Wednesday, June 6, 2012

Shared Desitiny

I recently had lunch with an old friend who currently works for an OEM. We used to work together, in fact sit next to each other in adjacent cubicles almost a decade ago. It is always so fun to meet up with old buddies and catch-up. We talked about our respective careers, family, etc. and then the conversation turned to how the current economy and the state of the world is affecting our lives. I realized that over the last nine years, we have drifted apart in our world view. My friend was definitely not happy with globalization and the fact that the OEM's products, manufactured in the US, are having great difficulty competing against global onslaught of similar but low quality products at a cheaper price. The current procurement system in the Federal and Municipal market picks low price over quality. While there is a mandate to buy American-made products, it is not working. My friend is also not in favor of the environmental qualifications required in US as opposed to the other countries who do not have those restrictions. Very valid points.

And I agree with my friend. Our policies are broken! Where we differ is that my friend thinks that the government should not be putting these environmental mandates in place and should block our import of cheap, and often times low quality, foreign products; while I think we need to work on fixing our purchasing policies. The purchasing decision should be based on 'total' cost including the capital, environment, and operations/ maintenance footprint instead of just basing the decision strictly on capital costs.

Why? Everyone on this planet now share a common destiny. The time for insularity is gone and it will never be the same again. For the last century, US was the major political and financial power, now we are seeing a multipolar world with India, China, European Union, and Brazil sharing the stage. Technology has made it possible to communicate across continents faster than we can bat an eyelid. Disintermediation is rapidly changing the marketplace, e.g. the market for phones, books, newspapers, etc. The markets are no longer the way we knew them to be for the last 60 years. The Water, Energy, and Food industries as we know are going through a dramatic transformation; their interdependence is becoming more prominent on a global scale.

The sooner we start appreciating the changed climate, the better we will be to compete in this new marketplace. We have no choice! We can all sit and complain that 'the past was better' and resist the change as much as we can, but the reality is that we are already on this one-way highway, all together. So, what should we do? Here are my ideas:
  • Update the purchasing policies to reflect the new reality of global marketplace and shared destiny. The criteria for purchasing should now be based on the life cycle costs as defines in ISO 14000. This implies that when purchasing a pump for example, the entire footprint is considered along the entire supply chain, that is mining the iron ore in Australia, building the impeller and pump house in China, assembly in Germany, installation and use in the US, followed by re-purposed in India. When all this is accounted for, the 'true cost' of the equipment / technology will create a level playing field for all. When I worked with Water Corporation (Perth, Australia), we had reviewed this method of sustainable selection.
  • As a manufacturer / service provider, we need to start looking to gather and furnish data that will enable purchasers to make an educated decision. Set up a sustainability program in your business to facilitate this process and you will notice that it will have a high return on investment. Your sustainability program will be your differentiator, and will focus on making your business more attractive to both your clients and employees.
These are not my words, but are so very true: We cannot solve our problems with the same thinking that created them. Sustainability is about enlightened self-interest.


  1. Your idea sounds good as far as the 'purchasing policy' goes. Bu it does not sound very environmentally ethical. Are you suggesting with the shared destiny that we should support the 'cradle to grave' approach of an equipment and once the mighty US is done with its use it should be disposed in India or some third world country in Africa?

    1. No, I am not suggesting that equipment should be disposed in India or Africa. I am saying that the entire footprint needs to be accounted for the entire life cycle of the equipment.