Modern Slavery Act 2015: Supply Chain Transparency Requirements

In October 2015, the UK government issued statutory guidance relating to supply chain transparency and reporting obligations of the Modern Slavery Act 2015.

Modern Slavery Act

This article was first published on Greenstone.

The document confirms who is required to comply and when they need to comply by, as well as including essential details on the all-important annual statement. You can read the document here.

Here is everything you need to know and what you need to do.

Background

Consolidating UK law on slavery and human trafficking, the Modern Slavery Bill was first introduced to parliament on 10th June 2014, and subsequently passed into law on 26th March 2015.

With the aim of preventing employment exploitation and increasing disclosure of labour practices, the Modern Slavery Act introduces new grounds of compliance for commercial entities. Not only do organisations need to ensure that modern slavery is not an issue in-house, they also need to take, and report on, actions to prevent the issue from occurring within their supply chains.

Which Companies are Captured?

The threshold to determine which companies have to adhere to the Modern Slavery Act has been something of a discussion point for the vast majority of the year.

Following a government consultation period earlier in the year, it was confirmed that the Act applies to any organisation that supplies goods or services and that has a turnover exceeding £36 million, aligning the legislation with the definition of a ‘large business’ in the Companies Act 2006.

Furthermore, this threshold is valid for any organisation that has operations in the UK, regardless of where it was formed. This means that many non-UK organisations, providing goods or services within the UK’s geographical boundaries, will have to engage with their suppliers, essentially resulting in diverse, complex and global supply chains being assessed.

Annual Statements

A key part of the Modern Slavery Act is the stipulation that captured organisations need to prepare and publish an annual statement. The statement details the ongoing process they are taking to ensure that there is no modern slavery within their business and supply chains.

To be published at the end of the organisation’s financial year, and required to be approved at board level, the statement must be publicly available via a prominent link on the company’s corporate website homepage.

What does the statement need to look like?

There are 2 routes that organisations can go down when it comes to preparing the slavery and human trafficking statement. Captured organisations must prepare and publish either:

  1. A statement detailing steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any part of its own business or supply chains; or
  2. A statement that the organisation has taken no such steps.

Although Option 2 is the simpler journey, having a publicly available statement that effectively says that the organisation does not care about the issue of modern slavery risks a backlash from stakeholders. As such, the safest route to compliance is certainly the first.

In terms of what the annual statement needs to looks like, the Act does not stipulate the exact parameters, but does provide some key areas that should be covered:

  • the organisation’s structure, its business and its supply chains;
  • its policies in relation to slavery and human trafficking;
  • its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
  • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
  • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
  • the training about slavery and human trafficking available to its staff.

What do captured organisations need to do?

The statutory guidance confirmed that the supply chain transparency and reporting provisions of the Modern Slavery Act commenced on 29th October 2015.

However, a transitional period applies to businesses with a financial year-end date between 29th October 2015 and 30th March 2016, meaning those who have a year-end of 31st March 2016 will be the first to publish the statement.

So what should companies be doing to prepare for these new supply-chain requirements? Regardless of when the year-end date is, it is imperative that organisations start engaging with their suppliers now and assess the level of risk. Without an extensive, and ongoing, information gathering exercise, taking steps to prevent the risk and subsequently reporting on them is simply not possible.

Where to start

As it is now a requirement for companies to collect and interrogate data from across their web of suppliers, it is essential that they make the process as efficient as possible.

We understand that this can be a complex and time-consuming process. The traditional offline data collection methods are not suited to the demands of today’s globalised supply chains. As such, it is an increasing trend for companies to move the process online.

For advice on what you need to consider when moving your supplier risk and compliance process online, please read our previous blog article on the subject.

Gyles is Head of SupplierPortal at Greenstone, a non-financial reporting solutions company providing software and supporting services to clients in over 100 countries.

Greenstone’s SupplierPortal solution enables buyers to effectively manage supplier risk and compliance through a secure and private online platform. Buyers have the flexibility to distribute standard framework questionnaires, as well as proprietary questionnaires, to their suppliers and can then manage and analyse this information through a comprehensive suite of analytical tools.

Alan Mulally – The Secret to Success in One Slide

“This is everything I know, folks” – Former President and CEO of Ford, Alan Mulally, shares the sum of his knowledge in one slide at ISM2016.

Alan Mulally

ISM’s keynote speaker Alan Mulally has one of those CVs that’s exhausting just to listen to. Alongside his nine-year stint as President and CEO of Ford, he served as Executive Vice President of Boeing, and CEO of Boeing Commercial Airplanes.

He was named to the Google board of directors in July 2014, served on President Obama’s US Export Council, and the advisory board of NASA.

He was named in Fortune’s 50 Greatest Leaders list, voted one of Time Magazine’s 100 most influential people in 2009, and voted 2011 CEO of the Year by Chief Executive magazine. Mulally is also a fellow of the UK’s Royal Academy of Engineering. 

One Slide to Say it All

“If it isn’t a Boeing, you shouldn’t be going”, says Mulally. He worked at Boeing for no less than 37 years, notably as a chief engineer for the avionics and flight management systems for a number of major Boeing projects, including the 747 and 777. As CEO of Boeing Commercial, he launched the 787, and was at Boeing during the 9/11 attacks, horrified to see a commercial airplane being used as a weapon.

Boeing was shaken to its core by the event, with production dropping from 620 planes a year to 280. “Not many companies can sustain a loss like that and remain viable”, says Mulally. Eventually, Boeing returned as the number one avionics organisation in the world.

The average airplane has about four million parts, and at the height of a new project, you might have over one million people working on the design. This is where Mulally learned how to develop a skilled and motivated team, and his principles and practices around working together led him to success after success at both Boeing and Ford.

Mulally brings up a one-page chart with 11 bullet points.  “This is everything I know, folks”, he tells the audience, and he means it. Whenever an audience member asks a question, he brings this chart back up on screen, selects the relevant point, and talks to it. Here’s the list in full:

Principles and practices around working together:

  • People first
  • Everyone is included
  • Compelling vision, comprehensive strategy and relentless implementation
  • Clear performance goals
  • One plan
  • Facts and Data
  • Everyone knows the plan, the status and areas that need special attention
  • Propose a plan, positive, “find a way” attitude
  • Respect, listen, help, and appreciate each other
  • Emotional resilience – trust the process
  • Have fun – enjoy the journey and each other.

Making sure “everyone knows the plan” is achieved through colour-coded project charts. “Every Thursday morning, we’d link up everyone around the world and colour-code the charts”, Mulally says. “Red means we’ve identified a problem – which is great – and we’re working on it.”

Ford Motors Turnaround

Mulally took these colour-coded charts over to Ford when he took on the role of CEO at the behest of Bill Ford, grandson of Henry. There he found a very different culture, and at first, people didn’t “get” the colour coding. “We had about 320 different charts”,

Mulally says, “I explained the coding, and the business leaders went away and had their charts colour coded. At the following meeting, I was surprised to see chart after chart all colour-coded green”.

The organisation was forecast to lose 17 billion that year, yet there wasn’t any red or yellow to be seen. The problem, Mulally discovered, was a culture in which business leaders would hide problems, making issues disappear rather than highlighting them as opportunities.

When a leader named Mark Fields was finally brave enough to place some red on his chart (due to a major production issue), Mulally responded by clapping in the leadership meeting. “People were looking at me, looking at Mark, waiting for him to be fired”, he says. “They thought the clapping was a signal for some bouncers to come in and remove Mark from the room!”

But Fields wasn’t fired. Instead, Mulally treated the production issue as a rallying point, showing Ford’s business leaders how to come together to figure out the problem, and also demonstrating that he valued Mark’s honesty by seating him next to the CEO at each subsequent meeting. Mark’s charts went from red, to yellow, to green.

And the following week? 320 beautiful, rainbow charts.

Deep Trouble

When Mulally took over at Ford, the company was in deep trouble with the aforementioned $17 billion loss in 2009. Ford was sized for 26 per cent market share in the US, but only had 16 per cent, losing money on every brand and vehicle. Mulally responded by focusing on the Ford brand over all others and consolidating the nameplates down from 97 to 15.

He launched a restructuring plan to turn around the losses and market share, and his cost-cutting initiatives led to the company’s first profitable quarter in two years.

In 2006, Mulally led the effort for Ford to borrow $23.6 billion, mortgaging all of Ford’s assets to overhaul the company and protect it from recession. This decision meant that Ford was the only company of the “Detroit Three” (Ford, GM and Chrysler) that did not have to take a government loan during the automotive industry crisis of 2008–9.

Value of Procurement

Mulally recognised the enormous value of procurement, especially in his aggressive cost-cutting endeavours. He promoted procurement to a leadership position within the company – something which had never been done at Ford – and ensured all of the business units around the world were working together with procurement.

Suppliers were also a major part of Mulally’s turnaround, and Ford rose from a position of second-last preferred customer, to number three today.

Today, Ford is the number one brand in the US, and the fastest-growing car manufacturer globally. It builds the first, third and sixth best-selling vehicles in the world presently. Mulally attributes this success to his eleven-point slide – in the end, it’s all about building the right culture and motivating your people.

The Double Edged Sword for Fast Fashion Brands

The impact of fast fashion can be seen on the high street and in the newspapers. But the trend may be about to take down one of the world’s most recognisable brands.

Gap Brands

There are few people in the world who wouldn’t recognise Gap’s brands on the high street, in shopping malls, or on the Internet. However, the fashion and retail giant is facing up to major issues thanks to the ever-growing fast fashion trends.

With consumers moving their shopping habits away from in-store purchasing, Gap may seek bankruptcy in order to help it transform its business model and organisational set up.

Sinking Sales

All three of Gap’s major brands – Gap, Old Navy and Banana Republic – have seen sales decrease again in the first quarter of 2016. In April 2016, Gap sales dropped by 4 per cent, Old Navy by 10 per cent, and Banana Republic by 7 per cent.

The company is now on a run of 24 straight quarters without a growth in comparable sales, and 13 straight months of declining sales. In the face of this, Gap’s shares are down by 9 per cent since the start of the year, leading many analysts to suggest that these brands still aren’t learning lessons from fast fashion retailers such as H&M, Uniqlo and Zara.

Gap is yet to successfully match the design-to-shelf timelines of fast fashion, with many of its products still taking up to nine months to hit the shops. This is roughly double the length of time that it takes fast fashion trends to reach consumers on average.

Wider Impact

It’s not just Gap who are suffering from the fast fashion spread. Other US-based brands, including J. Crew, Abercrombie & Fitch, have experienced a sales downturn, while traditional retail icons, such as Sears and Macy’s, have both closed a number of stores this year.

In Australia, Wesfarmers Ltd, the country’s biggest company by sales value, announced its worst yearly profit in two years, and looks set for its first net loss in almost 20 years. The organisation puts its decreasing sales down to the impact of fast fashion brands on its in-country discount stores.

Double-Edged Sword

However, not all is rosy in the garden for the fast fashion retailers. Uniqlo appear to be struggling to gain a foothold in the US market, opening fewer stores than anticipated, and with slower than anticipated sales.

Chief Executive, Tadashi Yanai, has gone to the USA to assess the company’s strategy and to work out how to raise the brand’s profile outside of major cities. The company has consistently lost money in its US operations since expanding there five years ago, but still maintains a plan to open over 100 stores in the country in the coming years.

Could this be a turning point for retail brands? Or is it just the natural progression of a business’ rise and fall, just sped up in line with the increasing pace of change in trends and demands? Whichever it is, it will be interesting to see how the fashion industry changes in the coming years.

We’ve been keeping track of the major stories making the procurement and supply chain news this week…

Procurement “Underpaid and Unrecognised”

  • A new salary survey report from Next Level Purchasing Association (NLPA) has suggested that procurement professionals are being underpaid.
  • The Purchasing & Supply Management Salaries 2016 report has shown that average global salaries for the profession have decreased by 7.5 per cent.
  • This leaves the average global salary around $53,000 USD, although the average covers professionals at all organisational levels, and across six continents.
  • The NLPA has suggested the best way for professionals to combat this is to get themselves recognised for value contributions to their organisation.

Read more at Supply Chain Quarterly

ISM Announces Annual Awards

  • ISM has announced its Persons of the Year, Affiliate of the Year and Affiliates of Excellence Awards at ISM2016
  • The Persons of the Year Awards sit across five categories: Education; Innovation; Leadership; Marketing & Communications; and Volunteer of the Year.
  • The Affiliate of the Year Award, won by ISM Cleveland this year, recognises excellence in core competencies, membership growth, and professional development opportunities.
  • ISM Cleveland was also one of the eight affiliates recognised with Affiliate Excellence Awards, for demonstrating an awareness and distinction in their professional operations.

Read more at ISM

Oil Settles Under $50 as Supply Worries Resurface

  • Oil prices touched  the $50-per-barrel mark on Thursday 26 May as production outages brought a faster-than-expected recovery to an oversupplied market.
  • Global benchmark Brent crude oil was down 35 cents at $49.40, having earlier risen as high as $50.51 in intraday trading.
  • Adding to outage concerns, a source at Chevron said the producer’s activities in Nigeria had been “grounded” by a militant attack, worsening a situation that had already restricted hundreds of thousands of barrels from reaching the market.
  • Investors will be watching next month’s OPEC meeting for signs of an output hike now that oil had reached $50.

Read more at CNBC

Adidas Unveils New Robotic Factory in Germany

  • Adidas, the German maker of sportswear and equipment, has announced it will start marketing its first series of shoes manufactured by robots in Germany from 2017.
  • The company is facing rising production costs in Asia where it employs around one million workers.
  • It plans to open similar factories in the UK or France following a test period in the third quarter of this year.
  • Arch-rival Nike is also reportedly developing a robot-operated factory.

Read more at The Guardian

Hyperloop Reveals New Material for Capsules

  • Hyperloop, the revolutionary transportation system and brainchild of Elon Musk, has announced more details on the manufacture of their travel pods.
  • Vibranium, more commonly known as the material used for Captain America’s shield, is the name for a new alloy created specifically for Hyperloop.
  • The material is made of woven carbon fiber, and the company claims it is ten times stronger and five times lighter than steel, and eight times stronger and 1.5 times lighter than aluminum.
  • Vibranium has also been designed to be a ‘smart’ material, able to relay real-time data on temperature, damage, structural integrity.

Read more at Futurism

How Middle Managers Can Make or Break Supply Chains

Can middle managers or supervisors make or break your supply chain company? Are organisations selecting the wrong people for these roles?

Middle Managers

To watch the video of this article, click here.

Over the years working and consulting in a wide variety of business, health, and education settings, I have noticed a common and obvious trend. The selection of supervisors or middle managers from the existing employee pool.

For some workplaces this is a smart choice. You know the person, their work history, and their technical skills, and, as the senior manager or company owner, you generally like them.

Plus, it saves a truckload of recruitment time, costs and fees.

Capability Struggles

So what’s wrong with this common practice?

Well it depends. Often the successful employee displays all the seemingly right characteristics: reliability, dependability, happy to go the ‘extra mile’, and deference to their superiors!

But what happens when they now have to supervise and direct their former colleagues? Did they suddenly get an USB stick full of management and leadership skills to download into their brain?

Did that person immediately demonstrate new behaviours, negotiation skills, creative and collaborative thinking, and ability to motivate their team? Probably not.

They usually struggle big time with the change. They’re like a duck on a pond – seemingly calm upon the surface, but paddling away furiously under the water.

They have no idea how to manage and lead their people. The shelf life of these middle managers is around two years if you’re lucky.

Some senior managers may think, “when they resign or burnout, I’ll just promote someone else”.

Cultural Harm

But what’s the real issue here for your company? It’s culture destroying. Supervisors or middle managers who are thrown into the deep end of the pool without a buoyancy vest usually sink.

And they will take down the rest of the workforce with them.

It’s usually a slow insidious slide:

  • grumblings from workers,
  • dissatisfaction on how they’re being treated or spoken to,

with a resulting in a decrease in productivity, increase in accidents (real or concocted), sabotage of company assets, absenteeism, and an unhappy workplace.

Why would any CEO or business owner want that?

What can you do?

Invest in them – train, educate, coach and mentor them. A one off induction just won’t cut it. It takes time, practice and a willingness to master new skills.

If you have ever been motivated by a inspirational person at any time in your life be it a footy coach, church leader, primary school teacher, or the old guy/gal next door, then you know how it affects you and your environment around you – in a great way!

So why not get your newly appointed supervisors or middle managers on the leadership bus?

The ROI will be worth every cent! You’ll have functioning teams, increased productivity, less absenteeism and WorkCover claims, and a place employees want to continue working for.

Sounds good, doesn’t it?!

Learn more about developing leadership skills, both your own and your team’s, and get to grips with some great life and style thinking at www.productiveminds.com.au.

Supply Chain Sustainability as a Competitive Advantage

Industry leaders understand that supply chain sustainability can be a competitive advantage. Utilised effectively, it brings a wealth of opportunities.

Sustainability Competitive Advantage

Read the first part of this article here.

Global brewing giant SABMiller embraces the idea that water is strategic. It cut its water consumption by 28 per cent, now only using 3.3 litres to make 1 litre of beer. It is on track to achieve its objective of 3 litres by 2020. Iconic sports brand Nike has adopted 3D printing to eliminate waste.

Companies not focusing their supply chain efforts on differentiation are at risk of falling behind. Innovation can also involve changing consumer behaviour. Here again, collaboration is key between different functions, from R&D to marketing and procurement and supply chain.

One of the three pillars of Unilever’s Sustainable Living Plan is to halve the environmental footprint of their products by 2020. They have developed a purpose-driven strategy to double their revenues, while still having a positive social impact. Their business model has put supply chain sustainability at the heart of strategy, and they use innovation to embrace it.

Cost of Sustainability

A common misbelief is that sustainable solutions cost more. In most cases, they are more profitable, with a faster return on investment. Business and sustainability go hand in hand, and better solutions have emerged, both for businesses and the planet.

True, there are more expensive examples. Traceable palm oil, which ensures zero deforestation during production, is one of these. However, renewable energy solutions, such as windmills and solar panels, can be profitable immediately.

Many companies also put a lot of effort in reducing transportation, with the objective to decrease gas emissions, as well as the transportation cost itself. From a labour perspective, the overall cost could be diminished by improving productivity and respecting minimum wage.

When companies take the long-term approach that sustainability requires,
 initiatives can be cost neutral or 
better. Some companies have increased their revenue by as much as 20 per cent, while reducing supply chain costs by up to 16 per cent. According to the World Economic Forum report written with Accenture, this has been done by implementing sustainable supply chain practices.

Best practices have been identified to support companies achieve a “triple supply chain competitive advantage” of increased revenue, reduction in supply chain cost and added brand value. The result is improved competitiveness and reduced operational risk.

Employee Engagement Key to Sustainable Success

46 per cent of CEOs reported that employees would be among the most influential groups in guiding their action on sustainability over the next five years – second only to consumers.

When it comes to employee engagement, it is important to communicate internally to all levels of the organisation. Best practice should come from within, and companies should ensure that their external actions on sustainability are also reflected internally.

Taking care of the workforce, engaging them in implementing a corporate commitment to sustainability, will drive greater productivity, and thus greater profitability.

Giving employees a purpose and empowering them to have ideas and find solutions at a local level could make a real difference in supply chain sustainability. It is more challenging to have sustainable operations in some global regions than in others. Leading supply chain executives encourage their teams to go beyond their own boundaries, inspiring, guiding and supporting them.

Companies who are leveraging supply chain sustainability as a competitive advantage are outperforming their less sustainable peers. Many studies show that these sustainability leaders have higher, faster-growing stock value, better financial results, lower risks, and more engaged workforces.

Aligning employees’ engagement with supply chain sustainability strategy is key to building an innovative, environmentally responsible, and socially conscious business. Workers on the front line are often in the best position to identify inefficiencies and propose solutions.

The best companies integrate their sustainability strategies into their employees’ day jobs. This is done by incorporating sustainability targets into the employee’s annual objectives, and incentivising them.

Shared Responsibility

Sustainability is the responsibility of everybody, but especially those involved in the supply chain who are in a position to act.

Communication and training are important factors in generating awareness across the workforce. To attract talent, particularly millennials and future generations, companies behind on the subject will lose in this battle too.

Many multinational organisations have set sustainability targets to be reached by 2020. Winning companies will master the balance between commercial gains and “it is simply the right thing to do”. They will embrace internal and external collaboration and will drive supplier and consumer behaviour.

In a world where social conscience is fed by social media, and fear of the speed and scale at which information can disseminate globally, it is crucial to behave responsibly. Those organisations which do not act now on supply chain sustainability face the risk of long term brand and reputational damage.

Fast Fashion – But at What Price?

Is the concept of ethical fast fashion an oxymoron? Do we as consumers have a good enough grasp of the ethical considerations?

Fast Fashion

Today’s typical fashionista has high expectations. She, or maybe he, wants to buy cheap and affordable trendy clothes in the latest styles straight off the catwalk.

Never mind that an item is unlikely to last more than ten washes. Fast fashion is getting faster and cheaper, but what is the real cost to society and the environment? We may have an uneasy feeling about the issues, but generally have a poor grasp of ethics.

How important is this industry?  

The direct value of the UK fashion industry to the economy is around £26 billion and growing fast. Average spending on fashion in Europe is about €700 (>£500) per person per year. Italy, Germany and the UK are Europe’s largest fashion markets in terms of consumption.

Fashion’s total economic contribution is much more if we include activities in indirect and related industries. We may be feeding the economy with our purchases, but we are also harming the environment. Shipping, transportation and logistics are energy demanding, time consuming, and pollution-spewing.

The formula for success in this industry was always to give the customers what they wanted: trendy garments at the right price, of acceptable quality, in the right place, and with a dash of speed. In the last five years there has been a concerted effort by some retailers to become more ethical buyers, employing better human resources policies and safety practices.

Ethics in Fast Fashion

Do procurement teams harbour concerns about sweat shops or care about child labour or manage waste disposal? Or is it more important to buy cheap to satisfy the consumer who just wants to pay £3 for a T-shirt?

Paul Brownhill, Group Chief Executive at Britannia Garment Packaging, says that although the majority of consumers want quick access to the latest trends at an affordable price, they are now also seeking assurances about the way these items are produced. He notes that consumers are increasingly concerned about the quality, safety and environmental impact of the clothes they buy. Is this really true?

The University of British Columbia recently researched this issue and came to the conclusion that, theoretically, young consumers place an importance on sustainability but have a blind spot when it comes to fashion.

“They may care deeply about eating organic foods, but fast fashion consumption is exempt from such moral decisions. This approach can in part be explained by the fact that youthful consumers may fail to fully grasp issues of sustainability, in particular the disastrous future environmental risks associated with unsustainable production.”

Other similar studies demonstrate little evidence that ethical issues have any effect on consumers’ fashion choices or that they are likely to sacrifice their own personal needs for the greater good.

Some Bright Spots

Leading retailers like H&M, Gap and Zara have all signed a pledge to improve factory conditions. H&M, whose tag line is ‘Fashion and quality at the best price in a sustainable way’, was recently named one of the world’s most ethical companies by the Ethisphere Institute.

One of its claims to fame is that it is the number one user of organic cotton in the world. H&M, with 3,900 stores in 61 markets, is also one of the first and largest fashion companies in the world to make its supplier factory list public.

Louis Vuitton Moet Hennessy, (LVMH) a corporation comprising over sixty luxury brands, has been auditing its carbon footprint since 2004. Tiffany & Co. produces a Corporate Responsibility Report, which touts their support of human rights, anti-corruption practices, and commitment to responsible mining. This is all very commendable if it is more than just words on the page.

Fast Fashion and the Ecosystem

For those that do care about the future of our children and damage to the environment, there are a couple of other options. Buyers can check questionable supply sources, read every label, and buy only locally produced items, but this may come at a cost.

What about sourcing second-hand or hardly used items? Re-purposing items creates a positive ethical and environmental impact and can be both cost-effective and trend-setting – it even has possibilities in the commercial environment.

Landfills are full of synthetic material. Cheap clothing goes out of fashion and people end up with a lot of unwanted items. UK consumers ditch more than a million tons of clothing every year.

In poorer countries the problem is less noticeable; items get handed down and re-circulated until they totally disintegrate. In developed countries, they may end up in the rubbish bin.

What can we do to help?

  • We could support ethically sourced products from brands that have committed to best practice
  • We could create more awareness among commercial buyers about poor labour practices and sustainability
  • We could buy fewer higher quality garments to reduce the environmental impact of fast fashion.

The campaigning organisation Labour Behind the Label provides information on what brands need to do to up their game and move closer to employing ethical sourcing practices.

Suppliers are anxiously trying to satisfy the market’s needs for speed and price, at what cost? Is ethical fast fashion” an oxymoron?

The Carrot and Stick Approach to Open Booking

Open booking is a massive problem for organisations globally, and one of the largest compliance challenges facing procurement.

Open Booking

In the US, over 50 per cent of hotel bookings, and 24 per cent of airline bookings occur outside the parameters of corporate travel programmes. The issue costs organisations $36 billion per year, and is one of the largest compliance challenges for procurement.

But what can be done about it?

Travel Management

Ethan Laub knows travel software. He founded a startup called TripScanner, a travel booking system giving clients the ability to book on any travel website while achieving compliance with their organisation’s travel policies. His startup was acquired by Coupa in mid-2015, and Laub now works at Coupa as a Director of Product Management.

Here at Coupa Inspire, Laub is running a session on open booking. Most of the audience members manage travel in some fashion, and all of them are frustrated by compliance issues. The consequences of open booking are potentially very serious. According to Laub, it can effect:

  • Risk management: if there’s an emergency, you need to know where your employees are and be able to contact them immediately.
  • Sourcing: open booking hampers procurement’s ability to negotiate discounts with travel providers.
  • Policy: making sure people are spending smart and within budget.
  • Visibility: not having any data on travel spend, hampering your ability to make decisions. 

What drives open booking?

Laub asks for a quick show of hands on why people would decide to avoid the corporate travel system. The top five reasons are:

  1. Better Deals: employees who claim they “got a better deal” outside the approved system.
  2. Conference Booking: conferences with hotel discounts where bookings must go through the conference portal.
  3. User Experience: people are increasingly confident in booking personal travel and are unfavourably comparing the quick and easy experience with clunky corporate travel booking.
  4. The Sharing Economy: people preferring to use companies like Uber and AirBnB, often unavailable on the corporate site.
  5. Airlines and Hotels Pushing Direct Bookings: otherwise individuals can’t claim loyalty points, free Wifi, or other perks.

What’s the solution?

Having established that open booking is a serious issue, and explained why people are avoiding company travel sites in droves, Laub recommends travel managers take an approach that best suits their organisation’s culture.

Stick Approach

  • Prohibit open bookings and refuse to reimburse.
  • Flag out-of-policy post-bookings.
  • Escalate repeat offenders to managers.

Carrot Approach

  • Improve User Experience

Over the past 10 years, consumer sites have become increasingly user friendly, while the policy-focused corporate booking tools haven’t kept up. There are a lot of attractive, easy-to-use applications on the market that can improve UX for your site. Some tips:

  • Ensure you have as few steps as possible
  • Explain to travellers why things are the way they are (policy)
  • Communicate the realities of the travel program.
  • Nuance the site to enforce your policies behind the scenes: users shouldn’t be able to see the out-of-policy options
  • Show fare comparisons to prove your negotiated fares are the best option.
  • Reward savings

If the employee comes in under their travel budget, the company shares half of the savings with the employee. This can be considered part of the gamification process of employee management.

  • Clear guidelines

Ensuring that you have clear guidelines for your employees is key. Employees need to understand when it is okay to book outside of the system, and when they need to be following process.

What does the future hold for business travel management?

Check out this video from Coupa that shows the exciting future of corporate travel artificial intelligence. This system anticipates all of your needs and is so intelligent that you’ll fall in love with it – in the case of this hapless user, literally!

Are Procurement Professionals Stuck in the Stone Age? – Part III

If procurement technology is stuck in the stone age, what do we need to do to modernise? We take a look at some B2C examples for inspiration.

B2B & B2C

So far in this series, Market Dojo and Odesma have discussed whether procurement technology is stuck in the stone age, and why B2B software isn’t keeping up with its B2C counterparts. This article examines some B2C companies getting it right.

This article was originally published on Market Dojo.

Slowly but surely, not only do we see B2B companies adopting B2C ideologies, but some B2C companies are jumping in and filling the gap left by B2B providers. Granted, the complexity of B2B companies isn’t completely covered by the consumer oriented companies, so they are aiming more at the smaller companies. But all the same it still highlights a shift in the market.

By taking a couple of examples, we can see where these changes are happening and examples of B2C solutions doing it right.

Uber and Freight Brokering

MD - Uber

The transportation networking company Uber originally focussed on the B2C space by bringing together people looking to travel in the same direction, aggregating the demand and sharing out the cost of the journey to charge a lower price.

Targeting those traveling for personal reasons and commuters, they are paying special attention to the business sector with their latest development of business profiles.

More recently, focus has shifted to the freight industry where they hope to achieve similar by introducing mobile-based freight brokering technology. Not only will there be a reduction in number of ‘empty miles’ travelled, mobile-based freight brokering technology can help lower operating costs, improve fuel efficiency, boost asset utilisation and enhance resource productivity.

Benefits which Uber have been reaping since they formed in 2009.

Amazon Business

Amazon touch briefly on the B2B side with Amazon Business. With benefits like integration with purchasing systems and order approval workflows, they have adapted Amazon to create Amazon for business.

This could have extreme effects on the the current technology providers, should Amazon develop an eSourcing/eAuction aspect. It would not be that difficult for them to make the shift.

Another area in which Amazon has moved to a B2B focus is with their hosting options. This isn’t an adaptation of their B2C offering, but an entirely new market for them.

Software as a Service

MD - Airbnb

Airbnb, for example, provide a marketplace that allows one to search for and/or offer accommodation. Their sleek design, mobile-optimisation, carefully thought-out filters, and simple sign-in methods are something to be rivalled. Having relied heavily on investment, they have been able to afford the development costs and created a really neat SaaS product.

MD - ProcurifyProcurify is another such example of improved, B2C-esque usability. They aim to provide P2P technology without the presumed “boring” grey-scale colour scheme and clunky design that we have seen (and expected?) for so long. They have responsive design and mobile applications available. With their bright colours and simplistic design, they are very appealing.

Social Networks

But will this new technology, mainly adopted by new companies, only appeal to the millennials of today? Will previous generations appreciate this or seek their old faithful, familiar, providers.

Jive is also an interesting example. Marketed as “The Next Leap for Social Intranet Software“, their user interface is very similar to that of Facebook. Or, at least, Facebook 3 years ago.

MD - Jive

The concept is brilliant – provide companies with an internal social platform to share company news and collaborate. However the user interface still leaves something to be desired. Granted it’s one of the best on the market, and I am in no way criticising them specifically, but overall, there is still a lack of ease-of-use in B2B social platforms in comparison with B2C.

Is this because we expect it, because more complexity is required, or because the design needs to remain colourless and simple?

LinkedIn have recently redesigned their ‘groups’ making them more user-friendly and appealing, so increased usability is something which they pay attention to. But the creativity of design is definitely lacking in the B2B world. Why does business have to be so boring?!

The procurement community is lucky to benefit from the industry specific, social platform Procurious, which, with its bright colours and easy interface has a very B2C feel – which differs greatly from LinkedIn.

MD - LinkedIn and Procurious

In the picture on the left, you can see crowded text and pictures with no clear direction of what to look at next with a few small tabs at the top to interact with.

On the right the information on the profile page is broken down into tabs and the contact information on the left-hand side makes it easy to see details of an individual.

It seems that Procurious, being a more recent development, has taken learnings from other solutions (in its space) to create a more user friendly social media platform. Whilst LinkedIn (above left) is busy and cluttered, Procurious provides a more simplistic, clearer view. If you haven’t done so already, definitely recommend getting involved there and signing up to the tool.

Global Trading

MD - Alibaba

Alibaba provides an online platform for global wholesale trade. They launched in 1999 and attempt to make sourcing of goods and suppliers more simple for businesses, working with millions of suppliers across the globe.

Within the tool, they have a categorised search option for buyers with the ability to ‘get quotations’ from the approved supplier list within Alibaba (AliSource Suppliers).

So how will B2B software and technology evolve in the next decade? Make sure you read the final part of this series to see what we think.

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.

eISM – Introducing the Future of Learning

People don’t want a one-size-fits-all solution for their professional development. eISM aims to provide a set of flexible options to take e-learning forward.

eISM Learning on Demand

Whether skills are learned through small chunks, longer competency-based training, or direct job experiences, there’s no one-size-fits-all solution when it comes to gaining career knowledge and experience.

ISM’s Senior VP of Programs and Product Development, M.L. Peck, understands this, and has made it the foundation of ISM’s exciting new eISM initiative. “E-learning is the future of learning – it’s how our customers are consuming information”, says Peck. “But just like face-to-face learning, it has to allow for individuals’ learning styles”.

That’s why ISM has come up with no fewer than three completely different methods for varied learning styles within its eISM offering: Just-in-Time learning, Self-Guided learning, and Guided Learning. It’s up to the user to choose the method that best fits in with their busy schedule and learning style.

ISM’s e-learning is designed to support ISM’s Mastery Model, providing the training needed to equip practitioners with the skills and certification to master various competencies and sub-competencies within the model.

The content itself is pulled from ISM’s impressive 101 years of supply chain leadership, drawing upon its global network of subject matter experts to create a remarkable library of digital knowledge.

Just-in-Time Learning

Peck talks about the “just-for-me, just-in-time, and just-enough” approach. For example, if you have a negotiation in an hour and need an answer immediately, all you have to do is search for your answer based on Mastery Model competencies and sub-competencies. You’ll find the answer they’re looking for in a short video of no more than 15 minutes in length (micro-learning). Information is delivered in multiple, engaging methods, including:

  • whiteboard animations,
  • live interviews (Q and A’s) with executives and leaders in industry,
  • short lectures from industry experts,
  • fun activities, games and flashcards.

Self-Paced Learning

Self-paced learning courses are longer, on average an hour in length each. Users are given access to a wealth of knowledge with which they can create their own schedule and work at their own speed. This method is ideal for exploring a broad topic, or for diving deep into a sub-competency.

Guided learning

Nothing will replace the benefits of face-to-face learning, but eISM’s Guided Learning comes close. It includes an online instructor and peer-learning, ideal for people who want to make contact with the subject-matter experts or who are uncomfortable with learning a completely new concept alone.

The facilitated courses range from three to five weeks in length, running five days per week, in which the learner logs on and completes an activity of approximately 40 minutes each, or participates in a 1-hour weekly webinar (to be viewed live or recorded). The facilitator sends reminders to complete exercises.

Getting started

For more information on eISM, including subscription and pricing, visit the Education Area on ISM’s website. The best way to start is by using ISM’s self-assessment tool, which will rate your skill-set against the Mastery Model sub-competencies and identify gaps in your knowledge.

From there, find the learning approach that best suits you, whether it’s small, focused micro-learning, longer self-guided courses or the facilitated classes. “People are craving content that address specific needs at specific times”, says Peck. “eISM offers our customers that choice”.

In Search of Influence – The Traits of Influential People

With an understanding of what influence is, and how procurement can leverage it, we can now look at what the common traits of influential people are, and how to develop them.

Influential People

In my previous article, I reviewed some of the available literature on influence and influencing skills, in this article we look at what the key traits of influential people are, and how to best develop these skills ourselves.

These key traits and ways to develop have been identified following a range of discussions with a variety of procurement leaders.

1. Excellent Communication Skills

The most important trait to of influential people was the ability to communicate effectively. An example of effective communication was described as, “when they spoke to a room, it felt as though they were personally being addressed”.

This ability to communicate to many people, and make each person think that the message is for them, was identified as a key communication skill.

The research identified that there are different aspects of excellence in communication skills, which can be summarised as:

  • Develop and adapt communication plans based on the listener

When developing communication plans, it is imperative to consider how the person being communicated with likes to receive that communication. This then drives the method of communication – be it face to face or electronic, as well as the actual content. This adaptability of communication is again one of the key traits of influential people.

Goleman[i] suggested that effective planning specifically for the individual is a critical success factor for effective communication.

  • Make persuasive arguments

This links to making points in specific language that the listener understands. In other words, when making persuasive arguments, influential people spoke the language of the listener, rather than their own procurement language.

  • Listen to the responses and read the room

Listening and active listening is a key trait of an effective communicator. That it is more than what is being said that makes an effective listener.

2. Delivered results and built trust

The need to deliver on the promises that have been was seen as a ‘ticket to entry’ to a wider discussion. Therefore the ability to keep ones promises, i.e. contractual trust[ii], was identified as a non-negotiable to build trust both for the individual and the function.

The leaders influence increased within their businesses the more they delivered either on bottom line savings or on specific projects that they were asked to deliver.

3. Top influencers have empathy (and not sympathy)

Sympathetic listening is defined as how we care and show we care about the other person, and that we pay close attention and maybe share their feelings. Whereas when we listen empathetically, we go beyond sympathy and attempt to seek a fuller understanding of how others are feeling.

Empathetic listening means listening to the responses and asking more questions to understand the points made, which requires excellent questioning and close attention to the nuances of emotional signals.

4. The best influencers have great knowledge and great passion

Top influencers need to have credibility in order to be considered influential. When reviewing top influencers, all of those people had “been there, done that”, and were able to bring a huge amount of experience and credibility.

This referencing of credibility has an interesting link to the French and Raven work on expert power[iii].

Having passion in the field in which the influencers excel, be it procurement, or other topics, allows the influencer to demonstrate knowledge about their subject matter, which will increase the ability to deliver great outcomes.

5. Network and built great teams

The idea of networking with other senior leaders and influencers is an important leadership development tool. Harvard Business Review identified networking as operating at three levels, Operational, Personal and Strategic.

In order to be an effective influencer, the procurement professional needs to operate at all three levels.

How to Develop Influence

So if these are the key traits of influence, how do we go about developing these skills?

  • Observation is king

The number one thing that influential people do to develop their skills is the observation of others, especially those that they felt were influential.

This is then internalised by the individual to consider what it meant to them, and whether they felt it was something that they could do themselves, or something that they did not wish to do, or could not apply to their own style of influencing.

Top influencers have stated that they learnt as much from bad influencers as good ones, as this leads to things definitely not to do.

  • Training programs can add value…but need to be linked to on the job development

Attending a specific training program can provide lightbulb moments in terms of developing influencing skills. Many top influencers stated that this was unlikely to be a “learned skill” from a textbook, but more of an acquired skill through observation and mentoring.

This seems to add credence to the 70-20-10 learning methodology[iv], its application for active learning programs, and the use of formal mentoring or coaching activities.

  • Feedback loops from trusted and diverse sources

The requirement for an independent person to review performances and give detailed feedback on what was done well and not done well was considered to be a key ingredient to developing these skills.

The trusted sources could be a mentor, either formal or informal, potentially someone that the individual trusted or rated as a top influencer. Some have also mentioned that having a different diverse perspective in giving this feedback was a great way to develop skills, both in general and in relation to the topic of influencing.

  • Practice makes perfect

The need to practice the new skills when they had learned them links back to the earlier identified method of more on the job based training, or more planned activities following specific training programs. Top influencers have stated that the more they practiced and prepared the better they got.

Summary

  • There is a need to identify who you are trying to influence and decide on the best way to influence that individual.
  • This means that the practitioner needs to have multiple ways to influence rather than rely on the same approach for all.
  • If you want to develop your influencing skills then there is a key need to understand the way you process information and learn new skills.
  • Observational skills are paramount to increasing your influencing skills.

[i] Goleman D (1998) Emotional Intelligence: Why It Can Matter More Than IQ; Bloomsbury Publishing

[ii] Sako M; Does trust improve business performance? London School of economics 1997

[iii] French, J. R. P., Jr., & Raven, B. H. (1959); The bases of social power. In D.Cartwright (Ed.),Studies in Social Power (pp. 150–167). Ann Arbor, MI: Institute for Social Research

[iv] Kajewski K, Madsen V, (2012), Demystfying 702010. Deakin Prime