30 Under 30 Supply Chain Stars

Roundtable photo

This year marks a historic tipping point in US demographics. The Baby Boomers will be overtaken by the Millennials (18-32 year-olds) as the largest living generation, and nowhere will this be felt more than in the workforce. In fact, Millennials will comprise about 75 per cent of the workforce within 10 years. Research by ThomasNet suggests that employers’ perceptions of Millennials need to shift – most manufacturers (62 per cent) say Millennials represent a “small fraction” of their workforce, while eight out of 10 (81 per cent) say they have “no explicit plans” to increase these numbers. At the same time, 38 per cent of manufactures report that they plan to retire in one to ten years. 

So, the answer seems obvious – businesses need to move fast to attract and retain Millennials before they find themselves in the midst of a major talent crisis. ISM and ThomasNet have joined forces to strike a major blow in procurement’s “war for talent” with the 30 Under 30 Supply Chain Stars initiative.

I’m sitting at a press conference with five of last year’s 30 Under 30 winners lined up in front an enthusiastic group containing many of their fellow winners –  in fact, you could say that the future of US procurement is concentrated right here in this room. Today is all about putting a spotlight on the best young talent working in the supply chain to encourage more Millennials to enter the profession, excel like the panellists lined up before us, and tackle the looming demographic crisis head-on.  

What’s more important, in my view, is that the professionals in front of me really buck the trend of negative stereotypes of “brattish” millennials. They’ve all climbed to impressive levels of responsibility for their age bracket and are poised to fill the void as Baby Boomers retire. We have Amy Alpren, Manager of Strategic Sourcing at CBS Corporation; Nick Ammaturo, Director of Profit Improvement and Procurement at Hudson’s Bay Company; Matt Bauer, Procurement Administrator at City of Mesa Arizona; Katy Conrad Maynor, Category Manager, Finished Lubricants/B2B, Shell Oil, and Weslet Whitney, Sourcing Specialist at Enterprise Products. They’re joined by Jami Bliss, Director of Global Procurement Program Management at Teva Pharmaceuticals, who was a nominator for the competition. Each one of the panellists shares with us the impact they’ve already made upon the profession, reeling off a list of combined achievement that would silence even the most vocal critic of their generation.

Following the event I catch up with another 30 Under 30 winner in the exhibition hall. Leah Halvorson is ‎Director of Procurement & Supply Chain Development at Minneapolis Public Schools and very enthusiastic about the award. She tells me that she and the other winners have seen some amazing benefits flowing from 30 Under 30 – her peers have been offered job opportunities, scholarships and celebrity status at ISM and ThomasNet, but most importantly, they’ve had the opportunity to network with each other. Leah herself has had some fantastic recognition at her organisation, with senior executives congratulating her personally and career-boosting recognition in the company newsletter.

ISM and ThomasNet are already looking ahead to the next batch of 30 Under 30 Supply Chain Stars and expect to double the number of nominations this time around. This initiative has won the approval of businesses large and small across the US because it celebrates young talent, attracts more Millennials into the profession and, like the 30 Under 30 winners themselves, it has a bright future.

Leniency for Corrupt Petrobras Suppliers?

Petrobras, a Brazilian state owned oil company

Earlier this year Petrobras, a Brazilian state owned oil company, became involved in court action over questionable activities within its supply chain. Executives at the company were accused of accepting bribes, rigging bidding processes and facilitating overcharging in return from kickbacks from suppliers.

The resultant actions have had a marked effect on Brazil’s economic fortunes. After the scandal broke Petrobras elected to freeze all activity with the suppliers involved in the controversy. This decision has sent ripples through Petrobras’ supply chain resulting in bankruptcies and staff layoffs at a number of Brazilian firms. To put some scale to the project, it is estimated that Petrobras accounts for 10 per cent of all capital spending in Brazil. The slowing of work at Petrobras is thought to be one of the key factors contributing to Brazil’s economy shrinking by 1 per cent this year.

In response to the slowdown, the Brazilian government is considering a path of courtroom leniency for the embattled suppliers. In a bid to re-spark the country’s flailing oil and gas industry and kick-start its economy, the comptroller general is in discussions with five of the 30 suppliers caught up in the scandal. It is thought that should these firms accept responsibility for their wrongdoing, pay fines and commit to compliance measures, their exclusion from participating government contracts will be lifted.

It’s important to note that the proposed moves will not have any impact on the criminal trials faced by the executives of Petrobras and its suppliers. One of whom, Nestor Cervero, was sentenced to five years in prison yesterday for allegedly using money received from bribes to purchase an apartment. Cervero is the second Petrobras executive to receive a jail sentence for his role in scandal. Last month, Paulo Roberto Costa, former Petrobras director of refining and supply, was sentenced to seven and a half years in prison. However, after signing a plea bargain he will serve only one year under house arrest.

CIPS teams up with Procurious to drive social media knowledge

CIPS David Noble speaking at Procurious Big Ideas Summit 2015
CIPS David Noble speaking at Procurious Big Ideas Summit 2015

The Chartered Institute of Procurement & Supply (CIPS) has partnered with Procurious, the world’s first online business network for procurement and supply chain professionals, to form a social media knowledge partnership that will deliver enhanced learning and networking opportunities for Procurious and CIPS members in the digital realm.

The knowledge partnership will highlight how the growth of social media will impact the procurement and supply profession and encourage the wider community to embrace the new way of networking and information sharing [www.cips.org/procurious].

For CIPS members, the alignment with Procurious will greatly increase the opportunity to expand their network of like-minded professionals globally. Also, it will help them access best practice social media advice, webinars and interviews that will help them stay better connected with suppliers, mitigate risks and prepare for potential disruptions in the supply chain.

CIPS members will also benefit from being able to sign up for social media workshops in addition to the host of procurement and supply chain online learning modules already available on the site.

The agreement helps cement Procurious as the place to go for the best advice, discussions and online learning relating to social media. Specifically, the knowledge partnership will give Procurious members additional content including webinars, interviews, events and access to CIPS experts online.

Commenting on the partnership David Noble, Group CEO, CIPS, said: “Social media growth has been phenomenal over recent years and is having an increasing impact on the procurement and supply profession. Partnering with Procurious is enabling us to leverage the opportunities these platforms provide from both a networking aspect but also a knowledge and educational perspective for our members and the wider community.

Procurious Founder Tania Seary explained: “Procurious was set-up to help procurement professionals get connected and get ahead, and our partnership with CIPS is a terrific proof point of how we’re delivering on this promise.

“We live in an increasingly globalised world so those who master the opportunities such as Procurious offer will be at a huge advantage to those that don’t,” Seary added.

Procurious currently has over 5,500 active members across 100 countries who can use the platform to connect and engage instantly. Members come from organisations including Shell, Apple, HSBC, Rio Tinto, Qantas Airways and General Electric.

To find out more visit www.cips.org/procurious

Why is eSourcing adoption and utilization still so low?

The eSourcing alternative

By Jeff Gilkerson, Manager at The Hackett Group thglogo500

 

You would be hard pressed to find a TV viewer that would argue watching a show in standard definition is better than watching in High Definition. Similarly, it would be difficult to find a procurement executive that would argue a manual (excel/word/email) based sourcing process is better than utilising an eSourcing tool. It’s almost universally accepted that eSourcing is more efficient, improves quality/standardisation, and generates better results. Yet, eSourcing tool utilisation and adoption is still lagging. Approximately 70 per cent of large organisations have eSourcing tools. While at first this may seem encouraging, it begs the question: why do 30 per cent of organisations not have eSourcing tools when the benefits are widely known and accepted, the technology has been around for decades, and the tools can be obtained for a relatively low investment?

The picture gets even worse when you look at the actual adoption and utilisation of eSourcing tools in the 70 per cent of organisations that have them. Many of these organisations have “implemented” eSourcing tools, but what that really means is they have purchased the tools and have them available to use. It does not mean that the tools are embedded in the sourcing process, that the staff is adequately trained to use the tools, or that the tools are frequently and consistently used for sourcing projects.

We recently helped a mid-size manufacturing client in the midst of a procurement centralisation to design and implement an eSourcing program. While eSourcing was new to this organisation, some of their challenges and learnings are just as relevant to more mature organisation trying to understand why eSourcing utilisation and adoption has not reached its full potential.

Most eSourcing tool providers will tell you they are easy and fast to implement (some say it can be done in only a few days). However, true implementation of an eSourcing tool is more than just making sure the technology works.

The limits of adoption and utilisation go beyond the actual tool, and lay in a range of organisational and people issues:

  • Change is difficult: Former president Woodrow Wilson once said, “If you want to make enemies, try to change something.” Even if you know it’s for the best, change is difficult. Think of moving, even if it is to nicer house in a better neighbourhood, the process of packing, moving, and unpacking is difficult and not something most people look forward to. Similarly, moving from a manual sourcing process to an eSourcing process requires change on the part of users.
  • Required change: As mentioned, change is difficult, and transitioning to an eSourcing tool is change. Just like all change it requires effort and work. Users have to re-learn how to do things they have been doing for years, explain to direct reports, suppliers, and internal stakeholders why they are changing, and often times modify the process they have become accustomed to. Additionally, many of the things that make eSourcing tools efficient (e.g. templates, auto-scoring) have to be built or configured. This work is required upfront before users start to realise the benefits that eSourcing tools provide. It’s not just about having the technology, it needs to be embedded into the process and this requires work and change.
  • Lack of process standardisation: eSourcing tools provide a great resource to improve consistency in your sourcing process. However, in order to do this there must be a generally accepted sourcing process that is consistently followed throughout the organisation. In our experience, many organisations don’t actually have a standard sourcing process. Even in organisations that do have a documented sourcing process, it is common to find that the process is infrequently followed or applied inconsistently when it is followed.
  • eSourcing provides more visibility: A robust eSourcing tool and program gives management more visibility into the status, progress, and results of sourcing projects. While this is great in management’s view, users may not see this as a positive.

To address the organisational and people issues, procurement executives can:

  • Standardise the sourcing process: Ensure there is only one sourcing process for the organisation and that it is consistently and broadly followed. Just as teaching a young child two different ways to tie his shoes is certain to lead to confusion and frustration, designing an eSourcing program around an inconsistent sourcing process will inevitably lead to confusion and partial adoption.
  • Ensure proper training: eSourcing tools have become significantly easier to use, but for most users it is still change. A comprehensive training should be three-pronged:
    1. Basic Functionality: A “how to” use the tool. This is typically done as a classroom style training (in person or via webex) and focuses on the technical aspects of how to do things in the tool.
    2. Best Practices: Another classroom-style training that focuses on best practices for eSourcing (e.g. questionnaire design, eAuction design & set up)
    3. Hands on: The final piece of the training should be a hands on training in the form of pilot projects. The pilots reinforce the functional and best practice trainings.

Note: When planning the pilot projects, it is important to select the right projects and users. If the project is too simple it will not provide enough depth for the project team and if the project is too complex it may distract from learning the eSourcing tool. Users selected should also be carefully chosen as the early users of the tool will have a significant impact on overall adoption.

  • Develop comprehensive documentation: Ample documentation will ensure that when users have questions after the initial training and pilot phase they will be able to easily find answers and complete their projects. The documentation should be widely available and focus on both the functional “how to use the tool” as well as the business processes.
  • Track the outcomes: Too often an eSourcing program is rolled out with much fanfare, only to quickly fade into the background. To ensure successful adoption of eSourcing tools, it must be tracked and reported. In addition to tracking and reporting the results (i.e. savings) form eSourcing widely across the company, it’s just as important to continuously track and report to the procurement organisation on the use and adoption of the tool.

Comprehensively addressing these organisational and people issues will significantly improve the utilisation and adoption of your eSourcing tools.

What the hell is an Intrapreneur?

What the hell is an Intrapreneur?

You know that anxiety that sets in when you’re in a meeting and someone mutters a new three-letter acronym (TLA) or buzzword you’ve never heard of before? The rest of the room nods and you start to sweat?

Well, that happened to me at the Big Ideas Summit. The term that did it this time was ‘intrapreneur’. So while the speaker continued on with his speech and the audience continued nodding approvingly, I raced to Google the term intrapreneur.

Branson’s been on it for years

Fortunately, it didn’t take long to find a blog by the venerable Richard Branson discussing the term intrapreneur. The blog was from 2011, which sadly for me, quashed my previous assertion that this term was nothing more than a passing buzzword.

Branson’s blog defined the term intrapreneur as “an employee who is given freedom and financial support to create new products, services and systems, who does not have to follow the company’s usual routines or protocols.” Right I thought, it’s basically an entrepreneur who works within a big company. My phone is put away, anxiety levels drop and I’m able to listen to the speaker again.

The more I’ve looked into the term intrapreneur the more I see that it’s become commonplace in many workplaces.

Most articles I’ve read suggest that the intrapreneur revolution is a response to the start-up culture that is currently challenging more traditional business models. As the image below suggests, business models are changing at an alarming rate and it’s not just the small end of town that are in the crosshairs of these new business models – large firms simply must innovate to stay competitive.

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Others have forwarded arguments that the fixation on regimented processes and standard operating procedures (that enabled business to grow and succeed through the 90’s and 00’s), are the very factors that will dictate their downfall in the future. Intrapreneurship is an attempt to turn back this tide and bring flexibility and innovation to large organisations that have previously stifled such efforts.

It works for Gen-Y

Not only does intrapreneurship allow organisations to address new business challenges, it seems to fit pretty well with the next generation of talent.

Gen-Y, the Millennials or whatever you want to call them, have been classified, (perhaps unfairly) as restless and keen to make an immediate impact on the organisations they work for.

It is for these reasons that large firms have struggled to attract young talent as the strict processes and internal hierarchy present in these organisations are a turnoff to the new generation.

This point is highlighted in the Deloitte Millennial Survey that was released in January of 2014. The study found that 70 per cent of Millennials see themselves working independently at some point rather than being employed within a traditional organisational structure.

The question is, can intrapreneurship provide employees at large firms with the autonomy and creative space to change the ‘traditional organisational structure’?

UK Automotive Sector To Leave Other Supply Chains In The Dust

Healthy UK Automotive Industry

New investments, economic recovery, overseas demand and continued technological advances, all point to continued substantial increases in UK vehicle production in the coming years.

This means significant opportunities for those domestic suppliers able to respond.  (Currently only 40 per cent of components are sourced from the UK).

To ensure the industry is equipped with the right skills to support this growth, the Automotive Industrial Partnership – the recently formed body that brings the industry and government together to secure the sector’s skills pipeline – is conducting the biggest ever survey of its kind aimed at vehicle manufacturers and the 2,0002 UK based supply chain employers.

Jo Lopes, Chair of the Automotive Industrial Partnership is calling upon the industry to grasp this opportunity and participate to the full.

“This initiative is unprecedented,” said Jo.

“There have been many other surveys covering the engineering and manufacturing sectors as a whole – but none that drill down to this level of detail and meet the unique needs of automotive manufacturing industry.

“It’s vital that we know the views of employers of all sizes if we are to take the right action now to ensure an effective pipeline of future talent – from new entrant technicians through to the specialist engineers and managers we will need.

“By working together we have the opportunity to mould the future of our industry – and address the very real challenges that we face.”

The findings will be used by the Automotive Industrial Partnership to determine where, when and how future skills investment should be prioritised. In turn, this will inform the development of learning solutions that are relevant and accessible to the whole industry, including smaller employers.

Among the household names driving the Automotive Industrial Partnership are; Bentley, BMW, Ford, GKN, Honda, Jaguar Land Rover, Nissan, Toyota and Vauxhall.

Interested? Take part in the survey by visiting automotiveip.co.uk

We knew about reshoring manufacturing, but now business processes too?

new_shoring_made_in_usa_products

Earlier this year Barack Obama brought reshoring into the media spotlight when, in his state of the union speech he claimed:

“More than half of manufacturing executives have said they’re actively looking to bring jobs back from China, so let’s give them a reason to get that done.”

The stats add up as well. America is seeing somewhat of a resurgence in its manufacturing sector. According to a study by the Boston Consulting Group, 54 per cent of executives are planning on or considering reshoring roles they had previously moved overseas. This figure is a marked increase on 2012 numbers where only 37 per cent suggested they we considering making such moves.

It’s not all talk either. While the figures above refer only to intentions of reshoring, the same BCG study outlined that more firms are actively reshoring workers than in previous years. In 2012, only 7 per cent of firms reported they were reshoring roles, the latest study suggests that 16 per cent of firms are currently bringing jobs back to US soil.

The Wheels Turn Again

After a decade of decline starting around 2001, US manufacturing employment hours and earnings have begun to steadily climb in recent years. There are a number of proposed reasons attributed to this resurgence.

Firstly, the cost of producing in the traditional outsourcing hubs of China and India has been rising over the past decade. As these markets mature and more citizens move towards a middle class existence this trend is likely to continue.

The cost of producing at home has also contributed to the increases in manufacturing activity in the US. Energy costs in the US, one of the greatest cost drivers in the manufacturing industry, have dropped greatly in recent years. This is thanks in part to fracking, which provides cheap energy and has the US on track to once again become the world’s largest oil producer by 2017.

The shift to home production has also been catalysed by consumer preferences. Large retailers like Walmart and Costco have made commitments to source more products from the US in order to match consumer sentiment, which is showing a preference for domestically produced goods.

Manufacturing Sure… But Business Services?

New research from The Hackett Group is suggesting that the tendency to reshore is not limited to the manufacturing sector. The report highlights that decreased labour costs, lower employee turnover rates and proximity to company headquarters are sparking a drive for US firms to bring finance, IT and other business services back to home soil.

The Hackett Group’s study takes a further step of analysing potential locations across the US for reshoring activities to take place. In the company’s own words, the report is deigned:

To reflect the decision criteria used by companies today to select a destination for establishing Global Business Services centres, The Hackett Group’s Global Research Centre analyses 42 countries based on more than 30 key indicators. Five principal dimensions are taken into consideration when calculating factors that may be used to determine location choice. These are:

  1. Economic considerations: Location choice is primarily determined by labour arbitrage. In addition, office rent, telecom costs and other major cost components are considered.
  2. Business environment: Ease of doing business, wage inflation, economic health, tax burden and quality of life.
  3. Workforce quality: Availability and quality of the labor force in the context of factors such as the flexibility and business-friendliness of local labour laws and regulations.
  4. Infrastructure: Although greatly improved over the last decade, infrastructure quality (office, electricity, transport) may still inhibit location attractiveness when travel time is excessive, services are unreliable or costs are prohibitive. Though weighted to a lesser extent, this dimension is also taken into consideration.
  5. Risk assessment: Factors that may be hurdles to reliability and costs, such as potential for fraud, risk of political and social unrest, weak protection of data and intellectual property.

To access an abstract of the Hackett Group report click here.

As a postscript, it’s important to note that this recovery is only moderate and we are unlikely to see manufacturing employment numbers in the US rival those of the 80’s and 90’s (we’ve got technology to thank for that), but the developments are certainly encouraging for US job seekers.