January Newsletter

• From the Desk of the President
• GSC Launches New Certification Program
• The Impact of Global Warming on the Global Workforce
• Current Affairs Comment
• Think Piece on Social Responsibility
• Concepts to Consider

Wanda Lopuch

• In February the GSC hosted a live video-conference between the US and the Philippines, where various aspects of outsourcing, including off shoring and near shoring were debated between speakers in New Jersey and Manila.
• In June, in the midst of the global recession, GSC staged a Summit “Global Sourcing after the Meltdown.” During a day packed with thought-provoking insights from industry leaders, we have analyzed forces that are shaping global sourcing .
• In August and November GSC hosted meetings in New York on the role of innovation in developing models of profitable and socially responsible global initiatives; we discussed out-of-the-box approaches to open R&D models, global distribution channels, pricing strategies and product offerings to the four billion people at the “bottom of the pyramid.”
• Our September webinar continued to explore the role of innovation in economically viable and socially responsible enterprises.
• In our November webinar we addressed social consequences of global warming as a backdrop to the Copenhagen Summit.
• the GSC program of Certification in Socially Responsible Global Sourcing, was launched in November with great enthusiasm.

• January 20th – the Ministry of Ontario will share its perspective on socially responsibility in near- and far- shoring.
• February 24 –Unicor – the Federal Prison Industries Corporation, will present a domestic alternative to global e-waste disposals. It will be followed by webinars on the political and social risk mitigation solutions.
• In March and April, GSC will host the Associate Level Class in New York for the Certification Program in Socially Responsible Sourcing. After the exam, first graduates will receive their diplomas in Socially Responsible Sourcing
• And much, much more …! Exciting initiatives and events are coming!

We cannot do it without you however!

Why not designate the second decade of the 21st century – the decade of social responsibility in global sourcing?

Why not start 2010 with joining Global Sourcing Council and letting your opinion to be heard?

I wish you a successful and socially responsible 2010!

Wanda R. Lopuch

President of Global Sourcing Council

Christine Bullen

From employment practices to relationship management, from cultural sensitivity to supply chain management – social responsibility crosses all functional and strategic business areas in the marketplace of global sourcing.

To provide tools for implementing principles of socially responsible sourcing (SRS), and to bring social responsibility into the core of the outsourcing profession, the Global Sourcing Council is introducing the Certification in Socially Responsible Sourcing.

Outsourcing professionals from both buyers and providers, will benefit from the unique and stimulating curriculum focusing on real-world examples and proven practices on how to be successful in global sourcing and practice socially responsible processes.

The certification program has been developed by an international team of practitioners and experts lead by Professor Christine Bullen - the Director of The IT Outsourcing Program at the Stevens University of Technology in NJ, USA. The certification program consists of 20 hours of collaborative instructions, interactive exercises and practical assignments, supported by study materials either in a classroom setting or on-line.

Three levels of certification are offered to enhance personal skills and experience by tailoring the program for professionals with different backgrounds: Foundation level (no experience required), Associate level (3-5 years of experience in sourcing) and Master level (5+ years in sourcing).

The first classes for the certification will be held in March and April, 2010 in New York. This will be at the “Associate” level for people with at least 3 years of experience in global sourcing. The class will consist of 4 days of intensive face-to-face sessions followed by a qualifying exam.

In 2010 socially responsible sourcing is far more then a PR slogan in an annual report. The winners will adapt quickly to the demands of the 21st century, embracing sustainable business practices throughout their supply chain. Certification in Socially Responsible Sourcing offers tools to execute this strategy.

For more information about and to register for the first class in the Certification in SRS, contact Christine Bullen.

Dr. Bo Lim

On November 19 2009, the GSC was honored to host Dr. Bo Lim, the Special Climate Advisor at The United Nations Development Programme (UNDP). She joined us for our webinar as she was preparing to attend the December Copenhagen Summit on climate change.

Current trends illustrate an increasing shift in the global political, economic, environmental and social landscape over the next few decades. This is particularly true given the shocks due to the climate, economic and food crises. These shifts have implications for future growth. Given the severe impacts of climate change on the way we currently do business, eventual transformations, will be necessary in order to adapt to these changing conditions.

Dr. Lim illustrated the dramatic impact that climate change can have as it affects these critical elements supporting human populations:

• agricultural systems – fluctuations in crop yields and livestock production will affect the food supply and the population working in these areas
• ecosystems and fresh water resources – decline in fresh water resources and associated ecosystems will affect the viability of the human population in the area affected
• health – contaminated food and drinking water exposes the population to health hazards such as malaria
• energy – reduced hydroelectric power increases dependence on imported sources of energy
• water supply – a reduction in the water supply will affect where people live, where industry can develop and where agriculture can be supported.

• Business will invest in climate-secure locations
• Business will take into account changing local resources and conditions and invest accordingly
• Increased investment in health prevention measures
• Increased investment in clean transportation
• Development of building construction and insulation that reduces the impact of indoor pollution and extreme temperatures

In summary, Dr. Lim discussed the business opportunities and risks:

The far-ranging effects of climate change should be considered by all nations and all should support negotiations on an international, national and local level in order to secure a positive future.

You can listen the recording of this webinar by clicking HERE.

The GSC will be following up on the Copenhagen Summit and preparation to the 2010 Mexico Climate Change conference – stay tuned!

China advances while US exhibits perilous decline in Invested Social Responsibility; Africa emerges a strong contender for the future as fiber arrives. The World Transforms.

In future commentary & in my blogs, I'll address local, corporate social responsibility - the one-on-one opportunity that businesses and individuals have in both client and provider markets to give back and make a difference. But for today, with the world where it is currently, I'll take a post-meltdown, global view.

There are many different ways in which to assess progress in social responsibility when applied to the sourcing sector. My preference is "simple & tangible" - and, on a national level, it is directly related to national-level investment in infrastructure that supports real job creation, ongoing employment and wealth generation in the broader community - and how dispersed that opportunity is.

How good a job are countries doing of buying, selling & investing in ways that will benefit their people - it's a good question and it tells us a lot about tangible social responsibility.

This is also why I think this is the decade of China.

With the early-aftermath of a global meltdown still close in our rear view mirrors, what do we see? China has just taken the #1 export position from Germany and its services sector is on a tear. The UK is staggering under record debt from the bailout phases of recovery and concerns about its ability to clear it - talk about ratings downgrades are more than idle chatter. The US is struggling under bitterly partisan politics and a very ugly rich-poor nation debate driven by the mechanics of the bailouts here - the government is throwing increasingly large amounts of government money at unemployment & health cover maintenance versus real job creation while states & cities see budget shortfalls. Most commentators agree the US is too expensive & too highly taxed (even now) to be as competitive as it needs to be globally. Last year, India accounted for the largest number of billionaires created. Add to the mix, Africa is enjoying delivery of fabulous new fiber that will transform the telecoms sector and open up the continent on previously-impossible competitive terms.

China is not perfect but it's not in the same hole as some other economies right now - so it can get more done - and it is.

Discussions on social responsibility are often de-railed by a host of factors - and in the case of China, it is most often the issue of human rights. But whatever one's views on this subject and the history of it, this is to entirely miss the bigger picture in China now - that of an economy that is building & investing for itself & for its people - embracing opportunity at home & abroad. The path of progress & self-determination is a hard path. The history of every national economy shows us this - just consider the history of Europe and the much shorter history of the US versus the vast history of China.

A new China is steadily emerging that accounts for almost one third of all people in the world - and it is almost unique in the scale of investment & infrastructure development it is undertaking for the current and future benefit of its people. China is building for China and its people - and the western world can't help but be investors in China since (for many) they see better growth opportunities there than closer to home.

Those who knock China (and some other locations scruffily referred to as "offshore"), including those in the sourcing industry, should reflect very carefully. The world is changing. This decade will see more than just change. It will witness "transformation". And the greatest example of commitment to life-changing, economy-driving, opportunity-creating progress - national social responsibility - may be provided by that country least expected by the experts, China.

Social responsibility is not just "feel good". It requires tangible action, investment & the money trickles down from the top. On a national basis, there are a lot of reasons to think that the national commitment to social responsibility in China exceeds that of its counterparts. If you're looking for the practical evidence of social commitment, consider the investment in China currently and consider where else in the world one could match its progress.

China's decade will not happen in a day - but their rate of progress is something to reckon with as we enter this new decade.

S. Jimmy Gandhi, Stevens Institute of Technology

Responsible sourcing – is it the future of outsourcing?

With all the negative publicity sourcing gets, organizations are keen to implement “responsible sourcing” to avoid having their reputation negatively affected. According to the international chamber of commerce, responsible sourcing is a voluntary commitment by companies to take into account social and environmental considerations when managing their relationships with suppliers. Responsible sourcing can also be thought of as an attempt to incorporate human health, environmental and social considerations into the routine sourcing process along with more traditional considerations like price, product performance and quality.

Some of the issues that organizations are starting to address under responsible sourcing are:

• Organizations require that their suppliers demonstrate compliance with environmental laws and regulations
• Suppliers are required to improve energy efficiency and use fewer natural resources
• Higher standards of product safety and quality
• Greater transparency in the sourcing process

By implementing responsible sourcing, organizations are trying to mitigate the reputation risk associated with sourcing, and try to show their customers and stakeholders that there is more to sourcing than mere cost savings. Even though cost savings is still a primary reason for sourcing, organizations wish to show that they are considering several issues that go along with sourcing, particularly offshore sourcing where different laws apply. This is because in the past, one bad incident with one supplier has led to a disproportionate amount of adverse publicity, damaging a company’s reputation and brand image.

A perfect example of an organization trying to implement responsible sourcing because of excessive negative publicity affecting it as a result of their sourcing practices, is Walmart. During the last 12 months, Walmart has set new goals and greater expectations for environmental and social compliance, transparency and accountability.

From the President: Wanda Lopuch

Socially Responsible Sourcing: oxymoron or business strategy for the future?

Sourcing is about savings, cost cutting, and maximizing margins.

And then we have experienced 2009: the housing crisis, the banking crisis, the most serious global recession in the recent history. The capitalism creed of greed is-good was put on trial this past year. In his dramatic speech at a congressional hearing on October 23, 2008, Greenspan admitted that supposedly self-regulating markets in fact do not self-regulate themselves, that the invisible market hand can become too greedy. This hand needs to be slapped and redirected occasionally, not because greed is bad, but rather because uncontrolled greed shakes the foundation of the global economy and in effect threatens our existence.

The 2009 take-home lesson is that there is more to good management on a global scale than quick profits alone. And, there are more benefits in undertaking global sourcing than quick cost savings.

Sustainability and social responsibility programs are being adopted by boards of public and private companies alike, not because they are politically correct, but because these programs make economic sense in the long run. They produce profits – sustainable profits. This is why global corporations are moving sustainability and social responsibility to the top of their business development agendas.

Years ago, Hewlett Packard piloted a green PC recycling program that paid consumers to return obsolete machines. Hewlett Packard implemented this initiative not because it was fashionable and socially desirable; the forward thinking executives saw that in the long run, green e-waste program can be profitable. Walmart requires all of its suppliers to comply with social responsibility codes by the end of 2012 (See article in Fast Company). The incremental expenses incurred in implementing the program and monitoring suppliers, are not viewed as additional costs that will lower Walmart’s short-term margins. Rather they are viewed as a strategic investment in the brand value and acquisition of new customers, which will produce sound profits.

BPO, ITO and sourcing in general, which evolved from cost cutting initiatives in the first place, are in a peculiar situation, as adaptation of the social responsibility principles may initially increase the cost of doing business. The existential question on the mind of any BPO and ITO forward-looking executive is: can you do both - cut costs and adopt a social responsibility agenda in global sourcing?

In the second decade of 21st century, global powerhouses will move forward aggressively with the adoption of social and environmental responsibility agendas. Suppliers and partners will be both expected and required to follow suit. The winners will be those who imbed the principles of good corporate citizenship into their ways of doing business. Socially responsible sourcing providers have and will continue to enjoy a competitive advantage in contract negotiations, in wining client “mind-share,” in energizing employees, and in increasing productivity.

As we enter 2010 with new visions, socially responsible sourcing is not an oxymoron after all. It is a matter of economic survival and thriving business development strategy.