind, Opec officials can expect their mobiles to be ringing off the hook in the coming days.

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.

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.

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.

Devising a coherent supply chain strategy may be taxing the minds of many procurement executives, but many are still struggling to achieve their aims. Not my words, but those of Stanley Fewcett and Gregory Magnan, the authors of a recently published CAPS Research Focus Study, ‘Achieving World-Class Supply Chain Collaboration: Managing the Transformation’.

According to their research, managers are spending more time than ever before evaluating supply chain-enabled business models. Despite this Fawcett and Magnan claim that only a handful of companies have developed fully integrated collaborative capability, whilst for the majority supply chain collaboration remains “ad hoc” and “fragmented”.

And the report’s authors warn that those companies who are failing to develop their supply chain strategy are in danger of being left behind by the competition.

But fear not, the authors have taken the time to provide a three-step process to highlight the benefits of companies pursuing a collaborative supply chain approach.

These are; introspection – the way companies view and interact with their customers and their systems thinking orientation; Supply chain design – which is a five stage process incorporating scanning, mapping, costing, competency/outsourcing management and rationalisation; and Supply chain collaboration – which refers to the methods used to drive the transformation, including relationship alignment, information sharing, performance measurement, people empowerment and collaborative learning.

Fawcett and Magnan have used their data to compile a supply chain collaboration benchmarking diagnostic, and if their findings are anything to go by, it’s going to prove a very useful tool indeed.

Life is far from sweet for one of Britain’s most famous companies.

On Monday of this week Cadbury’s announced it was planning to cut 15% of its global workforce in a bid to sustain the profitability of the business . The company, that was set up to sell tea and coffee in 1824, will next month find out what penalty it faces in the aftermath of the highly publicised salmonella outbreak in the UK last summer.

The scare, which led to almost one million bars of its chocolate being recalled, was sufficient for Birmingham City Council - who police health and safety at the company’s Bournville site in the midlands where the chocolate-making process is completed - to prosecute Cadbury’s for the alleged sale of “unsafe” chocolate.

Cadbury’s also faced a prosecution from Herefordshire Council over charge relating to environmental health.

The verdicts, the first of which is expected on 24 July, are likely to raise some important questions concerning Cadbury’s supply chain and where the actual blame for the outbreak lies.

However, regardless of whether the salmonella outbreak originated in their Birmingham site or was passed on by one of their suppliers, Cadbury’s have said that the bill for dealing with the contamination is likely to top £30m. A total of which, as you would imagine, would be punishment enough.

However, the six offences the company are alleged to have committed in relation to Herefordshire Council’s prosecution carry a maximum penalty of an unlimited fine and/or two years imprisonment.

Although the chances of the company’s top executives facing a prison sentence is small (when I last looked , there were no more cells free anyway) the seriousness of the offences merely serves to demonstrate the importance of a robust and rigorously policed supply-chain.

Something which Cadbury’s are finding out to their considerable cost.

It’s increasingly difficult to have a conversation with anyone involved in procurement without the word ‘global’ slipping into the dialogue at regular intervals, which is why a recent piece of research caught my eye.

According to BDP International’s Centrix consulting unit and St Joseph’s University in Philadelphia, nearly half (48%) of supply chain executives consider their supply chains to be global, despite the fact that the operating decisions that dictate the strategy of these supply chains appear to be anything but.

The research found that 60% of the executives questioned in the study said that supply chain decisions in their companies were regional or local in scope. Just 35% of respondents said that their supply chains were managed globally.

The findings led Yone Dewberry, Centrix Managing Director, to conclude that the majority of multinational companies are operating supply chains that are not “global” but are in fact “multi-domestic.”

“The reasons for this vary, but the unrelenting pressure to achieve per-unit cost reductions, in tandem with the emergence of true global data visibility, must hasten supply chain integration to accommodate the exigencies of international trade,” Dewberry said.

The research found that the most pressing issue facing those companies who do operate in a truly global marketplace to be on time delivery, with 64% of those questioned (87% European and 55% North American), citing this as their biggest concern.

Conversely, in a study that unearthed a diverse range of findings, 43% of those involved in the study reported that the implementation of a global supply chain strategy had led to shorter lead times, courtesy of increased investment in supply chain technology and management systems.

For many companies though, it seems that the quest to go global has not extended as far as they imagined.

The next five years could see a fundamental shift in the way supply chains are managed, that's according to the ELI Broad School of Management at Michigan State University.

Whilst today’s supply chain concerns revolve around avoiding disruptions, on-time delivery and leadership, the study suggests the next five years could see a dramatic change of priorities.

Their findings come after a series of interviews with leading figures at global companies such as BP, Kellogg’s and Harley Davidson and an exhaustive supply chain audit of US-based automotive supplier Delphi.

Speaking at a Supply Chain Management Conference and Exposition at Steelcase University, Steven Melnyk, MSU professor of operations and supply chain management, said the research had found in the future the supply chain is “not going to be about buying things” but will be about "managing relationships".

Fast forward to 2012, the study claims the biggest headaches facing procurement executives are likely to issues around areas such as intellectual property protection, process development, managing supplier relationships, trust, talent retention and raw material costs. 

With this shift away from cost driven priorities Melnyk said he believed any failure to embrace and invest in innovation could have potentially disastrous consequences, refering to the success of renowned innovators such as Toyota and Apple to back-up his point.

"Innovation is going to be the next battlefield," he said. Don't say you haven't been warned.

The quest to be lean is spreading from the catwalk to the supply chain - that’s if the recent results from a survey by E2open, a supply chain management software company, are to be believed.

They recently carried out 160 interviews with participants at the SAP Logistics and Supply Chain Management Conference 2007, and found that half of all respondents (48%) named a lean supply chain as their top priority.

The study suggests many companies are looking to evolve from a “push” to “pull” demand-driven strategy as they look to eliminate waste. However, like the super-models doing all they can to hit size zero, lean supply chains come with their own unique set of hazards, particularly in an era when companies are relying more heavily than ever before on suppliers across the globe.

At present it seems many companies believe the benefits far outweigh the drawbacks, although as any CPO will tell you, the implementation of a lean supply chain is very much dependent of every part of the supply chain working to its optimum levels. Something the automotive industry - with continual problems with shipment methods – is continually learning to its cost.

Other issues raised by respondents in the E2open survey included; the need to obtain visibility into supply chain information by replacing manual processes with automation (45%); and the requirement to leverage economies of scale across multiple operating units (39%).

It’s the pursuit of ‘lean’ that leads the way though, and like size zero, it’s not a trend that’s going to disappear anytime soon.