Letter From GSC President – Sanjay Sharma

by Sanjay Sharma

As we move into 2013, we are looking forward to the changes that are inevitably coming; there is an old saying “the change is only constant thing” . My experience tells me that wheel takes its own time to complete full circle. Something similar is happening in Outsourcing and in Global Sourcing. The Global Sourcing, which started some 20 years ago, is going to complete its full circle. The signs are there for us to see and that’s a change we will see soon.
There are many issues and reasons why the change will come and Offshoring and Outsourcing will be compared to On-shoring and In-sourcing.

The main reasons for change to take place are:

· Cost: Cost saving was one of the primary drivers for businesses to outsource and later outsource globally. As the cost of globally outsourcing is no longer justified, businesses will change their decision. Take example of BPO business which went to India in early 2000’s has either moved from large cities to tier II or tier III cities in India or moved to Philippines. Similarly by locating operations to tier III or smaller cities in North America, businesses are saving cost of operations. Lots of businesses have adapted to rural outsourcing, they now want to be on shore but in smaller/rural cost effective areas.
· Quality: As many businesses have started to realise that lower cost may result in lowering the quality of the product/services, especially if it is CRM or IT services, the impact is higher, businesses don’t want their customers to go for poor customer service as cost of acquisition is much higher than paying a bit extra and retaining business onshore and in-house.
· Control: Businesses don’t want control on their business activity to go, imaging if your call centre is located in Vietnam, back office in India, how much is your control over your business. The Executives spend much of their time and resources in travelling and communication just to be in control.
· Innovation: Most businesses want to constantly innovate and if their business needs to be not far from their customer base. They are willing to pay a bit extra cost and if they move their business to tier II & III cities in US or Canada, it is win-win situation for them.

With above reasons you would agree that next change is when businesses will go from off-shore to on-shore and out-source to in-source.

We at Global Sourcing Council are changing as well, I would like to welcome our incoming team very best and success.

Sanjay_Sharma  [box type=”shadow” ]Sanjay Sharma is the former President of the Global Sourcing Council. Mr. Sharma has over 20 years of global experience in information technology, supply chain and project management. He leads projects on automation and deployment of latest information technology to bring cost efficiencies and reducing dependencies. Mr. Sharma’s articles were published in business magazines and publications on the subjects of procurement, supply chain and project management. He speaks at conferences, seminars and symposiums. He works as consultant for project management and global sourcing. In addition he teaches project management subjects.[/box]


What Does Corporate Global Citizenship Really Mean?

by Luiza Oleszczuk

Corporate global citizenship is the new buzz word. The World Economic Forum claims that “Corporate Global Citizenship is anchored in (its) mission.” Tech giants like HP or Xerox, financial corporations like Morgan Stanley, and an increasing number of global companies have their own corporate global citizenship programs. These programs are increasingly acknowledging that the umbrella of their stakeholders also includes local communities in often distant and underdeveloped countries where they operate.

Microsoft sign at the entrance of the German Microsoft Campus in Unterschleissheim, Germany. Photo: Johannes Hemmerlein. 14 Jul. 2005

Microsoft sign at the entrance of the German Microsoft Campus in Unterschleissheim, Germany. Photo: Johannes Hemmerlein. 14 Jul. 2005

But what specific practices hide behind that term – “Global Citizenship”?

The Global Sourcing Council recently asked leaders from two corporations, Microsoft and Chrysler, and a non-profit entity, The Rockefeller Foundation, what the term “global citizenship” means for their organizations and what resulting practices it urges them to implement.

“Doing no harm” is No Longer Good Enough

Global corporations are beginning to understand that the rule of “Do no harm” cannot be their only goal. In order to build truly sustainable supply chains, global companies have to reach out to the communities they encounter, understand their needs and problems, and help empower them. That, in return, creates a healthy supply chain that, according to multiple experts, also brings greater financial gains.

Microsoft is a known leader in reaching out to the communities that the company operates in.

“Microsoft has an enduring commitment to working to fulfill our public responsibilities and to serving the needs of people in communities worldwide,” reads the mission statement of the company’s Corporate Citizenship program. “Fundamental to this commitment is the role we serve as a responsible global corporate citizen.”

Tim Hopper, the Responsible Sourcing Manager for the Microsoft Global Outsourcing’s Service Providers, was a panelist at the GSC’s recent Web Meeting (Global Citizenship: Building the Global Supply Chain for the Local Impact).

He presented to the audience some examples of the programs that Microsoft has created to fulfill its “corporate citizenship” mission. Among these is the Scorecard that the organization keeps, ranking its suppliers’ CSR and sustainability capabilities, as well as the Community Technology Center Program, which provides the foundation for teaching basic to intermediate technology skills and is designed to be used in community technology centers (CTCs). The program’s curriculum provides educational content for its stakeholders in the most underprivileged communities.

Through these and other programs Microsoft is aiming to help “people and businesses around the world to realize their full potential,” Mr. Hopper said during the panel.

“Do No Harm” cannot “be your entire mission,” agrees Todd Yaney, member of the Corporate Sustainability Core Team at Chrysler Group. One of the things that the term “global citizenship” means to Chrysler is “recognizing the global community and the responsibility that we have ourselves where we are doing business,” Mr. Yaney said on the GSC panel.

As one of its practices, for example, Chrysler established a “supplier code of conduct,” checking if its suppliers’ practices are socially responsible and sustainable.

But “sustainability for sustainability’s sake really isn’t very sustainable,” he added, reminding that each company has responsibilities towards all of its stakeholders, and that includes developing in a way that allows making profit. Profit and purpose can indeed meet in the corporate world.

For the Rockefeller Foundation, a global philanthropic organization, the idea of global citizenship has been part of its 100-years of development work around the world. The question, according to Eme Essien Lore – Associate Director in the foundation’s Africa Regional Office, is: “Is there demand on the side of the corporate world to pursue Impact Sourcing?” Ms. Essien Lore remains optimistic that there is.

The organization is pursuing its goal of spreading the practices of “Impact Sourcing”. “A nascent but growing arm of the global business process outsourcing (BPO) sector that intentionally employs poor and vulnerable individuals,” according to Ms, Essien. Impact Sourcing-based operations make it possible to serve the companies’ clients well while improving local communities, for example by educating and helping recruit affordable talent in Africa, Ms. Essien Lore, who leads such a program in Kenya, explained on the GSC panel.

Summing up, the World Economic Forum believes “that corporate global citizenship is fundamentally in the enlightened self-interest of global corporations since their growth, prosperity and sustainability is dependent on the state of the global political, economic, environmental and social landscape.”

Individual corporations seem to understand this too. Many of them, such as Chrysler, are still learning and looking up to the more experienced pioneers such as Microsoft.

“As more and more organizations become global and as outsourcing becomes a standard practice in today’s corporate world, traditional roles in supply chain management depart from its original charter of purchasing and logistics,” said Dr. Wanda Lopuch, Chair of the Global Sourcing Council. “The definition of stakeholders also evolves, embracing diversity of the global workforce performing its functions in a variety of non-standard working environments, local communities in which employees live and businesses operate and the availability of resources and environmental needs.”

To view the entire recording of the GSC Web Meeting – “Global Citizenship: Building the Global Supply Chain for the Local Impact” – click HERE

Luiza Oleszczuk[box type=”shadow” align=”alignleft” ]Luiza Oleszczuk is Development Director at the Global Sourcing Council. She is also a freelance journalist and a sustainable development enthusiast, as well as a part-time business research consultant specializing in the Eastern European markets. She holds a Master’s degree in English from University of St. Andrews. Among Luiza’s interests are international supply chains and CSR, the role of technology in social innovation, globalization and social issues related to it, policy and economics, and women in business and politics. Her articles have appeared in The Economist, Globalization Today, Outsourcing Magazine, Fox, The Christian Post and other publications.[/box]


3S Awards Corner: VOS Interview

VOS representative (Jose Flores) receives the 3S Employee Engagement Award 2012 from Dr. Zia Khan, VP of Rockefeller Foundation

VOS representative (Jose Flores) receives the 3S Employee Engagement Award 2012 from Dr. Zia Khan, VP of Rockefeller Foundation

3S People, 3S Community, 3S Environment – Sustainable & Socially Responsible Sourcing!

The GSC 3S Award Gala Event provided an opportunity for thought leaders in sustainable and socially responsible sourcing to network and celebrate the winners of the GSC 3S Awards.

This month’s interviews with 2012 WINNERS: 

Community Engagement Award: Alter Eco 
Employee Engagement AwardVOS

To learn more about our winners, you can not only click on the website links but look at the 3S Awards. 3S Award Site.

VOS Interview:

VOS, now having ten employees, was founded by José Alejandro Flores in San Antonio, Texas and Guatemala City, Guatemala. Over the next year, VOS is poised to diversify our collection of 100% recyclable natural rubber flip flops and continue our efforts to expand the presence of VOS® in the marketplace; over the next five years, we aim to expand the eco-friendly product offering outside of the VOS logofootwear category while continually sourcing sustainable raw materials and exploring additional humanitarian needs which can be addressed alongside those of healthcare, footwear and education. Our significant partners are Soles4Souls, Agro Salud, Gremial de Huleros, and Dream Center San Antonio.

Can you tell us about the element of inspiration and purpose that pushed your organization towards pursuing goals in sustainable and socially responsible practices, as opposed to a strictly profits-based model?

The inspiration came from lifelong experiences over 3 decades which exposed me to realistic humanitarian and environmental needs around the globe and then coupling the aforementioned with my passion for international business. VOS® was founded as an answer to a simple but profound question: Can you afford to care? As a result, the Give+Give+Recycle™ social initiative was created which promises to give a pair of footwear away to a person in need for every pair sold. The social initiative also supports natural rubber-producing communities with basic health care and education, initially in Guatemala. The social initiative is implemented in partnership with Soles4Souls, the international shoe charity. Basic health care and education is initially provided in partnership with Agro Salud Guatemala and the Guatemalan National Rubber Association.

The idea of creating a 100% recyclable natural rubber collection of flip fops was born more than a decade ago while I was spending time in Brazil and other South American countries. This idea was coupled with my lifelong exposure to the global sport of soccer, where feet and shoes are an integral part of the game. The idea of VOS® as a brand was born due to a “vos” expression used throughout Central & South America that is a colloquial version of the formal “vosotros” Castilian spoken in Spain.

The providing of healthcare and education to the agricultural communities that cultivate sustainable raw material used in the VOS® natural rubber flip flops was a direct inspiration through my exposure to the need of the same. I volunteered my time as a linguistic translator for many years with organizations that provide medical attention to rural indigenous communities in Latin America. Being fortunate enough to acquire an International MBA, I am a huge advocate of education therefore I was empowered to build and support programs that provide educational opportunities to communities and individuals that do not readily have access to them.

The providing of shoes to individuals that do not have proper footwear was an inspiration of my passion for the global sport of soccer. Growing up, I would collect used soccer shoes and balls in the U.S. and would take them with me to give to underprivileged individuals in Latin America. I’ve had the opportunity to travel the world over and every opportunity I would get, I’d play soccer with local members of the communities and I always found so many individuals playing barefooted on an array of surfaces. This in turn enlightened me to the reality of the millions of people around the globe that cannot afford basic footwear; hence I was inspired to help alleviate this issue through the Give+Give+Recycle™ social initiative.

What do you understand by corporate social responsibility? What do you understand by sustainable sourcing practices?

I understand Corporate Social Responsibility (CSR) as being a company’s deed of going beyond what may be required by regulators or environmental protection groups to effectively carry out commercial obligations to its stakeholders and end-consumers. It encompasses initiatives which assess and take responsibility for a company’s effects on
the environment and impact on social welfare.

I understand Sustainable Sourcing Practices (SSP) as the integration of ecological concerns with social and economic ones that in-turn minimizes uneconomic growth that would otherwise deplete ecosystem services. Sustainable sourcing extends to all aspects of a supply chain and infiltrates all procurement practices of an organization by carefully evaluating the economic, social and environmental aspects against a defined set of criteria.

I’d summarize CSR and SSP as “corporate citizenship” which can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change. Our organization’s mantra is “it’s not about “us” … it’s about “we” … we can make a positive difference together!

Did you – at any point – come to regret that your company is following this path? What were some of the biggest rewards?

Not for a second. It is paramount for the consumer marketplace to be aware of the global realities which are faced day-in and day-out by billions of people around the globe. Some of the biggest rewards come from the fact that the humanitarian intentions are sincere which is clearly sensed and embraced by the end-consumers which support the company and global social initiative. In addition, the smiles are genuine and heartfelt on the faces of the recipients of our humanitarian initiatives being provided healthcare, foot wear and education without us expecting anything in-return for the giving.

What do you think sets you apart – as far as business model is concerned – from other companies from your sector?

We take the Triple Bottom Line concept 1 step further than other companies. Instead of just considering People, Planet and Profit we also take into consideration the End-Consumer. In other words, we have found that most brands in the marketplace, which are tied to a social initiative ask consumers to spend more on their products to either keep profits high or to sustain the charitable side of their business. This inevitably took VOS® to the original question: Can most people afford to care?

More importantly, can VOS® create high quality products, which are good for the environment and while help others in need without asking people to spend more?

Yes. By reducing the profit margin and strategically partnering with national and international organizations, VOS® created a sustainable business model. This enables most people to support the cause and the different social initiatives of all the organizations VOS® has partnered with by offering eco-friendly products tied to a social initiative at a price point that is competitive with products that do not give-back at all in any fashion.

We believe that if a brand’s mission is to sincerely carry out philanthropy, there is not a need to inflate the final end-consumer price in order to carry out the same. A brand should be willing to realistically cut from their bottom line in order to carry out the philanthropic activities supported by the same. A final point that sets us apart is that we align with the United Nations Global Compact program which asks organization to embrace ten principles in the areas of human rights, labor, the environment and anti-corruption.


3S Awards Corner: Alter Eco Interview

Alter Eco logo3S People, 3S Community, 3S Environment – Sustainable & Socially Responsible Sourcing!

The GSC 3S Award Gala Event provided an opportunity for thought leaders in sustainable and socially responsible sourcing to network and celebrate the winners of the GSC 3S Awards.


Alter Eco's Jeanne Cloutier receives 3S Award 2012 in Community Engagement from Dan Green, Director of Citi Commercial Bank NYC Division

Alter Eco’s Jeanne Cloutier receives 3S Award 2012 in Community Engagement from Dan Green, Director of Citi Commercial Bank NYC Division

This month’s interviews with 2012 WINNERS: 

Community Engagement Award: Alter Eco Employee Engagement Award: VOS

To learn more about our winners, you can not only click on the website links but look at the 3S Awards. 3S Award Site.

Alter Eco Intrview:

Can companies make profit and incorporate social responsibility into their business model at the same time? The Global Sourcing Council (GSC) – a non-profit organization focusing on “greening” global supply chains – believes so. The GSC 3S Awards program (www.gsc3sawards.com) honors best sustainable and socially responsible practices in global sourcing operations. The program is open to companies, NGOs and individuals incorporating CSR into their global operations- especially sourcing practices.

One of the main categories in 3S Awards is the 3S Community Engagement Award, which symbolizes an organization’s commitment to empowering local communities that are part of its supply chain. This year, a company promoting such “profit with purpose” is Alter Eco – a global food trader that works with underprivileged farmers across the world, assuring them fair prices for their products.

Established in 2004 in San Francisco, Calif. by two Frenchmen, Edouard Rollet and Mathieu Senard, Alter Eco Americas promotes a form of global commerce where priority is given to working with marginalized farmers to build trade relations based on solidarity and sustainability. It currently operates in USA, France, Canada and Australia, trading globally.

“Alter Eco is honored to be selected for the Community Engagement Award from 3S,” said Jeanne Cloutier, Director of Operations. “The recognition from this award underscores and bolsters our commitment to the Direct Trade model of commerce as a solution for alleviating global poverty and empowering farmers worldwide.”

Below is an interview Ms. Cloutier gave the GSC:

Can you tell us about the element of inspiration and purpose that pushed your organization towards pursuing goals in sustainable and socially responsible practices, as opposed to a strictly profits-based model?

Alter Eco was started by a group of friends who share a passion for economic and social justice and food. From the start, our mission was to work with small-scale farms in the developing world. The initial spark came from an article in a Catholic Services magazine that described a new economic model in which the price paid to small-scale producers in developing world for their crop was an important part of the trading relationship. Small-scale farmers produce excellent quality products and deserve a just and equitable price for their crop, this is the basis of fair trade. No matter the type of food—red, white or rainbow quinoa from Bolivia, heirloom Jasmine rice from Thailand, Mascobado cane sugar from the Philippines or dark chocolate bars made with organic cacao from Ecuador and Peru—each has distinct flavors that result from native soils, climate and farming techniques. Our business model combines high quality foods with sustainable development that nurtures small growers and the environment.

What do you understand by corporate social responsibility (CSR)? What do you understand by sustainable sourcing practices?

The way business has been run for the past 50 years is that companies in rich countries are going to buy commodities at the cheapest price possible, regardless of the effect on people or the environment. We want to change that. Sourcing sustainably implies knowing who you are making the purchase from, with full traceability from farmer to brand-holder. With full traceability comes accountability and ultimately – mutuality. This means that we can only be successful when our partner farmers are also successful. If a farmer is struggling, we as a company are going to struggle as well. Treating farmers as professionals, e.g. paying them so that they can reinvest their profits into increased quality, is a win-win. It’s really about seeing them as fellow members of the human race, rather than “producers”. Social programs are equally critically important to sustainable sourcing. One is not going to improve yields if the roof over their head is falling down and they do not have access to basic human rights like clean water for example.

What do you think sets you apart – as far as business model is concerned – from other companies from your sector?

As proud partners of Fair Trade USA and the FairTrade Labeling Organization (FLO), 100% of our products are Fair Trade Certified. This means the producers have been paid a price that ensures sustainable production and living conditions, along with a premium to support the growth and advancement of the cooperatives and their communities. Contract prices between Alter Eco and the supplying farmers are 10% to 30% higher than the local market price, with an additional Fair Trade premium set every year by the Fair Trade Labeling Organization (by product category and country of origin). In a global food system where farmers often carry debt three times their annual income, Fair Trade provides concrete opportunities for a stable, prosperous life. In addition to Fair Trade practices, we work directly with our co-op partners to create a supportive and mutually beneficial business relationship. Eliminating middle men creates savings we can redistribute, providing farmers with higher prices for their goods. We sign long-term contracts and prepay for crops so that farmers can better plan for the future, maintaining consistent quality and output. Additionally, we act as guarantors on loans–and pay the interest on their behalf–to allow the farmers to properly prepare for a successful planting. We’re not just importers, we work for our friends.

What do you think can be done to make the business world aware of the need for corporate social responsibility? 

Leading by example. This means emphasizing all three elements of CSR: people, planet and profits. The more revenue we can generate, the more sales increase for us, the more revenue is generated for our farmers. Success breeds success all the way down the chain. Alleviating poverty through fair trade is the basis of our business.

How is caring for local communities with which you do business influencing the business outcomes in case of your company, or in general?

Fair trade equals quality. Having financial freedom gives farmers the means to reinvest in their homes, health, families and community, and of course in their farms. We believe we have the best quality rice, chocolate, quinoa and sugar on the market, because farmers with a margin to invest in their farms can continually improve their conditions over time. As a result, the food grown on these farms is better. We directly correlate fair trade with higher and higher quality over time.