Agility – Making Flexibility Look Like the Plan

As usual, I take the topics for my blogs directly from my past experience as CPO or, more recently, the work we do with our clients and partner companies. This blog is no different.

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Lately, it seems to me that in virtually every meeting, every executive development seminar we host, and every conference I attend, the word ‘agility’ has crept into the business lexicon and now sits in a central position in all that we discuss.

Hardly a sentence passes without someone extolling the need for agility, the benefits thereof and the mandate that they have received from a corporate demigod to be agile. I must also admit that as executive advisors, we are not immune from this lexographical frenzy and, likewise, have laid the ability to develop your function, yourself, your people and your very survival at the foot of the ‘agility’ alter.

Defining Agility

All of the common definitions of agility run something like: “ability of a business to rapidly respond to internal or external factors, change flexibly, with minimal interruptions and without losing momentum.”

But, as usual, after hearing yet another colloquy about agility, I began to think, what exactly does this mean, and in particular what does it mean for high-performing procurement teams?

“The claustrophobia of narrow mandates and inflexible policies make ‘agility’ sound either like an unobtainable nirvana or something akin to irresponsibility”

So where does all this noise about agility come from? While I may not have a complete answer, surely uncertainty is at least one parent of agility. Supply chains spread across the globe, unpredictable economics, demand variability, war, strife, politics and even weather have all conspired to create an increasingly uncertain business climate. Uncertainty defies orderly planning and presumably, if you’re agile enough, you can surf this unpredictable landscape with little or no visible effort.

But let’s get beyond the simplistic definitions. They are fine, but the realisation of this seemingly perfect state of affairs is often unreachable in the day-to-day world that most senior procurement teams (that we know) find themselves in.

The claustrophobia of narrow mandates, inflexible policies that circumscribe everything from bidding policies to the scope and mandate of the function, overlaid with financial, ethical, sustainability and a myriad of other policies and procedures, makes agility sound like an unobtainable nirvana or something that is akin to irresponsibility.

I am equally frustrated when I try to reconcile what I see as our clients’ every day pressures and the lofty concept of being a highly agile function. So recently, I tested this. I asked the leaders of an extremely high performing procurement leadership team what exactly was agility to them, and more importantly, since they had just done a full executive stakeholder review; how did their internal clients think procurement could demonstrate agility?

Well to be truthful, there were a lot of good answers, some insightful, and others sign-posting the way for procurement to become a trusted business partner, but what stuck with me most (and sadly might be the real state of affairs), came from one senior leader who suggested that clients defined procurement agility pretty narrowly. They defined agility as “procurement getting out of the way and allowing me to conduct business with anyone whom I want to.” Painfully, it dawned on me that this is precisely how many of our internal clients see the function.

The Perception of Agility

Well, what to make of that? You can assume that that was the answer from a unenlightened client and not to be seriously considered, but since that epiphanic moment, I have tested this with several other senior procurement teams and find that more oft than not, this is closer to the real perception of procurement agility.

The follow-on question is, of course, two fold: firstly, how does Procurement actually demonstrate agility, so it is recognised by peer organisations, senior executives and is the operational reality, and secondly, how does a highly agile procurement team demonstrate this to the mass of unbelieving functions?

Blogs are, in the words of a former boss, just short enough to get you into trouble and not long enough to get you out, so I will not try to solve both questions here. I attempt to answer here only the first question. In our work with many clients, and from our own experience, we have some thoughts on how procurement demonstrates agility;

  1. Never stop planning. We are all used to the annual planning cycle that somehow has an end where implementation begins. This is too narrow a view. Develop an adaptive planning cycle that is constantly reconsidering where you are in your plan so you can capitalise on short-term opportunities. Remember, agility is not improvisation, it is adaptation.
  2. Devolve approval chains. Trust your people to do the right thing and allow more executional freedom than you are comfortable with.
  3. Develop a propensity-for-action. Reward people for making choices and taking actions even if it results in a poor outcome. Action is better than inaction and almost any outcome can be reversed.
  4. Invest in thinking time (perhaps the toughest thing to do). Invest in spending time with your leaders to deeply discuss objectives, barriers, ways to overcome them and new ways of doing things.

Will all of these combined make procurement magically agile? – probably not, but it will set forth a path toward agility that will separate your team from the usual procurement team that is prevented by (or worse) hides behind organisational inertia, obstructive rules and overlapping restrictive mandates.

Lastly, I would suggest from my own experience, to go talk with your CEO and explain to him how you perceive the agility of procurement and get his/her wisdom. Good CEOs will guide and provide useful insight – others might just tell you to get out of the way and let your business clients deal with anyone they see fit.

Disruption, Scandal and Upheaval – A Week in Procurement

The past week in procurement and supply chain has been a busy one, and so it’s been hard to pin down just one story to kick the new week off. 

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Over the past seven days, a marketing procurement function for a major global brand has been scrapped, Nigeria has been gripped by a massive procurement scandal and global freight and logistics has been hit by global unrest.

So, just in case you missed all of this, we’ve decided to wrap these three of the major stories for a change.

Marketing Procurement – Beginning of the End?

One story that took many people by surprise was the news that PepsiCo had taken the decision to scrap its marketing procurement function. The firm explained the move as a way of remaining “competitive in an environment where cost cutting and value building are paramount”.

The idea that this has been done to reduce costs and increase efficiency might seem a touch strange, as this is often what procurement are tasked with doing. However, the decision by PepsiCo immediately got the procurement world wondering if this would be the first of many.

However, before all of you who work in marketing procurement start dusting off your CVs, it looks unlikely that this is the case. A survey carried out by the Association of National Advertisers (ANA) found that 68 per cent of surveyed members didn’t view PepsiCo’s actions as the start of an industry trend.

However, it does serve to highlight the frequently high tension between the procurement and marketing functions. Procurement’s role as the intermediary between the organisation and the agencies is often seen as one of cost cutting, rather than value adding.

A survey by the ANA earlier this year found that the vast majority of individuals on both sides of the agency/client relationship were unconvinced about the value that procurement added to the process.

The PepsiCo situation may serve as a warning to other marketing procurement teams, but also afford them an opportunity to shift their focus. Instead of a focus on costs, it’s perhaps time for a more strategic approach, forging stronger relationships with agencies, and establishing how to add value on both sides of the aisle.

Nigeria Hit by Arms Procurement Scandal

Early last week, the news broke of the outcome of a major procurement fraud investigation in Nigeria, implicating some of the country’s former leaders and senior figures.

Based on the investigation, Nigerian President Muhammadu Buhari ordered the arrest of Sambo Dasuki, the country’s former National Security Advisor, who has been implicated in the fraud scandal, thought to be worth in the region of $2 billion.

It has been alleged that Dasuki awarded over $2 billion worth of “phantom” contracts for vehicles, weapons and munitions, which were to be used in Nigeria’s on going fight against terrorist group, Boko Harem.

An additional sum of $142.6m was also allegedly transferred to a company with accounts in the USA, UK and West Africa, without contracts being in place, and without any goods or services being supplied.

Mr Dasuki has claimed that all due process and military procurement regulations were followed in all transactions, and indicated that, given the value of the contracts, they could only have been approved by Nigeria’s former President, Goodluck Jonathan.

Former President Jonathan has also denied any involvement, and, when questioned at an event in Washington, D.C. last week, was quoted as querying whether the contracts ever existed. Keep an eye on the Procurious news for more on this in the coming weeks.

Global Unrest Disrupting Supply Chains

Events in the past week in Paris and Lebanon, as well as the on going influx of migrants into Europe, has freight and logistics organisations counting the cost of disrupted supply chains.

In their most recent Security Risk Index, US-based supply chain consultants BSI have highlighted border closures and slower than normal freight clearances as two of the major issues in Europe.

Delays at Calais costing UK shippers an estimated $1.2 million per day, plus losses from contaminated food and pharmaceutical products, have industry experts stating that that further disruptions could mean job losses across the continent.

Supply chain issues are not limited to Europe either. In China, thieves have been targeting moving trucks and removing goods from them on the road, while in South Africa, truck hijackings have increased by 29.1 per cent over 2014.

CIPS have also argued that increasingly global supply chains has increased complexity and that disruptions could have a damaging impact for the end customers.

Increasing risk in the supply chain is the topic of a webinar that Procurious founder Tania Seary is taking part in next week. Risk analysis in procurement is a key skill, particularly in light of current disruptions to supply chains.

Get all the information on the webinar and register here.

We’ve also kept an eye on other breaking news over the weekend and here are some of the key headlines to share over a morning cup of coffee.

UK Government Boosts Defence Spend

  • UK Prime Minister, David Cameron, will announce an additional £12 billion investment in equipment spend this week
  • As part of the Government’s National Security Strategy and Strategic Defence and Security Review (SDSR), Mr Cameron will outline the UK’s strategy for the coming decade
  • This includes a new fleet of maritime patrol aircraft and two new rapid-reaction “strike brigades” to add to existing capabilities
  • The news is good for American firm Boeing, who won an industry bidding war to provide nine aircraft to the UK RAF

Read more at The Belfast Telegraph

Google Glass Used in Heart Surgery

  • A team of cardiologists from the Institute of Cardiology, Warsaw, used the new generation Google Glass as part of a heart surgery procedure
  • The doctors used the device to help control and restore the blood flow in a blocked artery in a 49-year-old male patient
  • The Glass enabled the doctors to visualise the operation, as well as control the images with voice control, allowing them both hands free to operate
  • It is hoped that more wearable technology will now be adapted for use in the medical industry

Read more at Market Business News

BBC Announce Women of 2015 List

  • The BBC’s 100 Women season has returned, and the corporation has chosen its list of inspirational women for 2015
  • The list this year focuses on “octogenarians sharing life lessons; ‘good girl’ film-makers discussing expectations; nursing; five high-profile women; and ’30 under 30′ entrepreneurs”
  • The list highlights women from around the world who have given a positive inspiration to others with their actions over the past 12 months

See who made the list at BBC News

The Real Value of Ethical Procurement

The issue of ethics in supply chains and procurement is a rapidly trending topic.

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However, much of what is written about this topic is based more around compliance activities, such as auditing suppliers or creating policies to monitor potential issues or breaches. This implies that improving ethics within supply chains is more of an afterthought than a priority.

Ethics in supply chains doesn’t have to be a burden. In fact, value can be extracted from doing the right thing. So how can we determine the real value of ethics in your supply chain? Lets have a look at four pieces of value that your company is likely to receive.

Procurement Marketing Dream 

Let me refer you to Patagonia, the outdoor clothing brand. As a certified B Corp, they meet very stringent social and environmental criteria. One of Patagonia’s biggest selling points is the ethics of their supply chain. Everything they do regarding their procurement is a marketing story ready to be told, from what raw materials they source, to the ethics of the factory where its made.

By contrast, conventional procurement is focused on optimising costs and driving down prices. Lets be honest, this doesn’t excite you or your customers. With conventional procurement, there is no story to tell (in some cases only stories your company wants to hide). With ethical procurement it can be utilised as a marketing weapon.

Greenwashing is not what you are going for here, it has to be legitimate changes within your supply chain. Done right, it can be very powerful. Producing a video about the process or result is an effective marketing resource, and can be used over and over. A good example can be seen here. Remember, it is not advertising, it is a blend between emotionally engaging marketing and a documentary. 

Skyrocketing Staff Engagement and Retention

Millennials expect more from the companies they work for. As seen here in the 2015 Deloitte Millennial Survey, 7,800 millennials were surveyed from 29 countries and the results were clear. 

Millennials overwhelmingly believe that business needs a reset in terms of paying as much attention to people and purpose as it does product and profit”

The report also states that an overwhelming 75 per cent believe businesses are focused on their own agendas, rather than helping to improve society. 

If the company you run or are working for is not making a difference in a positive way, you may have disengaged employees. Ethical procurement can inspire that engagement, not just for current employees, but also new employees who expect more from the company they work for.

It starts in the procurement department but is shared company wide. Staff crave an emotional connection with their workplace, ethical procurement is a good driver for that connection. Engaged staff also leads to increased productivity, but that’s another story for another time. 

Longevity of your Brand

It’s future planning. As the world is more focused than ever on issues such as resource scarcity and inequality, companies that are not doing their part are at risk of being left behind. They will lose market share against brands that focus on improving the positive lasting impact of their company.

Unilever under the care of Paul Polman, has done just this. Paul Polman (who is also a member of the B-Team, along with Sir Richard Branson) has differentiated a multi national company from its competitors by considering the future and longevity of its brand and by investing in sustainability and innovation.

Meanwhile its main rivals are falling behind in terms of brand value. Supply chains play a big part in this, with an average 65 per cent of total company expenditure being put in to the supply chain. Such money can go be redirected towards suppliers that have embedded social and environmental missions into their DNA.

Which means that your company’s impact spreads beyond your internal operations and creates value in the far corners of your supply chain. This leads us to the last point. 

Creating Intrinsic Value

When Marc Benioff created the 1+1+1 model of philanthropy for his company Salesforce, other companies thought he was crazy. The model requires donation of 1 per cent of profits, time and product towards communities. Not only was Marc Benioff doing this but he was doing it as a start up which seemed crazy at the time.

Fast forward to current day, this model is not seen as charity but a shift in the way a company operates. Even Google took on a similar model, but Marc Benioff will forever be the pioneer.

There’s no doubt about it – looking at the positive impact that your supply chain can make is cutting edge innovation. It means your company is forward thinking, even visionary. You realise that spending your procurement dollar with ethical suppliers is actually better value for the money spent.

It’s clear that not only are you getting the required goods or services, but your company is also creating value for society or the natural environment, which is priceless. You are like a startup again, finding new ways to stand out from your competition. Except this is a moral imperative and you have the power to make a difference. 

These are just a few insights into the value that your procurement can create.

Jordan J Holzmann is the CEO of Cruxcee, an online platform that connects buyers with ethical suppliers. 

US Government Faces Criticism Over IT Outsourcing Spend

A recent report has highlighted a lack of management on US Government IT spend.

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IT services outsourcing cost the US government $30 billion USD in 2013. However according to a recent report released by the Government Accounting Office (GAO), the lion’s share of this spend was not adequately managed.

The GAO’s report highlights that while leading private firms ‘manage’ up to 90 per cent of their IT services spend, the government agencies analysed manage only a fraction of this number.

The departments in question – the Department of Defense (DoD), the Department of Homeland Security (DHS), and the National Aeronautics and Space Administration (NASA) – accounted for more than half of reported federal third-party IT services spending in 2013.

Also highlighted in the report were the branches of the US Armed Forces and the percentage of their spend that was “strategically managed”, revealing some worrying figures:

  • US Navy – 10 per cent of $3.3 billion
  • US Air Force – 17 per cent of $1.4 million
  • US Army – 27 per cent of $3.5 billion

Duplicated Contracts

The report went on to suggest that, despite recent improvements in the procurement process, including appointing individuals to identify and action strategic sourcing opportunities, the departments’ IT sourcing was still being carried out using “potentially duplicative contracts“.

These practices served to reduce the power that the departments, and the Government, could wield in sourcing activities. In addition, the report found that the departments could save as much as 15 per cent on their IT spend every year, if they were to take a more strategic approach to the way they purchase these services, similar to the approach of leading organisations.

Commenting on the report’s findings Phil Fersht, CEO of outsourcing analyst firm HfS Research stated; “This data just reinforces how alarmingly poorly run U.S. government agencies are with their IT spend.”

Fersht went on to say, “Why only a fraction of external IT service spending is actually managed via an established contracting model in this day and age is baffling—and indicates a huge amount of unnecessary wastage of taxpayer dollars. Also remember that external IT spend is only a fraction of total IT spend. In some cases, the total spend per agency could amount to two or three times the external IT spend.”

A number of government-wide efforts have been kicked off to streamline the inefficiencies pointed out in this report to ensure the government receives better value from its IT contracts.

10 Career Influencing Women in Procurement – Part 2

A couple of weeks ago I was lucky enough to attend the ProcureCon Europe ‘Women in Procurement’ Breakfast in Berlin.

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The conversation over breakfast got me thinking about the women who have supported and influenced my career. In my previous article, I talked about the first half of my career, pre-children. This week, I’m focusing on the influencers I have met since I had my children.

Once I had children, managing my career became a lot trickier. For me, work simply couldn’t be my number one focus anymore – I had some other major commitments that were consuming my heart and my head (they still do!).

As I didn’t have any relevant role models for my situation at the time, I found my own path for managing my career (which could be the topic of another story…maybe even book!).

The Value of Mentoring

I believe there are some real strategies to mentoring, which I captured in this blog. I have always reminded people you don’t need just one mentor, you can learn from a whole array of people. It’s not only learning about what you want to do, but the kind of leader you don’t want to be as well. You can learn both ways.

Becoming an entrepreneur meant I chose a very lonely path full of second-guessing and self-doubt. For me, the women around me have provided me with the “courage to change” and have given me the confidence and self-belief to stay committed to my goals.

There are of course many fantastic women in Procurement – many of which I haven’t had the fortune to meet yet. The women profiled here have had an influence on my career and professional development.

Here are just five more who have left a lasting impression on me.

1. Eva Wimmers

Eva is the closest thing I have met to a procurement rock star! She has enjoyed an extremely successful procurement career at Deutsche Telekom, including being on the Supervisory Board for T-Systems International, and a Board member for both BME and Procurement Leaders.

She is an inspiring speaker on supplier collaboration and innovation. Most importantly, she has relentless energy, direction and is always forward thinking – all things I think are exactly what the profession needs.

2. Dapo Ajayi

Dapo’s enthusiasm for procurement, and her commitment to ensuring her leadership team embraces social media to win the war for talent, makes her an inspiration to me right now. Mostly because I am hoping all CPOs will soon start to understand the power of social media for the profession.

I am also a fan because Dapo comes from a non-procurement background, and has fallen in love with our awesome profession! I love it when others see the scope and opportunity for procurement.

3. Georgia Brandi

Georgia was recently named the CIPS Australasia Young Procurement and Supply Chain Management Professional of the Year 2015, and, less than two weeks later, was then awarded her Juris Doctorate in Law (that is, of course, on top of her Bachelor of Arts AND Business).

Georgia’s energy and commitment to her career and professional development is a huge inspiration to me (and I hope many others). She is investing in herself, learning what she can and kicking goals at work. She is absolutely one to watch in the future!

4. Visna Lampasi

Visna is one of the most successful procurement professionals in Australia. She is on the CIPS Global Board of Trustees and has been recognised as CPO of the Year. Her success has been built on an uncompromising focus on process and results.

I meet with Visna as often as I can, to talk about developing the profession and how to win the war for talent.

5. Lisa Malone

Lisa and I have worked together for almost 7 years and are now focussing on building the Procurious community together. Lisa encouraged me to start blogging and is now working on convincing me to write a book. Once again, having someone in your corner pushing you on is absolutely invaluable.

In my presentations on social media, I recommend that every executive find himself or herself at least one ‘millennial mentor’. Lisa is my millennial social media mentor and has been the single biggest influence on me “getting out there” and sharing my thoughts for (hopefully) the benefit of the procurement universe!

One Final Challenge

And finally, another challenge for you. Who are you looking to for cues on how to best manage your career? If you don’t already have a mentor, why not start looking today?

To close, a quote from Sheryl Sandberg, “Lean In: Women, Work, and the Will to Lead”:

“The more women help one another, the more we help ourselves. Acting like a coalition truly does produce results.”

Want to Know Where Your Clothes Came From? There’s an App for That!

A new app, developed in Australia, hopes to give consumers the information they want on the supply chains producing their clothing.

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We’ve covered ethical fashion in great detail on Procurious in the past. Most of our coverage has focussed on the public’s desire for cheap, rapidly produced garments or ‘fast fashion’ as its been dubbed.

This business model has had a huge impact on the supply chains of leading retailers, as they push to make the latest fashions available quicker and for a lower price. Many have resorted to shifting production to the developing world in a bid to reap the benefits of low cost production as a means to keep price down and maintain margins.

As these practice have become public, many firms have been accused of scrimping on safety and ignoring labour and environmental concerns in the their supply chains, and have faced harsh criticism as a result.

The Turning Tide

While this fast fashion business model has dictated the retail garment industry for the best part of a decade now, it appears that the tide is starting to turn. Many consumers are now prioritising the ethical footprint of their purchasing, just as much as cost and style.

Companies like Patagonia (who we’ve written about before) and KowTow have started appealing directly to consumers’ better judgement by creating a business model that focuses on sustainability first.

Even H&M, long condemned for its questionable supply chain practices has released a ‘conscious collection’ of sustainably produced garments. However, many have accused the firm of ‘green washing’ as, although it is producing a small amount of clothing sustainably, the vast majority of the company’s range still follows the fast fashion model.

There’s an App for That

Regardless of motive, this shift in consumer psyche has spawned a new app called ‘Good On You’. Developed in Australia, the app gives shoppers the ability to understand the ethical impact of the clothes they are buying, directly through their smart phone.

The app analyses clothing ranges based on the three broad categories – environmental, labour and treatment of animals – before creating a final rank for that brand.

‘Good On You’ doesn’t currently carry out its own auditing, instead analysing firms’ current accreditations from organisations like Fair Trade, Ethical Clothing Australia and other non-governmental organisations.

The app aims to inform customers of brands’ practices and supply chains, and call out firms using sustainability as a marketing tool, particularly when they don’t have credentials to back it up.

Speaking on the opaque nature of sustainability marketing and supply chains, Co-Founder at ‘Good on You’, Gordon Renouf said; “We want brands to say exactly what they’re doing, to be transparent about the supply chains, to show where their factories are so other stakeholders and unions can check on them.”

Find out more about the company’s aim here and download the app before you next go shopping!

Making Your Department Sexy

Every functional department needs to find its rightful place in the business hierarchy. So what can you do to help it achieve the sexy status it deserves?

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And before you even think of saying, “we’re doing a really good job – that is what people will notice!” – forget it. Of course you are doing a good job, but these days that is not enough. You have to show it too.

The first thing you need to do is strut your stuff, show your wares and make them want your services – find out what you are good at and market yourself.

Lose the Mission Statement

Rule number one – if you have a mission statement then throw it away – it has already fulfilled its purpose by getting you to think about what you do. It is useless to market yourselves. In fact it’s worse than useless because it often has a bad effect on others.

Put it this way – just how thrilled would you be if you got sent a copy of the Accounts Department mission statement? Would it lighten your burden? Would you think: “Ah! Now I at last can see their purpose in life I will for evermore integrate with them seamlessly”?

You need to work out what you’re good at – how you impact the wider community, what are the practical things you do for them, and why do you make their life better? Next you need an influence plan, and that should have named individuals on it representing no more than ten per cent of the company.

If you think a plan means putting a display board up in the canteen so everyone can see us –think again. It’s limp, unfocused and unprofessional. Your message is too important to let it dribble out to people who are grazing, rather than go-getting.

Craft Your Message

If you need some help in formatting this idea then why not ask your own marketing department? Perhaps you buy some marketing and creative services in – you may even get it for free if you sell it as part of the process of ‘getting to know you better’.

Take your ten per cent target and use your carefully crafted marketing material with laser like accuracy to get up close and personal. If you make it important then so will your target audience. This is line fishing for powerful marlin, not drift netting for common herrings.

Get the Right People

So you‘ve got yourself a good story – but do you have the people to back it up? Is your group bursting with talent that is the envy of the rest of the organisation? If not then you need to something about it. The simplest tool of all is often overlooked – go find the best people and ask them to join you. Top talent is always interested in self-development. They often have the ability to persuade their own management to let them do things. Best of all they are usually a bit vain and easily flattered.

This doesn’t have to get tangled up in job specs and grade issues. Perhaps they could have some relevant work experience for a short while, or work on a joint project with you. If you can get some fresh blood into the camp, it can have a rejuvenating effect on the whole team. Start looking at the way your team does things. What impact do your people have? Not just from the point of view of their skills.

This sort of profile-raising is not going to be without its side effects, which are worth heading off early if possible. Firstly when you tell people what you can do for them, you can expect the initial response to be a lengthy list of all the things you haven’t done well. This is great feedback – it may not feel like it at the time, but it’s gold dust. Remember, before you stimulated them into complaining, the problem was even worse because you didn’t know about it.

The Future

So where does the future lie for making your department the sexiest around?

The truth is that the skill and attractiveness of your players will make the difference. Does this mean you need only Brad Pitt and Angelina Jolie look-alikes in your group? Absolutely not. Lasting attractiveness has always been more to do with passion, knowledge and focus than surface looks. And the good news is these are things that can be taught, so everyone can be sexy if they want.

Can Re-Shoring Explain China’s Faltering Economy?

China’s economic slowdown is starting to send reverberations across global markets.

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While it’s too soon to panic about Chinese growth figures, the engine behind the world’s economic growth for the last decade or so does seem to be spluttering a little, and this is a worrying sign for some market sectors.

Just what is causing this slowdown?

Many are attributing a slowdown in Chinese manufacturing levels as a key driver for the nation’s economic downturn. The numbers seem to back this up. The Chinese Purchasing Managers Index (PMI), a metric that measures economic activity based on the activity of procurement departments (learn more about this indicator here), hit a two-year low in July 2015, following a fifth consecutive month of contraction.

The significant drop in the PMI is usually in line with a decrease or slowdown of manufacturing in a country. A potential cause for this slowdown could be a preference from firms in the west to move operations away from China.

There seems to be two main drivers for this behaviour. The first is that ‘low-cost China’ isn’t so low cost any more. The second is an increasing preference for ‘re-shoring’ or ‘near shoring’.

When Low Cost Isn’t Low Cost

Firms that moved their operations to China between 10 and 20 years ago are finding that labour rates for Chinese workers are far more expensive than they once were. This is removing one of key motivators for both relocating operations to China in the first place, as well as maintaining these operations now.

It’s estimated that Chinese incomes are increasing by as much as 20 per cent year-on-year, a rate much higher than most of the rest of the world. Many foreign firms are now looking to other developing markets in Asia and Latin America, in order to take advantage of lower cost bases.

Reassurance in ‘Re-shoring’

The other practice driving a move away from Chinese manufacturing is ‘re-shoring’ or ‘near shoring’. This involves firms moving previously outsourced operations much closer to home.

David Simchi-Levi, a professor of engineering at MIT, suggests that this may be a key factor in China’s manufacturing slow down. He highlights a study carried out by MIT in 2012 that suggest 15.3 per cent of US firms were ‘definitely’ planning to move operations back closer to home and that 33.6 per cent of firms were ‘considering’ similar action.

To highlight acceleration in this area, Simchi-Levi points to a more recent study by AlixPartners that shows 32 per cent of firms are already re-shoring and 48 per cent of firms are in the process of doing so within the next three years.

Closer to Home

It seems that as Chinese wages continue to climb, organisations have less of a stomach for the other issues that have accompanied Chinese based production, such as questionable safety records, long lead times and high transportation costs in favour of options that are closer to home.

While a large number of firms have to ability to move production very quickly, clothing producers being one clear example, China has been able to build a significant domestic technology and hi-spec manufacturing industry that will mean firms with more technical specifications may find it harder to move away from their traditional Chinese production centres.

It will be interesting to see if the move from traditional manufacturing to a more technology-based economy will help to arrest the economic slowdown, and re-affirm China’s place as a powerhouse economy.

4 Reasons Why L’Oréal is Winning the War for Talent on Social Media

Because you’re worth it…

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We talk a lot on Procurious about using social media to ‘win’ the war for talent. More frequently, organisations are using social media in this respect, but some are using it more effectively than others.

The Role of Social Media

So how can procurement organisations ensure that they are attracting the best talent and having a better perception than their competitors in the recruitment market? Social media may provide an answer.

Having a positive presence on social media can help organisations to promote themselves, their opportunities and the benefits for potential employees if they join the company. Visibility is the key, but it needs to be done right in order to have the best impact.

One organisation doing it right is The L’Oréal Group.

What L’Oréal Is Doing Right

The L’Oréal Group is the world’s largest cosmetics company, headquartered in France. With an annual turnover of €20.3 billion, a presence in 130 countries, 27 global brands and 68,900 employees, the Group has good reason for wanting to attract the best talent.

But in an increasingly crowded market, L’Oréal has managed to make itself stand out from the competition on social media by tailoring its approach in the following ways.

And, although these campaigns have not been directed at procurement specifically, there are some good takeaways for procurement teams to consider.

Presence

The L’Oréal Group has a major presence on social media in its own right, but has also chosen, as many other large organisations have, to dedicate pages and accounts to careers and job advertising in multiple countries.

What’s more, these pages are run as the main accounts are and pack just as much of a punch in terms of followers.

That’s a huge community, accessing regular posts, Tweets and videos and hearing the L’Oréal message.

Uniform Branding and Naming

The beauty of the L’Oréal pages is that they are uniform in branding and design on all pages, accounts and profiles. The branding helps to give each of the sites a professional feel and make them immediately recognisable for potential employees.

The accounts and pages are also easily searched for, with the naming conventions for them following a simple pattern, where the platform and location are called out clearly; e.g. facebook.lorealusa.jobs

Activity

One of the key tips Procurious gives for having a great personal brand on social media is to keep your accounts active. There’s no use having all those followers if you aren’t saying anything to them.

The L’Oréal accounts and pages are regularly updated with new job opportunities, information, videos and blog content (like this) to keep people interested. Part of this includes unique insights into what you might get up to at work and why L’Oréal is a great place to work, which brings us on to our next point.

Employee Advocacy

There’s very little that can say more about the strength of a company as an employer than testimonials from its own employees. And L’Oréal has made sure that their social media accounts show plenty of these.

Like this one from LinkedIn:

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Or this one from Twitter:

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Getting your employees to talk positively (and genuinely!) about your organisation sends a strong message to potential employees and may tip the balance for them.

And the result?

Two campaigns that bore fruit for L’Oréal came one each from Facebook and LinkedIn. Using a combination of approaches on social media, including an app to allow employees to share listings across their own networks, L’Oréal benefited from:

  • “Optimised” performance and return on investment and higher than average click through rate
  • Higher than average conversion rates from adverts
  • A higher percentage of qualified resumes than when traditional methods were used
  • Substantial savings on recruitment fees for hiring

And as the organisation’s networks continue to grow, there’s no reason to think that this level of success won’t continue. It’s just up to other organisations to try to follow in L’Oréal’s footsteps.

Is your organisation up to the challenge?