Straw houses: no need to fear the Big Bad Wolf

We’re all familiar with the tale of the three little pigs and how the Big Bad Wolf blew down the first little pig’s house, a questionable dwelling built entirely from straw.

First straw house goes on sale in UK

Apart from having us wonder how it stood up in the first place without a frame, we all grew up knowing that a house made of straw was a bad idea.

However, an engineering research project in the UK is showing that maybe the little pig was ahead of his time in construction innovation. This week, the first straw houses offered on the open market in the UK are up for sale.

So huff and puff as much as you like, but you’re going to have to try harder than that to blow these houses down!

Building with bales

The research project was the brainchild of the University of Bath and Modcell, a specialist architectural firm. The hope is that the research, and the subsequent sale of the houses in Bath, will lead to the wider use of straw bales in construction.

The benefits of using straw are worth noting. Straw bale houses are more environmentally friendly to build and maintain than traditional brick houses and with proper care, the house will last for up to 100 years.

As straw is a natural material, the requirement for the production of raw materials will be reduced. This will in turn lead to a lower carbon footprint for the supply chain as the processes for manufacturing cement and firing bricks, both of which require high energy usage and generate substantial waste, will not be required.

Straw can be sourced relatively easily. Each year, UK agriculture produces an estimated four million tonnes of straw, of which only a small proportion is used, with the remainder just being burned. A new house would require seven tonnes of straw to build, meaning that there would be a potential to build half a million new homes from the straw produced each year.

Not only are the building method and supply chain more environmentally friendly, but also the houses themselves have significantly lower running costs and environmental impact. The bales provide highly efficient insulation and retain heat more effectively than their brick counterparts. The expectation is that the houses in Bath will have energy bills that are up to 90% lower than similar houses in the area.

Innovative construction

In recent years, the construction industry has made significant strides to reduce the environmental impact of and waste in its supply chain. Innovations have included:

  • The ‘house in a box’
  • The use of recycled materials in concrete – leads to reductions in fossil fuel and greenhouse gas production, rain acidification potential and waste
  • Bio-based composite building materials
  • Roof tiles that remove nitrogen oxide from the atmosphere

It’s hoped that these innovations, plus the potential for a wider market for straw houses, could lead to a much more sustainable supply chain and industry as a whole.

For more on the straw houses go to http://www.modcell.com/.

Read on for more of the biggest stories commanding headlines right now:

New guidance aims to keep products of pirate fishing out of UK supply chain

  • Illegal “pirate” fishing damages the environment and human rights, and leads to economic losses of as much as $23.5bn (£15.3 bn) a year, according to fresh guidance which aims to help British businesses keep illegal fish products out of the supply chain and stamp the practice out.
  • A briefing published by retailers, conservation and human rights groups sets out in full how retailers and suppliers should act to end the long-term threat to the oceans, while building up legal and sustainable fisheries.
  • The briefing by the British Retail Consortium, Environmental Justice Foundation and WWF UK is to inform UK industry, retailers and brands of the risks associated with illegal, unreported and unregulated or pirate fishing. It offers advice on risk-assessment and mitigation, and encourages action to prevent illegal fishery products entering UK supply chains. As much as 26 million tonnes of illegal fish products is involved annually.

Read more on The Guardian

Fresh row for Tesco as supermarket giant demands suppliers cut prices as food commodity values fall

  • Tesco risks a fresh dispute with suppliers after it demanded they cut their prices or risk being dropped from supermarket shelves.
  • The grocer has written to suppliers asking them to reflect recent falls in the cost of commodities such as wheat and sugar. In some cases, those who do not decrease their prices have been told they risk being ditched by the supermarket in favour of cheaper rivals.
  • The revelation comes only days after the grocery giant faced a fresh investigation into claims that it bullied firms that it buys goods from. A probe by the supermarkets watchdog the Grocery Code Adjudicator has begun over allegations it charged huge sums to place suppliers’ wares on prominent shelves, even if they were not on promotion.

Read more at This Is Money

How Will Global Supply Chains will be Impacted by Obama’s Budget?

  • In his 2016 budget plan, to be unveiled today, President Obama will propose that U.S. companies’ overseas profits be taxed to fund a major boost in infrastructure spending. These tax proposals could change the way the Tax Efficient Supply Chain (TESC) operates.
  • When highly profitable companies pay little in the way of taxes, negative press coverage can ensue.  But CEOs are asked by financial analysts about their corporate wide effective tax rate (ETR) all the time. This can be a no win situation for a CEO. A company with a high effective tax rate is at a significant disadvantage to industry competitors with low tax rates, particularly in the company’s ability to grow the business. And ultimately a CEO’s tenure is often most strongly impacted by the financial community’s view of his company’s performance.  Not surprisingly, many large companies have restructured to lower their tax burden; it is not unusual for these companies to lower their ETR by about five percent.
  • While supply chain cost savings fall to the pretax bottom line and improve a company’s Net Income position, corporate tax restructuring increases deferred revenues.  Some large corporations are sitting on tens of billions in deferred earnings that can’t be used for stock owner dividends, without being taxed at US rates, but can be used to fund growth and thus future earnings, in a variety of ways.

Visit Logistics Viewpoints to read more

Distribution demands drive investment in logistics properties

  • Ecommerce is fuelling a boom in logistics property investment in Europe, as retailers try to keep pace with changing consumer demands.

  • Investors pumped €19.8bn into properties such as warehousing and distribution hubs in 2014, a seven-year high and a 34 per cent jump year on year as companies scramble to adapt to evolving supply chains and developers position themselves to profit from the thriving sector.

  • The UK led the way, with investment in the sector jumping 65 per cent to €7.9bn, according to Property Data. But investment accelerated on the continent too, as European eretailers expanded and cross-border ecommerce took off.

  • “You’re doing the stuff inside the distribution centres that you used to do inside the shop . . . Companies are having to reorganise their distribution logistics,” said Alan Braithwaite, chairman of LCP Consulting.

Read more at the FT.com

The businessfriend platform offers new way for supply chain execs to do business

  • In a world full of technology, it can become a hectic existence trying to wade through the myriad of business apps as part of your day-to-day working life. But there is a new platform on the horizon which could solve this issue for supply chain executives.
  • Businessfriend is the one-stop communications channel that helps you stay connected with the people and professionals that matter the most to you. Whether that be warehouse operatives, production line managers or managing directors. Consolidating the noise with one effective business communications platform, businessfriend launched on 6 January during the three day CES event in Las Vegas, and it promises to redefine how business is done in the supply chain sector.
  • Glen White, Founder and CEO of businessfriend, said: “On any given day, the typical young professional can have as many as five platforms open to get them through their day. “We offer one complete forum that enables constant connectivity for optimal business communications. One mobile app, one desktop, any device – no more juggling apps.”

Read more at Digital Supply Chain

McDonald’s and the Challenges of a Modern Supply Chain

  • Recently, McDonald’s, the world’s iconic largest food service provider, has been (forgive the cliché) through the grinder. Poor performance has led to the departure of its CEO and plenty of critical attention in the business pages. Part of this story relates to the provenance, or origins, of its products: Chains that provide more upmarket “fast casual” dining such as Panera, Chipotle, and Shake Shack have brands that speak of freshness, health, and trustworthy sourcing.
  • In 2010, I wrote an HBR article predicting increased interest in supply-chain transparency: firms needed to develop strategies for knowing and explaining where stuff comes from. Since then the idea of product provenance has steadily crept up the corporate agenda and is now a compulsory issue for boards and governments. In the UK, for example, legislation is in progress that would build on the California Supply Chain Transparency Act, potentially applying to wider range of firms. Across Europe, the 2013 horsemeat scandal generated widespread panic about contaminated meat. In a wide range of industries — electronics, software, toys, aerospace — provenance is increasingly a critical concern.
  • McDonald’s woes offers three lessons for others about supply-chain transparency. Visit Harvard Business Publishing to read them.

Influencing skills can be learnt – start now

How to persuade and influence

Last week a leading Chief Procurement Officer said that up to 80 per cent of a CPO’s time is spent influencing internal stakeholders.  What does that mean for the ambitious procurement professional?   It means that besides having top class technical skills and experience, to get ahead you need to be a sales person as well.

Listen more, talk less 

Sales training includes advice on how to be an active listener.   As well as giving your full attention to the speaker, it is important that as an active listener you are also seen to be listening.  You can convey your Interest to the speaker by maintaining eye contact or uttering regular words of encouragement to continue.

By giving this ‘feedback”, the person speaking will communicate more easily, openly and honestly with you.  Inter-personal relationships with internal customers are always open for improvement, even if you have been trained repeatedly in “soft skills”.

You can develop a reputation for being approachable and for solving your users’ routine problems. Without stating the obvious, attitude speaks volumes.

The powers of persuasion 

It is important to position yourself as a credible, trustworthy and knowledgeable person if you want users to follow your way of thinking.  Understanding human nature and the principles of persuading and influencing can help create better working relationships.

Persuasion is presenting your case so that you can sway opinions or motivate a decision, usually by appealing to their emotions.   Dr. Robert Cialdini, the author of the popular book Influence: The Psychology of Persuasion talks about reciprocity. Your internal customers will feel better disposed to your overtures if you can give them something personalized or unexpected. They may even get to like you.  His six principles are beautifully explained in this info graphic drawn by Everreach.

Change management

Much of a CPO’s time is spent in managing change, traditionally not a mainstream procurement function.  Conventional wisdom says 20 per cent will embrace change, 60 per cent will go along with it, but 20 per cent will outright reject it.

Knowing how to handle the bottom 20 per cent can save you time, money and stress.  The implications of ignoring stakeholders that have a vested interest in a given solution cause extra work, aggravation and a poor result.  Remind yourself that they are always thinking of this acronym:  WIIFM  –  what’s in it for me?

Dale Carnegie wrote a classic in 1937 called How to Win Friends and Influence People which is still completely relevant today. He teaches the principles of dealing with people so that they feel important and appreciated. He also emphasises fundamental techniques for handling people without making them feel manipulated.

Knowing how to approach people and make them feel important is a skill that will work for you forever. Stakeholder management is developing into a core competency.

How to reap the benefits of the conference circuit

How to get the most out of conferences

At Procurious, we’re obviously big advocates for online social networking, we’ve outlined the career and personal benefits of partaking herehere and here.

However, we want to use this blog post to remind you all of the importance of incorporating traditional face-to-face events and conferences into your networking program.

Should you need any convincing, we’ve listed some of the benefits you’ll reap from attending conferences and events below.

You’ll get a sense that you are not alone in the world

Lets face it, procurement can be isolating at times. Have you ever sat at your desk and questioned your approach to a certain problem? It could be negotiating new terms with a supplier or trying to get a bigger slice of your CPO’s time. Well chances are in hundreds of offices across the world, other procurement professionals are pondering exactly the same problems. Conferences are an opportunity for you to meet these people, share your challenges and potentially come up with some solutions.

You’ll learn about the full breadth of your industry

At a good conference, everyone is present: be it tech providers, consulting groups, journalists or fellow procurement professionals. It’s incredible to see the diversity of companies and potential careers that are supported by the procurement function.

You’ll be exposed to new technologies

Conferences are a place where technology providers and consulting groups come to pitch their wares. While sales calls from these organisations may be disruptive and tedious while you’re at your desk, at conferences you have the opportunity to sit back and evaluate these solutions on their merit. Not sure about the new supplier relationship management tool you heard about before lunch? Why not find someone from a company that has already implemented the solution and get the inside word?

You’ll get an opportunity to take stock

Taking time away from the office to step back from the day-to-day and engage with other professionals on a strategic level can help to refocus your efforts when you’re back at the desk. Conferences not only provide a new perspective on old problems, they also serve as a great opportunity to reinvigorate your efforts.

It’s an opportunity to position yourself as an expert

Whether it’s a formal presenting role or simply speaking-up during a roundtable discussion, conferences provide a pedestal for you to display your knowledge and expertise. Events are a fantastic opportunity to grow your profile within the function.

You’ll experience a diverse range of opinions

While you may not agree with everyone’s point of view (how boring would the world be if you did?), the opinions of others will challenge your own personal beliefs and may encourage you to tackle issues from another angle. Unless you’re certain there is no way you could possibly improve as a procurement professional, it is definitely worth listening to what others have to say. As Einstein said, “insanity is doing the same thing over and over again and expecting different results.”

You’ll have fun

One Republic will play at Microsoft Convergence this year (maybe that’s not everyone’s idea of fun), Boris Becker presented the trophies at last year’s Procurement Leaders Awards and Bill Clinton is popping up more frequently on the corporate speaking tour. So, despite what many say, conferences can be a great opportunity to have fun! Great food, open bars, hotel rooms and exciting cities – what else do you need?

You can turn it into a vacation

The procurement conference schedule is packed with events lined up all over the world. Savvy conference organisers have figured out that you are more likely to attend events towards the end of the week and have adjusted their timetables accordingly. What this means is that conferences have become a great excuse for you (and your loved ones) to take an extended city break. Further your career and win some brownie points with your spouse in the same week? No brainer!

Remember, at these events engagement is key. Don’t be shy, get out and talk to people, tell them your problems, listen to theirs, talk about the presentations, interact, learn and enjoy. The more conferences you attend, the easier the networking becomes – you’ll feel more comfortable catching up with the colleagues you’ve met at previous events and the benefits of these catch-ups will magnify.

Here’s the problem: convincing you on the value of conferences is the easy part, but ultimately it’s not you we need to convince is it? Your boss holds the budget and has the final say as to whether or not you attend conferences.

Keep an eye on Procurious because next week, we’ll give you a guide on ‘how to ask you boss to pay for your next conference’.

How to navigate the tricky path to procurement accreditation

Procurement accreditation and qualifications

At Procurious, we are all about changing the face of procurement and encouraging and engaging with the next generation of procurement professionals.

Discussion wraps allow us to consolidate the knowledge of the whole community and keep the conversation going on the key issues and themes.

Achieving and Leveraging Professional Accreditation

People are constantly looking to develop personally and professionally. A number of questions have been asked about accreditation – routes for achievement, how it can be leveraged, is it worth it and how to get into it.

There are a few routes for accreditation open to procurement professionals, with the most common being CIPS through study and exams, an MSc through an accredited university or distance learning.

While there was no consensus on the best route to take, there was a consensus that having these qualifications and being a member of CIPS was necessary for procurement professionals and often used as a requirement for recruitment.

Things to consider when selecting a route were:

  • Practical application
  • Acceptability in your organisation
  • Balance of theory vs. practice
  • What your long-term career goals are
  • What you as an individual want to do

One of the agreed themes was that many organisations would sponsor studying through the CIPS route, as they push for their departments to be adequately qualified.

Having achieved MCIPS, or other accreditation, the question was could you leverage it in salary or promotion negotiations.

The consensus from the community was that these qualifications added value to your personal offering, but that having them would not normally lead directly to an increased salary in isolation.

It was important to demonstrate improvements, highlight practical applications and present a track record of accomplishments to managers in order to properly leverage qualifications.

For more on routes to MCIPS, go to the CIPS website: http://www.cips.org/en-GB/membership/What-is-MCIPS/Routes-to-Membership/

For distance learning opportunities, check out the recommendation from the community of Canban: www.canban.org

Born in the USA: the little phone that could

Will a streamlined supply chain give a small manufacturer just enough of an edge to take on the big boys? 

BLU Products Vivo Air

A new combatant is suiting-up and joining the fierce smartphone battleground…

Wave hello to BLU Products, its newest Android smartphone – the Vivo Air, measures in at an impossibly thin 5.1mm thick and 3.5 ounces in weight.

Making it the thinnest and lightest phone available right now in the US. At just £199, it might just be one of the most affordable little firecrackers out there  – and we’re talking unlocked/off-contract too.

It takes guts to move into a crowded marketplace… BLU Products joins the ranks of Motorola, HTC, ZTE, LG, OnePlus, and Yota (to name but a few) – underdogs they may be, but that doesn’t mean going toe-to-toe will be any easier.

From small acorns…

The Vivo Air comes from an impressive stable – take a cursory glance at BLU Products’ smartphone portfolio (including the likes of the BLU Life One, Dash, Studio, and Life series) and you’ll see the burgeoning manufacturer is cranking out handsets at a spritely pace. BLU Products specialises in targeting developing markets with its range of affordable, high-speed, unlocked Android devices – a USP that is proving something of a success for the new kid on the block.

BLU Products came to life in 2009 and has since gone on to shift 10 million handsets in over 40 different countries. Despite its relatively small size, it’s one of the fastest growing manufacturers of mobile products in the world.

Its Brazilian entrepreneur – Sammy Ohev-Zion, spent 17 years previous in various roles, building essential experience that would later serve BLU Products well.

Take the manufacturers we cited above – the Motorola’s and Samsung’s of the world – Ohev-Zion realised that it doesn’t matter who you are, the price of manufacturing a handset remains a constant. Thanks to multi-million dollar marketing costs, exclusivity deals with mobile networks, and any artificially-inflated extras the manufacturer chooses, the retail price is usually double (or triple) the cost price.

In 2009 the dream came to pass, and with the formation of BLU Products, Ohev-Zion is taking aim at the big boys – he wants to beat them at their own game.

In an interview with The Verge, Ohev-Zion commented: “Previously for a startup company to be able to manufacture — if you weren’t one of these billion-dollar companies you didn’t have the access or the technologies to make your own mobile devices.” The supply chain of suppliers, designers, manufacturers, and retailers required was just not sustainable… Therefore dislodging this status quo was high on BLU’s agenda, and it had some much-needed help when the world slowly emerged from the throes of economic recession. There was suddenly an abundance of readily available components and manufacturers willing to take on production duties.

A healthy supply chain (smartphone or otherwise) also requires adequate means to pay its distributors and BLU Products found itself in an enviable position thanks to Ohev-Zion’s standing with Amazon and Best Buy (among others).

Innovate not imitate

On the face of it, BLU Products mantra is simple – high speed, high performance smartphones needn’t command a similarly high price tag. Consumers shouldn’t have to compromise on quality, design or experience.

In The Verge piece, the BLU founder cites one of America’s biggest manufacturers of affordable flat screen TVs – Vizio, as a direct comparison. Vizio pack just the same impressive technology into their screens, but do away with the costly overheads and the eye-watering RRP.

From its humble base in Florida, it seems BLU Products’ masterplan is paying off handsomely.

What is a Purchasing Managers Index? PMI explained

You may have heard of the Purchasing Managers Index (PMI) in the media recently and questioned what it was. The index was used on Monday to show a slowing in China’s manufacturing sector and again on Wednesday when discussing the strength of the Canadian economy.

What is the Purchasing Managers Index

Here is a brief run down on exactly what the PMI is:

PMI is essentially a means for economists to understand economic activity in a particular area based on the outputs of its procurement departments.

The index is generated monthly by surveying purchasing managers activity across five key indicators. These being: new orders, inventory levels, production levels, supplier deliveries and employment environment.

Once the results have been collated, a PMI score is produced. A PMI of above 50 represents an expansion in economic activity over the previous month. Anything below 50 represents a contraction.

The PMI indicator is used extensively by economists because it is thought to be one of the most accurate leading (or predictive indicators) for the future health of the economy.

What’s procurement like in your part of the world?

At the time of writing Procurious boasts members from 100+ countries, is yours represented?

Procurious boasts members from 100+ countries

We’re truly global

Yes we may keep a map of the world on the wall at Procurious HQ… What of it?

From Azerbaijan to Zambia, Procurious members circle the world! If you’re just casually browsing the site, why not join up and stake a claim for your part of the world?

We want to hear your stories! How well is procurement represented, what’s it like being a procurement professional – how does it differ from elsewhere in the world? Drop us a line if you’d like to be featured, just like Helen, Happymore, Hal, and Sergio below:

Exciting times ahead for Scotland

We asked Helen Mackenzie about procurement in Scotland:

“Not sure about the Scottish private sector but public procurement in Scotland is really buzzing at the moment.  The Scottish Government’s just got the new Procurement Reform Act through the Parliament and so sustainable procurement is high up on our agenda.  

There’s never been a better time to be in public procurement.  At last many of us are getting to take up our seat right in the heart of corporate management and decision making.”

Click here to read the rest of Helen’s piece.

Procurement in the USA? A different beast

Flying the flag for the US, Hal Good could only estimate when quizzed on the number of working professionals throughout the 50 constituent states:

“In 2008, according to the Department of Labor, there were 68,000 “purchasing mangers” employed in the US.  The latest Bureau of Labor statistics estimated 504,600 “jobs” for Purchasing managers, buyers and purchasing agents.”

How does it differ exactly? “Contractors doing business with the US Federal Government, are committed to utilization of the FAR program which gave rise to the National Contract Association (NCMA) and its educational programs and credentials.  

This has spawned a difference in terminology and to some extent practices within the profession in the USA itself, as well as with the rest of the world.  That is probably due to the vast influence of CIPS in the international arena.”

See Hal’s answers in full.

What does procurement mean to developing countries?

Procurious member Happymore Mambondiani previously spoke to us about some of the challenges procurement poses in his home country – Zimbabwe:

“Currently procurement is undertaken by unqualified personnel in the majority of organisations in the country be it in the public or private sector.

In Zimbabwe (unlike other countries where procurement has grown as a profession), procurement has not yet developed into a function. Instead it has been lumped into a wing under the finance department – this is true except for all but the biggest firms like Tangaat Hullets (a sugar producing company) in the South East Low veld of Chiredzi/Triangel.

At a National level procurement is undertaken by the State Procurement Board which is under the Ministry of Finance. The State Procurement Board should be a ministry dedicated to the handling of government purchases of goods and services.”

See more of what Happymore has to say here.

Italy: home to some of the best negotiators in the world…

Procurious’ greatest Italian advocate – Sergio Giordano, explains how procurement has been split into two:

“Once Procurement in Italy was ’emotional price negotiation’ the Italian Procurement professional was one of the best negotiator in the world … but nothing else. Today in Italy things are partially changed, there are two distinctly separate worlds in procurement management – 

  • The large national and multinational companies in which the concept of Procurement has evolved (not just negotiating the price but the TCO, the knowledge of local and global market, management of the relationship with suppliers, the use of e-Procurement, Lean Procurement approach, etc…) they use the same “tools” and strategies of the most competitive and advanced European nations.
  • SMEs (92% of the Italian companies). Today SMEs are realising that joining in network can help to become competitive to the market as large companies and things are changing also in the Procurement management.

However, in Sergio’s opinion one distinctive difference will always remain: “during the negotiations Italians tend to play ‘Poker’ instead of ‘Bridge’…”

Hear more from the great man – view his comments in full.

The battle for sustainable palm oil

The battle for sustainable palm oil

In another life, I was an extra on Home and Away (an Aussie soap opera) something I was put onto by a university friend. Despite receiving critical acclaim (from my mother) for my role as the ‘front desk operator’ at the Summer Bay Gym, I decided to leave the bright lights of showbiz and pursue a career in procurement.

My university friend however, stuck with ‘the business’ and recently starred in the following online commercial for the not-for-profit group Sum of Us.

The commercial, which has now gone viral with nearly 2 million YouTube views, discusses the sustainability of the supply chain for PepsiCo’s popular Doritos corn chips. It starts with two starry eyed lovers sharing their passion for Doritos and ends with a stern message to consumers that PepsiCo’s use of unsustainable palm oil is not acceptable.

Palm oil – The Sustainable supply chain’s figurehead

Palm oil has been at the centre of the sustainable supply chain debate for years now. The production and use of this product in consumer goods has gained notoriety for its lack of supply chain transparency and alarming environmental and social impacts, some of which are listed below:

Environmental impacts of palm oil farming

  • Large-scale forest conversion
  • Loss of critical habitat for endangered species
  • Soil erosion
  • Air pollution
  • Soil & water pollution
  • Climate change

Social impacts of palm oil farming

  • Land grabs
  • Loss of livelihoods
  • Social conflict
  • Forced migration

(Source WWF)

In it’s defence, PepsiCo has refuted the claims made in the Sum of Us advertisement and restated the company’s commitment to ensure all palm oil used in its production is sustainably sourced. The company claims it is making moves with suppliers that will ensure all palm oil providers are compliant with PepsiCo’s Forestry Stewardship Policy by 2016. The organisation has made a further commitment to achieving zero deforestation in company owned and operated activities throughout its supply chain by 2020, a timeline that as drawn some criticism from environmental group.

Sustainability and Brand

The Sum of Us campaign once again exemplifies the inextricable links between supply chain performance (particularly purporting to sustainability and the environment) and overall brand image.

Perhaps the strongest indication of this link can understood through the quote below. In response to questions as to why the campaign focused solely on the Doritos product (and not PepsiCo or the palm oil industry in general) Sum of Us stated:

“We find that focusing on brands that have resonance with members increases the chance of the campaign getting exposure and being effective. Consumers may not know or understand how PepsiCo operates, or a palm oil trader or supplier, but chances are they’re very familiar with Doritos.”

An Ongoing Battle

The battle for sustainable palm oil looks set to continue with Greenpeace claiming the Roundtable on Sustainable Palm Oil (RSPO). The RSPO is a certification standard established in 2004 to minimise the environmental damage done by companies using palm oil, and it is falling well short of its stated goals. In a report, published in February 2014, Greenpeace launched the following – a criticism of RSPO members:

“On the ground, we’ve seen lots of RSPO members still doing forest clearing in the area, which is an indication of weak enforcement and a weak standard. RSPO, from my perspective, has been used for green washing by companies who want to expand their plantations into the forest.” (PepsiCo is a signatory to the RSPO agreement).

Simon Lord – group director for sustainability at New Britain Palm Oil, believes large organisations need to take greater responsibility for their role in the side effects of palm oil production:

“People have hidden behind the easy options and have pushed the problem down the supply chain, and conveniently forgotten that they are a player in the supply chain and have a duty to source responsibly.”

Are the standards for sustainable palm oil production a step in the right direction? Or are they merely a shield for large organisations to hide behind? Leave your thoughts on the palm oil industry below.

PwC on business intelligence systems and organisational change

50 per cent of the costs of public sector administration and service delivery are incurred through procurement. Contracts are getting more complex. More is expected of them. BiP Solutions know this and as a result have enjoyed considerable success with their Procurex Live brand. 

Procurex Live has announced Southern and Northern dates for 2015

The 2015 dates for these procurement exhibition, conference and training events have recently been announced, use our Events listings to RSVP and secure your place below:

Procurex South Live 2015
Procurex North Live 2015

Both events have been designed to support commissioners and procurement practitioners to meet the ever-increasing expectations of politicians and the general public. They will also offer guidance to SME’s in winning public sector contracts through a range of training and networking opportunities.

Henry Needler – PricewaterhouseCoopers (PwC) Senior Consultant, is set to appear across both dates. In the North, audiences can hear his take on business intelligence systems:

“Generally with business intelligence, we’re trying to understand what the business is doing but also understand where the market is going and anticipate that and forecast it so that they can get the best possible deal in the marketplace. In terms of the alpha aspect, that’s focused on what local SMEs can do for big organisations going out and buying services so that money is invested back into the local economy.”

At the Southern event he will explain how procurement professionals can use and analyse data to make better decisions and optimise value for money for their organisations.

As a senior consultant at PwC, Henry’s role is to help clients implement procurement-led transformation within their organisations. Here he explains:

“It’s about how you can engage local markets best. It’s a case of understanding what that market can provide or what the suppliers can provide and about making sure you do whatever you can to engage a company and ultimately help them survive.”

Henry believes that Procurex Live is a good platform for businesses to learn about the procurement marketplace and how it is set to change:

“I think that it should help them understand where the market is going because consumer retail (you and I) is far more real time now. We can find a product and within a few seconds we can immediately compare prices, identify similar products and get some information so that, without a lot of effort, we can go into a traditional shop already very well informed.

Going forward, client organisations, councils, central government or manufacturers are going to be dealing with somebody in procurement who can immediately compare those prices so they end up in a more dynamic and fast-moving marketplace than the traditional local authority procurement that takes forever and has long-term monolithic deals.

The way forward is going to be smaller, shorter-term deals which are looking to exploit the innovation which the market is generating. That’s exciting for the SMEs as they can see what buyers want and what the customer wants and the larger organisations should also be in a good position to meet those demands.”

For details of Procurex Live and other professional events view our full listings

What is going on with the Swiss franc?

In a move that has hurt skiers, chocolate lovers and international investment banks alike, the Swiss National Bank (SNB) decided on January 15th to unpeg the country’s currency, the franc, from the euro.

What's going on with the Swiss franc?

Update – Since the time of writing the Swiss National Bank has signalled it will target a new exchange rate band, to find out more click here 

The repercussions of this decision have reverberated across the globe. Despite The Wall Street Journal reporting that J.P Morgan (an investment bank) stands to make up to $300 million USD as a result of the decision, the news for most financial agencies has been overwhelmingly bad.

Citigroup, suggested its losses will be in realms of $150 million USD and exchange agencies from New Zealand to New York City have hinted that troubled times and closures lay ahead after the unexpected currency shuffle.

Even English football has been impacted, with the jersey sponsor of West Ham United, Alpari UK (a foreign exchange dealer), filing for insolvency.

Currency changes and international finance have never been subjects I’ve been comfortably able to wrap my head around. So I have tried to tackle the unpegging of the franc from an entirely pragmatic point of view. What happened? Why did it happen? And what is the impact on procurement professionals?

Why was it pegged in the first place?

The Swiss government has traditionally been seen as a sound custodian of financial affairs, its stable government and balanced economy has seen business and investors flood the country with foreign cash. While this sounds like good news, the tide of foreign money drove up the value of the franc, which had a severe impact on the country’s significant export sector. Essentially, Swiss goods became expensive, too expensive.

In 2011, as European consumers remained dormant in wake of the credit crunch, the Swiss National Bank made a perhaps short-sighted decision to peg the value of the franc to that of euro, thus making Swiss goods more affordable across the continent.

Why did they unpeg it?

A number of different theories have been banded about as to why the bank elected to unpeg the franc – some of the more popular are listed below:

  • The SNB held fears that the consistent devaluation of the euro (in recent months and years) would be detrimental to the Swiss economy. This uncertainty is supported by political instability in some of the Euro zones more debt-laden countries.
  • The SNB was pre-empting the European Central Bank’s decision to introduce another quantitative easing program and decided that the printing of money required to carry out this program would further weaken the euro.
  • The SNB was responding to public concerns that the enormous $480 billion USD of foreign currency the bank now holds (as a result of its euro pegging) could lead to higher inflation levels, or even hyper-inflation.

Potentially, the bank simply wanted to unmake a poor decision it made in 2011. As the Economist magazine suggests, “When central banks manipulate exchange rates, it almost always ends in tears”.

What should procurement teams do? 

Whether the euro pegging was a good idea or a bad idea is now irrelevant, what we are left with is a situation where the Swiss franc is worth significantly more than it was two weeks ago. The valuation of the franc is likely to fluctuate further in the coming weeks, but experts are predicting it will remain high against the euro and other currencies.

Below are some points procurement teams should consider addressing when determining how this currency shift will impact their operations:

  1. Understand the exposure of your supply base to the Swiss franc. If you have got strategic suppliers based in Switzerland, their products and services have just got significantly more expensive, perhaps its time to look for substitutes.
  2. Understand your company’s internal exposure to the Swiss franc. The secure economy and friendly tax rates in Switzerland encouraged many international businesses to set up their European operations in the country. As a way to reduce their exposure to the now expensive franc, these businesses (as well as many native Swiss firms) may now be looking to ‘internally restructure’ as our friends in HR like to say.
  3. Prepare for a more competitive outsourcing environment. Swiss companies (and international firms with a Swiss presence) could try to minimise the impact of the strengthening franc by leveraging lower cost destinations and start outsourcing more work.

How is the changing value of franc impacting you? Fill us in on your concerns in the comments below.