Fast food giant McDonald’s announced on Tuesday that the firm would take action to end deforestation across its supply chain operations.
The company detailed the following eight points as the cornerstone of its commitment to halting deforestation:
No deforestation of primary forests or areas of High Conservation Value,
No development of High Carbon Stock forest areas,
No development on peatlands, regardless of depth, and the utilization of best management practices for existing commodity production on peatlands,
Respect human rights,
Respect the right of all affected communities to give or withhold their free, prior and informed consent for plantation developments on land they own legally, communally or by custom,
Resolve land rights disputes through a balanced and transparent dispute resolution process,
Verify origin of raw material production and
Support smallholders, farmers, plantation owners and suppliers to comply with this commitment.
The commitment is expected to mean big changes within the company’s supply network, with more than 3,100 of the firms suppliers expected to be impacted by the new code.
Michele Banik-Rake, a sustainable agriculture expert at McDonalds, said that the initiative for the new code was actually driven largely by the firms supply base. “The question that was coming back to us was, ‘As suppliers, we have stronger commitments than you do as a company, so why don’t you make the same commitment?’ I couldn’t argue with that logic, right?” she said.
Questions have been raised as to where the responsibility for McDonald’s commitment to deforestation starts and ends. It’s one thing for McDonald’s to have a policy that impacts the firm’s direct suppliers, but perhaps the biggest challenge will come from ensuring that the third party plantations and farms that McDonald’s do not hold a direct relationship with will abide by these practices.
McDonald’s commitment to deforestation mirrors moves made by others in the fast food space recently including Krispy Kreme, Dunkin’ Donuts and Yum Brands. David McLaughlin, the vice president of agriculture at the World Wildlife Fund (who advised McDonald’s on its new commitment) was quoted as saying: “McDonald’s brings size and scale to the debate of sustainable sourcing. Their reach is large, they are global, they work closely with the suppliers and so this outreach can only help.”
Professor Olinga Ta’eed has led a life spanning private, public and third sectors which perhaps is most accurately described as “entrepreneur, investor and social activist” (Professor Conlon, Dean of University of Notre Dame, April 2011). And despite embarking on plans to retire from a successful business career at 48, Olinga remains active and is instrumental in championing social good throughout business and industry.
Olinga is just one of our 40 influential thought leaders appearing at Procurious’ inaugural Big Ideas Summit on 30 April. To hear the Professor expand on some of the ideas presented in this interview, why not become a ‘Digital Delegate’ and register for the online event? You can do so here.
Procurious asks: You’ve spearheaded the Social Earnings Ratio initiative that will see the annual reporting of social value of 1 billion organisations by 2020. First of all can you explain to the uninitiated what this is, and why it’s important.
Olinga: Currently there are very sound robust metrics around financial value based around UK, USA and international GAP (general accounting principles). Financial value is measured because it matters. Increasingly all the ‘other soft stuff’ is starting to also matter– social value, personal value, consumer index, provenance in products, modern slavery in our supply chains, animal cruelty, impact investment, arts, etc. So in 2011 we set about developing metrics as robust as financial value to articulate these intangible values. As we know, in business if you can’t measure it – you can’t bill it and so it is with other values in our society.
Modern society is built on sentiment, about how we feel, about our values. It drives consumer purchasing right through to contracts being awarded based not only on price, speed and quality but also on delivering created social value. For example in public sector procurement, as government funds recede they are increasingly looking towards the private sector to deliver the same services into the community through third sector agencies; this is at the centre of UK The Social Value Act 2012, 2 per cent CSR Law in India, Indonesia 2 per cent CSR Law, 2.5 per cent Zakat in the Islamic countries, the Italian 0.5 per cent Cinque Mille, … the so called Big Society concept. To articulate between these blended solutions requires a common currency. We developed that common currency to translate sentiment into financial value. As governments utilise legislation and procurement to transform society, we found ourselves right in the centre of that need to articulate non-financial values.
Our mission is to translate complex inputs into simple, singular measurements of true intangible outcomes, the Social Earnings Ratio or S/E Ratio.
Procurious: Regarding the 2020 deadline: Is this realistic/what needs to happen to make this achievable?
Olinga: We currently conduct yearly UK or US GAP (general accounting principles) audits of 35 million companies in USA, 165 million in USA, 40 million in China … c. 1 billion organisations in the world.
Unfortunately using traditional social impact metrics (there are 1153) means surveys, translation proxy tables, etc which cost UK£ 5,000 to UK£ 200,000 to conduct and 3-18 months. This has proven to be a very significant barrier to resourcing the measurement of social value. Imagine the supply chain of a city like Birmingham with 34,000 suppliers, or a housing association with 18,000 suppliers, or of a food retailer with 35,000 suppliers. Who is going to pay for to evaluate these organisations, projects and processes? In any case no one has the time. The typical turnaround from a formal PQQ/ITT to contract award is a matter of days so this is simply not possible.
We set about building the first Model-T Ford of Social Value – fast, cheap, high consistent quality, fit for purpose, accessible to all, and in a lot of cases does not even require the intervention with the target company. Big Data, Social Media and Sentiment Analysis have changed the world of social value measurement. Shockingly, our disruptive metric takes 10 seconds and costs UK£ 5, and can be undertaken on a SaaS platform, Seratio.com, allowing 1 billion organisations to be measured by 2020. This is why we have been labelled as “the fastest adopted social impact metric in the world” (Vatican press, January 2015).
Procurious: How can procurement help CEOs understand social value?
Olinga: Changing CEO sentiment is a 100 year task but changing behaviour is a lot simpler. For example, if s/he wants to get that UK£ 1.5 billion contract, EU directive now says that impact funds must deliver 20 per cent social value. No ifs, no buts. So the driver here is easy. CEO’s are becoming bewildered by the range of KPI’s they have to perform to. It used to be simple – shareholder value and everything else was a slave to that. But now they find if they cough wrong in one part of the world, customers can walk away in other parts of the world due to social media, governments can pick on them for avoiding tax for example, suppliers don’t want to be associate with their toxic brand, etc.
But it’s not only about self-preservation, it’s about good business. To do that you have to articulate ‘good’ in terms that CEO’s understand. So we give them 3 distinct metrics – social value as a percentage of their capitalization ie what it means to their bottom line; and S/E Ratio which is an efficiency score just like the P/E Ratio – they could spend less but get more impact. Finally, and most importantly, we benchmark them against sectors, competitors, globally – no one wants to be at the bottom.
Procurious: Modern-day slavery and supply chains are intrinsically linked. Do we need greater transparency?
Olinga: Let’s not mix up transparency with ethics; they are not the same. When a company demands say 3 per cent cut in supplier remittance, they are making a conscience decision to transfer value. In a capitalist framework, financial value is an artefact between the board and shareholders; everyone else is a ‘slave’ to that. Customers, suppliers, community, statutory bodies, environment, staff … detract from dividends. Pay them more (eg tax, CSR spend, suppliers) and you have less to share with your shareholders and your own bonus. But we now recognize that we operate in a multi-stakeholder Citizenship framework, where all this ‘other stuff’ is social value – and they can contribute towards the total value.
So when a company takes out 3 per cent from their suppliers they have made a deliberate and conscience decision to take out value from their supply chain and give it – usually – to their shareholders. What they are saying that their success is contingent on someone else being deprived of their value ie. underpay, poor conditions, etc in their supply chain in a developing country. We however are not here to admonish companies but merely to measure them. Being university backed we are neutral, non-partisan, no agenda of our own. We merely point out that we can measure that you have taken value from the supply chain and perhaps increased your shareholder value by the same. It may be however, that they give the value to their community initiatives – that’s why we don’t judge. We simply allow them to measure value so they can track transference.
To hear from Olinga (and many others), watch exclusive videos, read more interviews, and contribute to discussions please register as a ‘Digital Delegate’ on our Big Ideas Summit page.
How do we go about attracting the next generation of commercial leaders? That’s the question I have been asking myself recently – and today I wish to put forward social media as the magic solution to our waning talent pool.
Procurement needs to be brave; it’s in dire need of a bold, disruptive force to take us into a rich, exciting and prosperous future. I believe that social media is this disruptor, yet it’s still a blind spot for procurement and very much an under-utilised channel for attracting the best talent. As such it is imperative that we view social media as something we need to take very seriously.
With the exceptions of maybe Google+ and fad networks like Ello – the germ of social media is not going to go away anytime soon. Instead we must view it as a new way of doing business – an opportunity that we not only need to embrace, but one to be mastered. We’ll be touching on this particular issue at our very own Big Ideas Summit physically in London on 30 April, and digitally via Procurious.com.
To be the most successful CPOs, we need to have the most talented teams. So how can we best use social media to do that?
A new generation with new tools
Procurement is not only one of the fastest growing professions in the world, but we’ve entered an age where “the face” of procurement looks markedly different to before.
The next generation of procurement professionals are intelligent, possess a broad range of interests, have an appetite to learn, and driven when it comes to plotting long-term career goals.
This next generation already possess an affinity to technology and the digital world. They have grown up with broadband, smartphones, laptops and social media being the norm and expect instant access to information. This is the first generation to enter the workplace with a better grasp of a key business tool than more senior workers.
Be where the talent is
Whether you want to call them Generation Y, or the oft-coined term ‘Millennials’, the same techniques apply.
Once you’ve set out your store, it’s time to ‘go fish’ and build meaningful connections with your new audience. Use social media to identify the rising (and most-active) stars in the procurement and supply chain world – this new tool will very quickly provide you with an insight into the person and their knowledge.
Look towards LinkedIn for an up-to-date career history – you’ll be able to identify gaps before inviting them in for an interview, and reduce the risk of skeletons in the closet.
Scour Twitter and Facebook posts for cultural fit – will this person be a good fit based on their online profile and persona? You don’t want to associate your business with a candidate of questionable morals, or who rubs people up the wrong way.
Who are they connecting with and having interactions with? The company people keep can be telling… Ask yourself if they are representative of your business and brand.
Hang on to a good thing
When it comes to retention – social media plays just as an important role. But don’t fall into the trap of thinking it’s a one-way street…
Just as you’re putting these social powers to good use, Millennials are just as likely to choose their next job based on how they rate their boss, over the company they are going to work for. They will base their opinion not on your title, but on word of mouth, social groups, strong connections, and online presence.
And its not just Millennials; stakeholders, peers, customers, suppliers are all there. Potential employees will track you (and your organisation) down on social media before an interview. Negative impressions can be formed if you cannot be found online…
Procurement gets a bad rap for being decidedly behind the times and tragically uncool. But by putting the profession out there and appearing instead as a progressive individual/business – someone who’s starting the discussions and making the connections – you’ll be forcing change from the inside out and refreshing the status quo for a new audience.
It should come as no surprise that your company policy on social media is also equally as important. You should be accommodating when it comes to social media use in the workplace – in the first instance it might help you to draw up a social media policy, providing guidance on what it’s OK to communicate. You should be encouraging employees to take advantage of all the resources at their disposal in order to gain competitive advantage (e.g. Using Twitter for market research/identifying trends; Procurious for eLearning and accessing best practice; YouTube for learning
These are just a few examples of how social media can help you win the war for procurement talent – now I want to hear about your experience. What are you doing as a CPO (or as an organisation) to recruit and retain new procurement talent in this progressively digital world? Come 30 April you’ll be able to hear what 40 of the most influential thought leaders make of it too. Find out more and get involved here.
45 years ago April 22 was just a normal average day… If it had been a colour, it would be grey. Unremarkable. Now it is forever marked in history as Earth Day – the original Earth Day occurred in 1970 and saw scores of people gather across the globe to show their support for greener policies.
Fast-forward to 2015 and more than 1 billion people from 192 countries have come together to build environmental democracy and to broaden, diversify and mobilise the environmental movement. Improvements in industrial development can be observed in corporate sustainability targets and the expansive range of sustainable products filling our shops and lining our cupboards. Yes, more companies are engaging with the issues firsthand – with the proposal of realistic goals, tangible progress is happily being achieved. The bottom line is now the Holy Trinity of people, profits AND planet.
If you happened to be in Washington last Friday you’ll have enjoyed Usher, Mary J. Blige, and Gwen Stefani (among others), performing at the free Global Citizen 2015 Earth Day rally hosted by rapper/entrepreneur will.i.am and journalist Soledad O’Brien. The event tied neatly in to the IMF/World Bank Spring Meetings – an early opportunity for world leaders to gather before they set the world’s sustainability agenda at the UN General Assembly in September.
The assembled throng counted world leaders and corporate innovators among its numbers – top of the agenda were rallying calls to end to extreme poverty and eliminate the threats posed by global climate change.
“Whether it’s the big migrations we expect to see or soil depletion or emptying the oceans, loss of species, loss of timberland — all these things are creating poverty at the same time that they are also creating climate change issues. Eliminating poverty will require solving climate change” – Kathleen Rogers, Earth Day Network president
The day saw a total of 33 commitments announced: education, water and sanitation, food security, health, political action, marine protection, and environmental awareness were all among them.
World Bank Group, President Jim Kim said:“Each person must do their part. We need engineers and entrepreneurs, we need doctors, we need lawyers, artists, teachers, we need students and activists – we need YOU. We are the first generation in human history with the opportunity to end extreme poverty.”
Also in attendance was the organiser of the very first Earth Day – Denis Hayes:“Climate justice is THE issue facing this generation. Ruthless, powerful carbon companies are buying votes and lying like the cigarette industry did for so long. So far, they are winning. The main power on the other side is you—you and billions of other people who actually care about tomorrow.”
A group of leading scientists and economists have added weight by issuing a chilling warning today – stating that three-quarters of known fossil fuel reserves must be kept in the ground if humanity is to avoid the worst effects of climate change.
Johan Rockström says: “It’s so frustrating, because it’s the choice of moving down a business-as-usual route with devastating outcomes for humanity and, at the same time, we have this almost unprecedented opportunity, we can transform the world economy to a fossil fuel-free one and moreover do it in a way that is security and health-wise more attractive.”
Turning Back The Clock
Steven Cohen, Executive Director of Columbia University’s Earth Institute– writing for The Huffington Post neatly summarises the challenges such an initiative needs to tackle head-on:
Sustainability is at or near the top of the modern global political agenda. At the core of that agenda is the need to:
Protect ecosystems and biodiversity;
Mitigate and adapt to climate change;
Protect and enhance water supply and quality;
Ensure adequate and healthy food;
Develop sustainable cities built with renewable energy and efficient transportation systems.
Reduce the impact of human-created waste on natural systems.
Develop businesses that minimize environmental impacts and maximize the use of renewable resources.
Steven notes: “We still have a lot to learn. We continue to extract and burn fossil fuels at a ferocious and destructive rate. The transition to a renewable resource based economy will be the theme of Earth Days for the next several decades. The institutional inertia and sunk costs of elements of the economy that depend on finite resources will not be easily addressed.”
Bob Langert, former Vice President of Sustainability, McDonald’s suggests that today’s society is in need of a reality check: “The consumer is less engaged today than in times past. We need a real surge to engage the consumer, or “sustainability” will be a niche that serves only a small segment of the marketplace.”
The 1990’s bought recycling to the fore but the enthusiasm (and novelty) soon wore off – and although recycling initiatives have become a part of modern society, the fervent desire once exhibited has now waned.
Bob continues: “While the consumer movement is quiet, the corporate environmental movement — including corporate collaborations with NGOs — is on fire. In 2005, Walmart worked with the EDF, Conservation International and others to put in place bold environmental goals, including zero waste. Similar actions and partnerships came from Unilever, Nestle, Nike, Coke, General Mills and General Electric, among others. For example, Coca-Cola has a “water neutral” goal. These aspirations, goals and progress are amazing.”
A Time For Change, Not For PR
Forbes notes that dozens of iconic US food, consumer and manufacturing giants (many of them Fortune 500 companies) such as Kellogg Co., Unilever, PepsiCo, Starbucks, Nestle, Mars, Gap Inc., L’Oreal, and Ben & Jerry’s will all be gathering on Capitol Hill to deliver a single, focused message to Congress.
Speaking to Forbes, Tim Brown, President and Chief Executive Officer – Nestlé Waters North America, said: “Nestle’s is directly impacted by the effects of climate change. Of particular concern are changes to weather patterns, water availability and agricultural productivity that will affect our global supply chain”.
And while many others will no doubt use the day to highlight their own sustainability plans and issue press releases – climate change is a challenge and not a business opportunity, and as such the developed world should not profit from disaster, according to India’s Environment Minister Prakash Javadekar.
Biggest Report Ever
Impeccable timing finds a newly-released report that details how sustainable production of bioenergy can be an important tool for addressing climate change.
Industry experts are calling the SCOPE Bioenergy & Sustainability Report the most comprehensive report on bioenergy ever released. It pulls together work from 137 researchers at 82 institutions in 24 countries that documents and analyzes impacts, benefits and constraints related to the global expansion of bioenergy.
The Big Ideas that will shape the future of procurement technology will be one of the hot topics at the Procurious Big Ideas Summit in London on April 30.
That’s why we’ve invited leading technology influencers like Tim Hughes, Lance Younger, Peter Smith, and Mark Perera to be “in the room”, and provide their views on which technologies procurement professionals should keep in their cross hairs.
I think it was Machiavelli said, “whoever wishes to foresee the future must consult the past.” My belief is also that it sometimes helps to look in the rear view mirror, to understand what is coming up on the road ahead.
In this article I look back in time and share four of the Big Ideas in technology that I believe have helped shape the procurement profession as we know it today – common protocols, online catalogues, reverse auctions and barcodes.
From the outset, let me stress that I am no technology expert and that my list of Big Ideas in Procurement Technology was conceived under the palm trees of an island in the Indian Ocean. Some may say this provided me with perspective, others may say I’m deluded. Let’s see what you think!
Common protocols – EDI & cXML
Establishing common protocols for the exchange of business transaction data (such as purchase orders, invoices, shipping notices, and many others) provided the basis for the globalization of procurement and the demise of the paper and fax era.
Electronic data interchange (EDI) emerged in the late 60’s and focused on machine-to-machine transactions, but it proved cumbersome for the internet. In light of this, in 1999, Ariba created Commerce XML (cXML), which subsequently became the primary universal protocol for B2B interactions over the Internet.
eProcurement came about as a way to conduct all sorts of purchasing transactions over the Internet, and marked a significant turning point in the use of technology for procurement.
Sometimes I wonder whether all the major eProcurement developments happened at the same time in the late ‘90s and we’ve just spent the last twenty years working out how best to use them, with the software companies refining the offerings in line with our demands.
Electronic catalogues were one of the first of the applications to be developed in the eProcurement suite.
It is easy today to think of this as a pretty basic development, but if you put it in context, consumer online shopping sites such as Amazon and eBay were only launched in 1995. Less than five years later, the corporate world was introducing its own, business-appropriate, form of online shopping.
The subsequent difficulties with managing in-house catalogues gave rise to the outsourcing of catalogue management, the creation of eMarketplaces and a whole new category of eProcurement applications and software providers that have flourished ever since.
Online reverse auctions
I LOVE a great reverse auction. Always have.
What I love most about reverse auctions is the need to follow a disciplined sourcing process in preparation for the event. I think this is one of the great, unsung benefits of this tool for the profession. Don’t worry, I have also heard all the downsides to online auctions. I know they have their place and that’s another reason why I love them – they are a weapon to be used selectively with great effect.
I love the story behind the creation of the online reverse auction – the Glen Meakem story. I was lucky enough to be both living in Pittsburgh when FreeMarkets was it its height, and also to be one of their customers. They were an impressive organisation.
Legend has it that Meakem conceived the idea when he was at a supplier negotiation day with GE. At that time, suppliers were marched into individual rooms Wal-mart style, interrogated, sent outside, then brought back in after their competitors had finished the same meeting. Flip charts were used to track pricing as it trended downwards.
Meakem had the idea to take this practice online and allow the negotiations to take place real time. Surprisingly, GE didn’t want to invest in the idea, so Meakem went out on his own, hiring McKinsey colleague Sam Kinney, and founding FreeMarkets with the purpose of facilitating the online tender process and running global auctions.
Reverse auctions proved to be a turning point for procurement, as they reinforced to company-wide suppliers the importance, and power, of a centralised purchasing team.
However, what I think makes reverse auctions most significant for the development of our profession is that not only did they really capture the attention of the C-suite, but also the rest of the organisation.
I remember hosting boardroom parties where colleagues from all parts of the business could come and cheer as they watched the prices being bid plummet. It’s not every day your colleagues get excited and stand up and cheer for procurement. It was a nice moment, and provided a great opportunity for procurement to demonstrate its value.
The Codes – The Bar… becomes the QR
I am certainly no barcode expert, but it is quite conceivable, as one story put it, that “no event in the history of modern logistics was more important” than the invention of the barcode.
Apparently, the first retail product sold with a barcode was a single pack of chewing gum at a supermarket in Troy, Ohio on June 26, 1974.
Forty years later, the latest incarnation of the bar code is the QR code (Quick Response Code) which is the trademark for a type of matrix, or two-dimensional, barcode.
The QR code has quickly become popular due to its fast readability and greater storage capacity compared to standard barcodes.
Where this development becomes very interesting is in today’s world of supply chain disruptions, where the QR can assist with product and time tracking, item identification and more efficient document management.
Given the procurement profession’s increasing need to guarantee supply chain transparency, the QR code could help provide some of the answers we need to protect our brands in the future.
The Big Ideas that will shape the future of procurement technology will be in the spotlight on 30 April at the Big Ideas Summit.
Procurement professionals around the world can get involved, and join Procurious’ 5000 members, as digital delegates by going to the Big Ideas Summit website and tweeting your Big Idea using #BigIdeas2015
You can also share your views on the ideas you believe disrupted procurement technology in the Procurious group.
How influential are you? Invite 10 people to join Procurious to win 1 of 5 iPad minis.
We need you! We hope you’ve been enjoying all the great content on Procurious and the benefit of connecting with other people like you.If you’ve got a minute, we need your help to attract even more procurement professionals to become members.
By growing our community we elevate the profession: in-turn we all benefit from richer discussions, more knowledge sharing and better career prospects for Procurement.
Invite and win an iPad mini
As a thank-you for helping us out, we’re offering 5 iPad minis to a handful of randomly-drawn winners.
To be in with a chance of winning, all you need to do is invite 10 people to join Procurious before 11.59pm (GMT) on 29 April 2015.
We’ll be announcing the lucky winners live in London (and via Procurious) at our Big Ideas Summit the following day. The list of winners will also be available on this Group page and via Twitter.
Sending an invite is super easy
When logged-in to Procurious you can send an invite to colleagues/peers/friends via any medium that appears on the ‘Build Your Network’ page.
The annual survey, involving more than 3000 procurement and supply chain professionals, looks at salaries and rewards across the profession. In 2015, it found that the average pay award in procurement was 2.5 per cent, considerably higher than the national average of 1.7 per cent.
Top Salaries, No Equality
In real terms, what this means is an average salary for procurement and supply chain professionals of £41,661. When looking at the individual job roles, the average salaries are now:
Procurement Director – just over £89,000
Head of Procurement – £64,000
Category Manager – £42,000
Senior Buyer – £35,000
Buyer – £27,000
Although salaries are on the increase, there is still a lack of equality between men and women in the profession. At all levels apart from tactical roles, salaries for men were higher than those for women, with the greatest inequality at the advanced professional level, where the difference was as much as £10,300.
The salary also found that professionals who held MCIPS accreditation earned on average 23 per cent more than their peers without the qualification.
Junior Roles on the Rise
What might be surprising to many people is that the biggest annual increase was seen in junior procurement roles. Assistant Buyers gained on average a 4.2 per cent increase in their salaries, while Procurement Directors reported only a 3.3 per cent increase.
The rise in the wages of junior roles highlights an important issue for procurement, even in light of it being one of the fastest increasing professions in the world. A lack of professionals starting in the junior roles means that organisations now have to work harder to attract and retain their employees.
The War for Talent
The ‘War for Talent’, as coined by McKinsey in the 1990s, is still firmly in place in the procurement profession. The number of procurement jobs available has increased significantly, with Hays Recruitment seeing a 40 per cent increase this year alone.
This increase has left many employers struggling to find the right, skilled employees to fill these roles. Of the number of avenues open to organisations when looking to attract new talent to their organisations, social media is one of the most powerful.
Platforms like Twitter, LinkedIn and Procurious can help employers check out potential employees, get to know them in more detail and also be noticed as an ‘employer of choice’ in the industry. But social media is by no means the silver bullet for procurement recruitment. Without new ideas, the work that procurement has done to get to the executive table may be undermined.
‘People’ is one of the key topics at the Procurious Big Ideas Summit on April 30th. Procurious has gathered 40+ of the biggest influencers in procurement and will be getting their ideas on the future for ‘people’ in procurement (among a host of other topics). Join in, ask questions, watch exclusive video content and contribute to all the discussions by here.
In the meantime, here are some of the top stories making the headlines in procurement this week.
Exploitative fashion retailers named and shamed
Australian fashion companies lack transparency around their supply chain or do not have full knowledge of where their raw materials are being sourced from, leaving workers including children at risk of exploitation, an audit has found.
The Australian Fashion Report 2015, launched by international development organisations Baptist World Aid and Not For Sale, which aims to empower consumers with the knowledge needed to purchase fashion ethically – this year assessed the ethical practices of 219 clothing brands — and found that popular retailers including Rockmans and Lowes are some of the worst offenders.
Many brands now produce in Bangladesh, which in recent years has become wildly popular for ready-made garment suppliers and where the wage is approximately $39 a month, 75 per cent cheaper than China.
Corporate governance researcher with the University of Technology in Sydney and a researcher with the thinktank Catalyst Australia, Martijn Boersma, said: “For Australia, the bulk of our imports come from the Asia-Pacific region where it is estimated 78 million children are involved in child labour. The deeper supply chains are, the more difficult it is for them to be monitored.”
Hilton hotels to improve animal welfare in supply chain
Hilton Worldwide is to implement new measures to improve the welfare of animals in its global food supply chain. The hospitality company said it would begin to eliminate the use of cages for egg-laying chickens and gestation crates for breeding pigs.
All hotels in the Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton and DoubleTree by Hilton brands, will ensure that chickens are not confined in cages by 31 December 2017. By the end of the year after that, all pork products will have to be come from suppliers that house breeding pigs in groups, rather than gestation crates.
The changes, announced in conjunction with the Humane Society of the United States, will initially apply in 19 countries and will be adopted in other markets as supply becomes available. Jennifer Silberman, vice president, corporate responsibility for Hilton Worldwide, said the company was committed to addressing key issues throughout its business and supply chain.
Internet of Things will deliver US$1.9 trillion boost
DHL and Cisco have jointly released a new Trend Report focused on the Internet of Things (IoT) at the DHL Global Technology Conference in Dubai. DHL and Cisco Consulting Services are also collaborating on a joint IoT innovation project that will improve decision-making in warehouse operations with near real-time data analytics based on Wi-Fi connected devices.
Ken Allen, CEO DHL Express and board sponsor technology, said: “At Deutsche Post DHL Group we have a deeply held belief in the positive powers of global trade. There is huge potential for countries to further increase their connectedness and prosper through trade, integration and technology. We believe the Internet of Things will be a primary enabler of this transformation.”
The Trend Report, which estimates that there will be 50 billion devices connected to the Internet by 2020 compared to 15 billion, looks at the potential impact this technological revolution will have on business.
The value at stake, combination of increased revenues and lower costs that is created or will migrate among companies and industries when new connections are made, reveals the huge potential when the Internet and networks expand their connections to warehousing, freight transportation and other elements of the supply chain.
Science Warehouse is a leading provider of on-demand procurement and managed catalogue solutions that deliver purchasing efficiencies and control, spend visibility and drive savings. The Software-as-a-Service (SaaS) solution boasts dozens of clients across the UK public sector including higher education and the NHS, as well as corporate clients in the construction sector.
During the past 2 years it’s been developing a presence in Australia, working in partnership with the leading Australian spend analytics provider, Purchasing Index ANZ. The Charles Perkins Centre (CPC) at the University of Sydney has been live with the Science Warehouse solution since 2014 and has already seen CPC users buying from over 2 million live products.
In response to very positive feedback from other potential Australian customers, a new subsidiary (SWL Australia) has been formed with offices in Melbourne.
Richard Shine, Science Warehouse Sales Director said – “This is a fantastic opportunity for Science Warehouse to really showcase a market-leading solution.”
Cabinet Office procurement plans almost “perverse” and “draconian”
Reaction has been swift to a reported move by the Cabinet Office to include two subtle but radical provisions in the government’s Small Business, Enterprise and Employment Act which could shake-up local government procurement.
The Act, which became law last month, is said to contain two clauses which appear to give the Cabinet Office authority to investigate and challenge local authority procurements. The majority of the Act does not affect procurement, but two clauses appear to have relevance.
Responding to the bill’s provisions, the ICT leader at one London local authority said, “At a time when we’re looking to devolve spending decisions and empower local communities the Cabinet Office have introduced provisions which could, somewhat perversely, do exactly the opposite. Not sure why these powers were introduced.”
The National Outsourcing Association (NOA) has described the proposals as “almost draconian.” Kerry Hallard, chief executive of the NOA said, “Now that the government has the ability to implement measures relating to public procurement as it sees fit, it is imperative that this new power is not used callously.
Henderson Global is a leading independent global asset management firm. The company provides clients access to skilled investment professionals representing a broad range of asset classes.
In 2011, Henderson Global’s third party spend was valued at over £100m. However, there was no formal procurement function, with individual business areas conducting informal sourcing activities. The decision was made to create a centralised procurement function, with the aim of delivering value, increasing control and reducing risk.
The department was formed in early 2012 and handed some stiff objectives to prove its worth. It took just three months for the team to deliver significant value and savings and, in 2014, it won the CIPS ‘Most Improved Purchasing Organisation – Start-up’ award.
Nykolas Bromley, Head of Procurement at Henderson, talks to Procurious about his and the team’s journey to this award and plans for the future.
How did you get started in procurement?
After university, I applied to be a trainee buyer on the Tesco Graduate Programme. I assumed that I would end up working in one of the grocery categories, but was offered a place in their procurement function instead. I’ve worked mainly in indirect procurement ever since.
Tell us about getting the department up and running and what your successes have been?
Rather than spend months analysing and strategizing, we initially targeted quick wins in order to demonstrate that procurement can generate an immediate return on investment. By delivering benefits so soon after the function was established, we gained credibility and opened the door to involvement in much larger and more complex projects. In the three years that have followed, we have built out our systems, policies and processes, and focused heavily on developing capability within the team.
What prompted you to submit a nomination for the award?
We were genuinely proud of what we had achieved and felt we had a good story to tell.
What will the award do for you and your team?
Winning a Supply Management Award has raised the profile of the department both within the organisation and the wider procurement industry. The award is proudly displayed in the office, and should the need arise, I expect it will be easier to recruit new talent into an award-winning team.
What has been the most challenging aspect of being in a start-up/greenfield department?
Henderson celebrated its 80th anniversary in 2014, and for most of that time had existed without any form of central procurement. This created something of a communication challenge, whereby stakeholders were often unfamiliar with typical procurement terminology and processes. The steep learning curve worked both ways, as having moved from the retail industry, the language and acronyms of investment management were entirely new to me too.
Do you have any advice for someone in a similar situation?
There will always be a degree of resistance from some quarters in an organisation with no tradition of formal procurement. However, there are also likely to be areas of the business that are crying out for assistance. My advice is to concentrate on the stakeholders that want your help first. Even though they may not be the most strategic or highest value projects, it’s a great opportunity to build up allies, advocates and success stories.
What are your key aims for 2015?
This year we will complete the implementation of a new Purchase-to-Pay tool, which will transform the way that we manage our purchasing and payables processes within Henderson. This is a substantial change-management initiative, and a successful roll out of the tool is a key priority for the function.
What do you see in procurement’s future and how can social media play a role?
We are a small team with low staff turnover, so we try to utilise our external network to keep in touch with developments and best practices in the wider procurement industry. Tools that provide access to potentially thousands of procurement experts and facilitate knowledge sharing are invaluable in our situation, and in advancing the profession.
Procurious is gathering 40 of the brightest, most-influential figures across procurement, technology, and social media for the Big Ideas Summit on 30 April.
We quizzed Tim Hughes, social media extraordinaire and Go to Market in the UK for Oracle’s Cloud Accounting and Procurement solutions on the future of the sharing economy, procurement, and technology. You can follow Tim @Timothy_Hughes on Twitter.
Procurious asks: In your Twitter bio you call yourself a pioneer of Social Selling – could you distil it for the uninitiated?
Tim answers: It’s not a self proclaimed title, I’ve been called it many times. My background is 27 years in sales, so what I do (always) is try and push the Social Selling debate forward. How can I find new ways of using social and technology to forward an organisations sales strategy. At the end of the day, it is all about using Social Selling to enable a sales person over achieve their quota quicker.
Last year I was mentioned in Forbes as one of the Top 100 Global Social Sellers, this year an Influence Marketing company, Onalytica, came up with a list which positioned me as the number 2 most Influential Social Seller Worldwide. The only person from the UK on that list.
My Twitter @Timothy_Hughes has over 100,000 followers and my Blog https://timothyhughesuk.wordpress.com/ I’m told is a “must read” for people involved in Social Selling as it generates so many new ideas and debate. My most recent blog “Using Twitter to Make C-Level Meetings” went viral. Something I am very grateful for.
Procurious: Mastering social selling – if you were to promote best practice, what would be your top 5 tips?
Tim: On my blog I provide written materials and webcasts where I talk about the 5 Pillars of Social Selling to offer organisations a strategy. In terms of day to day things you can do, here are 5 suggestions.
People need to have a “Buyer Centric Profile” on LinkedIn.
People need to Identify their customers and Influencers.
Build Relationships and Engage. Don’t Spam!
Procurious: Innovation in the social space – your thoughts on the likes of Periscope and Meerkat. Will they stick around, what do they offer social storytellers etc.
Tim: I’ve not used them myself, but I’m sure they can. You always need to go to where your audience is more comfortable. With C-Level people now being on Twitter and LinkedIn, they is no reason, why a brand or a sales person does not stream video. For example, a user conference, demonstration or webinar. Video is becoming more and more a medium that people are comfortable with. I’m currently working with a sales person to use video for demand generation as inmails on LinkedIn and emails don’t get the right traction.
The Oxford and Cambridge Boat Race last weekend used Snapchat, so why not look at new ways to reach your audience or even reach a new audience?
Procurious: What else is disrupting the online, social space right now? (And how could this tie into procurement)
Tim: SMACT (Social, Mobile, Analytics (Big Data), Cloud, Internet of Things) are the main disrupters I see right now. People except to come to work and access systems the way they do at home, via mobile and for them to have the same “look and feel” as Facebook. This is causing major disruption to people that have IT systems that don’t support this. To that end, we are seeing that IT departments just cannot keep up because of the speed of innovation, that is where they are pro-actively using public cloud to support the business.
People are moving away from text to visual content. Photo and video. Instagram is the big platform for people and brands right now. At a recent procurement event I attended somebody said they couldn’t see how Instagram was relevant and I said, why send out an RFP, why you could post a photo on Instagram and say “who can supply me one of these?”.
Procurious: Gamification – is it important/how can it be used to effectively breed user loyalty?
Tim: Gamification should not be a “shoot from the hip” solution. Different people react to Gamification in different ways. While many of us are naturally competitive, often people will just “take our bat and ball and go home”. It has been used for years by Tesco (Club Card) and Sainsbury (Nectar) to enable them to understand customer behaviour. I’ve used it in the sales environment for cold calling days, I’ve also used it for Demand Generation via social media (See my blog for details).
Procurious: Why should we be encouraging procurement professionals to face their fears and get on social networks?
Tim: 20 years ago us sales people were able to talk to who we liked in an organisation. Then people introduced all kinds of technology, like voice mail to stop us getting to company executives.
I have a friend who last week made 12 appointments with C-Level people through Twitter. A number of us think it’s the “golden age” again. If executives (in any department) do use social media, how will they understand it? There was a theory it would just go away. It won’t. The argument around social media use in business and the ROI of social media was won two years ago. We use social media internally, it gives us Competitive Advantage and has increased employee efficiency by 25 per cent. Why wouldn’t you?
Procurious: Can you recommend some actions to help social-networking newbies spread and grow their online influence?
Tim: The first thing when you get online is to breath. You don’t have to be somebody you are not, just be yourself. If you are using social media just to get a hang of it, then just do, post photos of what interests you; sailing, cars, book reading. If you want to grow your influence then be interesting, add value and engage. Find influencers and engage with them.
And finally, look forward to 2030. How will the social landscape have changed, what’s your Big idea for social?
Tim: Change will accelerate, as mobiles get faster, can hold more data and the battery live is longer. Wearables will move from watches and bracelets to be woven into the fabric of your clothing. Through the Internet of Things (IOT) everything will be connected to the internet and will collect data. The amount of data we store will get bigger and bigger. The decision making from this data will revolutionize society and the way we think and act. This is already being used by Netflix and dating sites.
The Sharing Economy will move from the edges to be the “norm” with 25 per cent of the NASDAQ having disappeared already, more company will go as new entrants will take their place. Uber has no taxis, AirBnB has no rooms. The first question VCs ask start ups now is “What Industry will you Kill?”.
But this will all be surpassed by Artificial Intelligence (AI), while sensors are being seen as the fourth wave of the Industrial Revolution, AI is the 5th.
Want to hear what Tim has to say at the Big Ideas Summit? Follow along by joining this Group.
It’s an age-old story of supply and demand… so on the eve of Record Store Day we’re bringing our record player out of storage, dusting off our favourite albums and learning why vinyl is here to stay…
In 2014 something extraordinary happened… UK album sales on vinyl climaxed at a 20-year high, following seven years of sustained growth (after even more years in the doldrums). Recently released figures from the Official Charts Company reveal that sales of vinyl LPs are continuing the trend in 2015– up a whole 69 per cent during the first quarter (compared to the same period in 2014).
Happily this has led to the creation of the Official Vinyl Albums Chart Top 40 and Official Vinyl Singles Chart Top 40 (combining sales of 7” and 12” singles) – musicians and retailers alike have welcomed the announcement with open arms, like UK vinyl retailer Phil Barton of Sister Ray Records, Soho, London:
“The resurgence in vinyl sales has been a great boost for the independent trade. The launch of the Official Vinyl Charts tells the world that a format that is loved and revered is more relevant now than ever – far from being a curiosity, vinyl is the go-to format for many music fans.”
So all signs are pointing to a resurgence of the once-beloved format, but do we have the infrastructure to keep up with the newfound surge in demand?
Back in Black (red, gold, green, and even white too…)
Vinyl LP sales stood at 1.4 million in 1995 (1.60 per cent of the UK album market) – in the years that followed sales dipped dramatically, finally reaching rock-bottom in 2007 with sales of just 205k (and a dismal market share of 0.10 per cent). With such a dismal performance it looked as though the beleaguered format had nowhere left to go – it was as good as dead…
But that hasn’t stopped those passionate and protective of the format from striving to restore the vinyl LP’s rightful place in our record collections – enter Record Store Day…
From its humble origins in the US, Record Store Day (or RSD for short) has since become a significant event in the musical calendar.
Megan Page , Communications and Marketing Assistant for the Entertainment Retailers Association, provides us with a potted history of Record Store Day and its origins.
“RSD is a celebration of the culture of independent record shops that aims to appeal not to just vinyl enthusiasts but also introduces a new generation to the joys of vinyl. Stores stock a range of exclusive product and host a range of events to celebrate.
“Record Store Day was conceived 9 years ago in the USA and was brought to the UK a year later. It’s now in its 8th year in the UK and co-ordinated by the Entertainment Retailers Association and Spencer Hickman. In 2014, over 220 independent record shops across the country signed up as labels produced over 270 exclusive album releases and 340 singles on vinyl. Now a global event, Record Store Day is celebrated in territories all over the world, including France, Germany, Netherlands and Spain.”
“…Watch the reverence they have as they handle their Beatles vinyl. How carefully they replace the albums into their sleeves, making sure they’re placed back onto the shelf in the proper sequence…”
Due to the complex logistics involved in such an initiative, orders are placed at the record factories as far back as December to ensure the production runs are completed in time. But park that thought for a bit, first we need to discuss vinyl’s phoenix-like rise from the flames…
I Am The Resurrection
During 2014 record sales hit a 20-year high – bolstered by the likes of Pink Floyd and Arctic Monkeys. But if we had to play Devil’s Advocate, is this all just a flash in the pan, a passing fad perhaps?
“It certainly helps having a big year of releases that would include Pink Floyd but from a personal point of view even the smallest of artists/fanbases can add their own mark on sales which keeps this trend continuing.”
Megan adds: “The growth of vinyl has been incredible and its sales figures reflect year on year growth. In 2014, vinyl album sales passed the 1million mark for the first time since the Britpop era. This is more than four times than the level as recently as 2008.”
We quizzed Martin on the factors that have contributed to vinyl’s return – what caused it to come back into fashion?
“Customers/consumers have always wanted something tangible and collectable. Vinyl is nice to look at, the artwork was really made for this format and you get a feeling of experiencing the record more.”
Earlier this year we also saw Neil Young weighing in on vinyl’s rise in popularity –Martin reckons that Neil Young had his own agenda to peddle here, commenting: “Very recently he’s launched a multi-million pound digital system (the PONO) that various people have already poked holes in, so that anything that deflects back onto vinyl helps his cause.”
We asked Megan whether there’s been a visible knock-on effect from such initiatives as RSD with record stores sales and vinyl releases?
“RSD itself has become such a popular initiative – sales of LPs alone last year generated more than £2m in retail for record stores. Because of its success, we are now seeing that not only heritage acts are releasing material on the format, but a new generation of artists such as Jake Bugg and the Arctic Monkeys are releasing music on vinyl. This also allows teenagers to discover the sound of vinyl of first time.”
Megan adds: “The great thing about the inclusion of bands like 1D and 5sos etc. is that for the first time it is recruiting a younger, female generation of music lovers to independent record shops who are discovering music on the vinyl format for the first time! Hopefully we’ll see more and more mainstream bands releasing material on vinyl too.”
Raging Against The Machine
Certainly on the strength of this you’d be forgiven for thinking that the future of the vinyl is as shiny as its glossy black exterior. However, it’s a different story behind the scenes, as aging factories are struggling to keep pace.
The Wall Street Journal reported that pressing plants (in the US) are being run flat-out to keep up with demand. And although there has been some investment in increasing capacity across Europe, more investment needs to be pumped into production facilities.
“The creaky machines that make them haven’t been manufactured for decades, and just one company supplies an estimated 90 per cent of the raw vinyl that the industry needs” – WSJ.
Chris Ruff, Marketing at Atlantic Records, thinks that there is a similar story in the UK: “Vinyl pressing time now is well over 8 weeks something that used to be almost half that. This is due to millions (literally) of repressing’s of classic albums.
“Depending on artist we usually do a pressing of 2k and then repress if any is needed. For reissues it is usually 5k… As a standard now for bands and indie acts we press all albums on vinyl.”
It’s not delays that have the potential to derail this creaky supply chain… The WSJ reports that record labels are sometimes waiting months for orders that used to be filled in mere weeks. In an effort to boost production, the machines are being run harder (and longer) than ever before, which is increasing the risk of break-downs – leaving record factories to foot hefty repair bills. The labour-intensive nature of the pressing process itself – the creation of the master record – all of these considerations pile on to the complicated, archaic procedure.
Chris sees the biggest obstacle will be trying to keep pressing in the UK (noting that Atlantic may look to Europe to press if they are quicker).
Such is the demand that factory owners are embarking on globetrotting voyages of discovery in order to procure scrapped presses. Paying anywhere in the region of £10-25k for the privilege – and that’s before adding the costs to transform them back into their previously (working) glory.
Placing increased pressure on plants when it comes to readying special (weird) releases. Limited runs of splatter, coloured, glow-in-the-dark, even scented vinyl means that invariably pressings take longer.
As a retailer Martin offers an alternative viewpoint when it comes to vinyl’s challenges:
“Pricing very much depends on how many of each album/single is pressed. This affects myself as retailer (the cost to me) and the customer (the cost to them). Moving forward we could certainly use more pressing plants in the world to ease delays!”
“I believe that the power of the record store to inspire is still alive and well, and that their importance to our next generation of musicians is crucial.” Dave Grohl – Foo Fighters frontman and ambassador of Record Store Day 2015