Author Archives: Caroline McDonald

About Caroline McDonald

Caroline McDonald is a writer and former senior editor of the Risk Management Monitor and Risk Management magazine.
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Valukas GM Report ‘Deeply Troubling,’ Barra Tells Employees

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The Chevrolet Cobalt, on display at the Minneapolis International Auto Show on March 28, 2009, was criticized in the Valukas report.

An investigation by former U.S. Attorney Anton Valukas into General Motor’s ignition switch recall was described as “extremely thorough, brutally tough and deeply troubling” by General Motors CEO Mary Barra today.

In her remarks to employees about the report findings, which were presented to the GM board of directors on Monday by Valukas, Barra said, “For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly. I was deeply saddened and disturbed as I read the report.”

The Valukas report makes a series of recommendations in eight major areas, which she said the company is already acting upon. “We are taking an aggressive approach on recalls,” she said, adding that a number of personnel decisions have also been made.

“Fifteen individuals, who we determined to have acted inappropriately, are no longer with the company.  Some were removed because of what we consider misconduct or incompetence. Others have been relieved because they simply didn’t do enough: They didn’t take responsibility; didn’t act with any sense of urgency,” she said.

Ray DeGiorgio, lead design engineer for the Chevrolet Cobalt ignition switch was among those who were fired. Disciplinary actions have also been taken against five additional people.

Barra said the key conclusions of the report were:

  • GM personnel’s inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures.
  • While everybody who was engaged on the ignition switch issue had the responsibility to fix it, nobody took responsibility.

  • Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end.
  • The ignition switch issue was touched by numerous parties at GM – engineers, investigators, lawyers – but nobody raised the problem to the highest levels of the company.
  • Overall, the report concludes that from start to finish the Cobalt saga was riddled with failures, which led to tragic results for many.

Apple Again Leads Gartner Supply Chain Ranking

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Gartner announced its top 25-ranked organizations for supply chain in 2014, which includes four in the top-5 that also topped last year’s list. They are: Apple, McDonald’s, Amazon and Unilever, with P&G at fifth place. Gartner analysts announced the findings from this year’s research at its Supply Chain Executive Conference last week.

Apple took the No. 1 spot for the seventh year, continuing to outpace the others by a wide margin on the composite of financial and opinion measures used. McDonald’s placed in second spot for the second year in a row, followed by Amazon.com.

Two new companies joined the Top 25 this year—Seagate Technology (No. 20) appeared for the first time and Kimberly-Clark (No. 21) re-emerged after a year’s hiatus.

A primary goal of the Supply Chain Top 25 research initiative is to raise awareness of the supply chain discipline and how it impacts business, Gartner said. The supply chain rankings comprise two main components: financial and opinion. Public financial data gives a view into how companies have performed in the past, while the opinion component provides an eye to potential and reflects future expected leadership. These two components are combined into a total composite score.

Gartner analysts develop a master list of companies from the Fortune Global 500 and the Forbes Global 2000, with a revenue cutoff of $10 billion. The company then breaks the combined list down to the manufacturing, retail and distribution sectors, eliminating certain industries, such as financial services and insurance.

Analysts highlighted three standout trends for supply chain leaders in 2014:

Supporting the “Fully Contextualized” Customer

A trait of leading companies is that customer needs and behaviors serve as the starting point for go-to-market and operational support strategies. Their cultures enable consistently high-quality customer experiences that are tailored, where important, to local tastes. Supply chain leaders are expanding this demand-driven concept in terms of how they relate to their customers. They are more deeply understanding customers and striving to blend seamlessly into their daily routines. Ultimately, this understanding of customers in their local environments is helping supply chain leaders capture more revenue for their businesses, improving operational effectiveness, Gartner said.

Converging Digital and Physical Supply Chains

Leading companies have moved past selling only discrete products or services to their customers and are focused on delivering solutions. Regardless of industry, these companies want their customers to be loyal subscribers to their solutions. Several of the leading consumer product companies on this year’s list offer e-commerce subscriptions for their products, in partnership with retailers. This approach offers convenience and privacy to those customers who would typically purchase products in a physical store—and might switch to another consumer brand at any time.

Progressive industrial companies have suggested order replenishment systems with their dealer networks, based on the manufacturer’s ability to forecast demand for their dealer. Some have gone further, acting as virtual consultants to their customers’ planning organizations. They recognize that helping improve customers’ internal capabilities is part of a total solution, which makes them more competitive suppliers.

“Another significant aspect of the total customer solutions we see deployed by leaders relates to the remote management of aftermarket services, leveraging Internet connectivity,” said Debra Hofman, research vice president at Gartner. “The Internet of Things allows for monitoring of performance across the value chain; in the field at customer sites, but also to collect and analyze the big data generated as part of upstream manufacturing and logistics flows. This additional connectivity has also elevated the importance of supply chain security to prevent theft, counterfeiting and other forms of fraud. One thing is clear — future supply chains must seamlessly integrate the digital and physical worlds of customers to be competitive.”

Supply Chain as Integrated Partner

Growth is a top priority for the C-suite in 2014, with 63% of senior executives picking growth as a top imperative in Gartner’s 2014 CEO Survey. Leading supply chains are enabling this growth both organically and through successful M&A integration. Supply chain leaders also are emerging as trusted and integrated partners to business groups. Their focus on profitable growth often leads to smarter, more conscious decision making, saving business groups from spiraling out of control in the drive to maximize revenue.

In their quest for growth, however, many companies are finding the business models they were famous for dominating are now under attack from competition. Supply chain has a large part to play in enabling the business to compete for the future, concurrent with protecting existing business. The most advanced companies in the ranking said they are not afraid to rethink the design of their global supply networks to be successful. In some cases, this has led to increased vertical integration where leaders become involved in their customers and their suppliers’ businesses in an attempt to dominate value chains, redrawing the lines of competition in the process.

More detailed analysis is available in the report “The Gartner Supply Chain Top 25 for 2014.”

Piracy Incidents Down

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Steps taken by the international maritime community have paid off, reducing the threat of piracy in the Arabian Sea’s Gulf of Aden, according to the Allianz Global Corporate & Specialty Safety and Shipping Review 2014. The number of ships seized and hostages taken was down significantly in 2013. According to the International Maritime Bureau (IMB), piracy at sea is at the lowest level in six years—264 attacks were recorded worldwide in 2013, a 40% drop since Somali piracy peaked in 2011. There were 15 incidents reported off Somalia in 2013, including Gulf of Aden and Red Sea incidents—down from 75 in 2012, and 237 in 2011 (including attacks attributed to Somali pirates in the Gulf of Aden, Red Sea and Oman).

But while the number of incidents in this region has gone down, piracy attacks in other areas have increased in frequency, notably Indonesia and off the west coast of Africa. While most of these Indonesian attacks remain local, low level opportunistic thefts carried out by small bands of individuals, a third of the incidents in these waters were reported in the last quarter of 2013, meaning there is potential for such attacks to escalate into a more organized piracy model unless they are controlled.

The Gulf of Guinea region accounted for 48 of the 264 incidents in 2013. Of these, Nigerian pirates and armed robbers were responsible for 31 incidents, including two hijackings, 13 vessel boardings and 13 vessels fired upon. One crew member was killed and 36 kidnapped—the highest number of Nigerian kidnappings for five years, according to the IMB.

Obama Calls Attention to Aging Infrastructure

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Tappan Zee Bridge. Photo by Laura Glickstein

President Obama is visiting the Tappan Zee Bridge, 25 miles north of Midtown Manhattan, on Wednesday to raise awareness of the nation’s crumbling infrastructure. The message is that funding for projects such as roads and bridges is to expire this fall.

The president’s speech will highlight the need for congressional action on infrastructure spending, the White House announced on Saturday. Obama will use his visit to the bridge site, where work is underway on pilings for a new bridge, to highlight the urgency of replenishing the Highway Trust Fund. The administration predicts the fund will be insolvent by the end of the summer.

Refurbishing the infrastructure is critical, as the American Society of Civil Engineers grades for U.S. infrastructure systems are low. Last fall the organization gave road and transit systems a D, bridges a C+, and levees a D-.

According to The White House Blog funding for infrastructure impacts more than 112,000 active projects to pave roads and build bridges, and about 5,600 projects to improve the country’s transit systems. This doesn’t include almost 700,000 jobs supported by these projects.

The White House plans several infrastructure-themed events, which began with the release of a report on Monday that lays out its argument for infrastructure investment and the ensuing funding crisis if Congress fails to act.

While construction is underway to replace the 58-year-old Tappan Zee Bridge, a $3.9 billion project recently approved for a $1.6 billion federal loan—the largest loan ever awarded under the Transportation Infrastructure and Innovation Act (TIFIA)—the administration is warning that other projects could be halted, slowed or not began in the coming months.

“We have reports that many states are already rethinking their investment plans due to the uncertainty,” U.S. Transportation Secretary Anthony Foxx told a Senate committee last week. Foxx pointed out that one-in-four bridges either needs significant repair or cannot handle current traffic, and that 65% of the nation’s roads are not adequate.

Foxx told the Senate that the administration is open to a variety of possibilities for raising new revenue to finance the Highway Trust Fund. The administration has proposed a one-time infusion of $150 billion into the fund, using revenue generated by corporate tax reform. The proposal, called the GROW AMERICA Act would provide $302 billion over four years for highways, bridges, transit, and rail systems, according to the blog.