How My Procurement Network Made 1 Million Dollars

Your procurement network could have massive benefits for you and your business. But only if you are growing and managing it effectively.

Million Dollars

Mention the “n” word and most people cringe and break into a cold sweat. The problem with networking is that it has a really bad reputation.

The term evokes clichéd images of businessmen getting together for meetings with secret handshakes and weird hats, or of the “long lunch” at the club. Networking used to be elite and self-serving. You networked to get up the corporate ladder; you did not network to collaborate or share.

In today’s world networking is widely accepted as a critical element to career success. But I would also go as far as to say networking will improve all aspects of your life.

Getting started with networking can be tough. After all, old habits die hard. If you need some further encouragement, read my article on the ‘3 Steps to Becoming a Networking Guru’.

Inspiration and Information

Networking stretches way beyond finding your next job. Your network can be a source of inspiration. It can provide you with information and insight you would have never otherwise encountered.

Effective networking may help you find your next mentor, role model or, god forbid, a friend. Of course there are many definitions for networking, but to me networking is about creating and maintaining relationships.

So why should you bother with all this networking business?  I mean, if you just get on with your job and deliver on your promises, isn’t that enough to make you successful?

Well, of course it is, but you may be disappointed when you miss out on some lucrative benefits. Ultimately, the benefit of business networking is to create commercial value.

Leveraging Your Procurement Network

Procurement Network - 1 Million Dollars

To bring the power of an effective procurement network to life, I want to share a personal story to show the “multiplier” effect of building strong relationships.

It proves that just 1 connection can be worth millions of dollars to you and your network.

Let’s go back to Australia 10 years ago, where I met Nick Moen. He wasn’t a client, but a leading CPO, and a very smart guy, running procurement for BP in Australia and New Zealand. Nick and I really connected, we met regularly for coffee, and talked about leadership and shared ideas about improving the procurement profession.

Nick was one of the first CPOs to come to me and suggest the value he would derive if I established a CPO Roundtable. Eight years and more than 50 different companies later, that group is still going strong, benchmarking, sharing and collaborating.

In another of our meetings, Nick mentioned some fantastic should cost-model training he had undertaken from a company called Anklesaria, based in San Diego. We struck a deal which has provided hundreds of procurement professionals in Australia with a very valuable skill-set.

Connecting Connections

One year we were looking for a global speaker for our CPO Forum. Ankelsaria recommended Nokia’s outgoing CPO, Jean-Francois Baril. Many years later, his son, Matthieu helped build our eLearning platform on Procurious, and ended up living in my home in Melbourne for three months.

Jean-Francois also introduced us to the amazing former CPO of Deutsche Telekom, Eva Wimmers, who is now a personal friend and a real visionary on supplier-enabled innovation.

Nick and I also decided to start a Procurement Executive Program, which has now trained almost one hundred rising stars. Although the Deputy Dean of the Business School, Dr. Karen Morley, moved on before we started the program, she and I created a connection. This led to me asking her to develop an X-Factor Skills Assessment to identify CPO talent. She is also a regular judge on our CPO of the Year Award.

At one of our coffee mornings, Nick brought along one of his rising stars, Richard Allen. Richard would later become CPO at BP, and now is the CPO at Australia’s largest telecommunications companies, Telstra. Richard and I have continued to keep in touch.  Even three years after I left Australia we still talk at least once a month.

So – from one meeting – all this value has been generated.

Value for Others

Also worth pointing out is how much other people have gained from the partnerships created. Hundreds of people have received valuable training, my business partners have made money, I have had fun, and got a lot of joy and pride out of building my business. It hasn’t just been about networking.

And to think all this value, goodwill and good work was generated from one networking meeting. So what are you doing to leverage your procurement network? Isn’t it time that you took another look?

At Procurious, we want to create a truly global network of procurement professionals that are there to support each other to learn, grown and prosper.  We believe if you get involved, you will get ahead.

Burritos and Ice Cream – Supply Chain Failure and Success

Burritos and ice cream – the contrasting fortunes of two organisations and the difference between supply chain failure and success.

Supply Chain Failure

Burritos and ice cream. Who doesn’t love them? Carne asada and guacamole. Chocolate and cherries. The combinations are endless, and so are the places that offer these tasty treats. So what can a burrito chain or an ice cream brand do to stand out from the crowd?

Chipotle and Ben and Jerry’s (known for burritos and ice cream, respectively) have both come to the same conclusion: leverage the supply chain and use it as a brand differentiator.

They have decided to draw customers in with high-quality ingredients and a transparent supply chain. Chipotle and Ben and Jerry’s as brands have both become champions of local suppliers, fresh produce, and organic and non-GMO foods.

However, if you’ve been watching the news over the past months, you’ve probably noticed one of these companies has been more successful in their mission than the other.

Supply Chain Failure

Chipotle has been plagued by outbreaks of food-borne illnesses in the past few months, to the point where they shut down all their restaurants for a day to address food safety issues. As a result of these outbreaks, there have been calls for the chain to centralise their procurement strategy and source from large, well-known suppliers, rather than working with small farmers who may not adhere to as stringent food safety standards.

Chipotle appeals to the coveted millennial market and a supply chain failure, and a failure to live up to their lofty supply chain goals, may have a severe impact on their brand value.

Ben and Jerry’s has succeeded in the arena where Chipotle has come up short. After being sold to Unilever, a multinational corporation, Ben and Jerry’s received certification as a B-Corp, essentially a company that doesn’t allow board influence to sidetrack their CSR efforts. In their case, their parent company may actually be an asset rather than an obstacle as Unilever itself is also known for ambitious environmentally friendly initiatives.

For example, the company has pledged to make a $90 trillion investment in infrastructure over the space of 15 years to build a sustainable economy and combat global warming. “Companies make up 60 per cent of the global economy. If they don’t play an active part, how can we solve this crisis?” said Unilever CEO Paul Polman.

The Role of Procurement

Procurement needs to play a central role in CSR efforts, especially when supply chain promises are a primary piece of the brand message. Procurement should be responsible for staying on top of current and potential suppliers, including second tier and beyond when possible, making sure they have the necessary qualifications to live up to your brand image.

Procurement also needs to be ready to pivot to new suppliers quickly in response to any supply chain disruptions, whether they are result of illness outbreaks, drought, or changing government regulations.

Where Chipotle failed, and failed big, was that it wasn’t just one outbreak — there were five in the space of six months. Even if they can’t be traced directly back to a weak link in the supply chain, rumours and public perception can still have damaging consequences. Of course, Chipotle isn’t the only company to have suffered from a supply chain failure. Read about a more extreme case here.

Both Chipotle and Ben and Jerry’s have proven supply chain doesn’t have to hide in the shadows; there’s a place for it in the limelight. After all, now more than ever, people want to know where their food comes from.

But from Chipotle we can see companies will suffer if they don’t live up to their brand promises. However, with proper alignment to business objectives and recognition as a strategic player, Procurement can help prevent this from happening.

Hillary Ohlmann is the knowledge base developer at DeltaBid, easy-to-use procurement management software.

Australian Shines Spotlight on Unethical Supply Chains

Australian fashion brands are bearing the brunt of increasing unwanted attention for unethical supply chains.

Fashion Unethical Supply Chains

No-one wants to talk about it. But if you’re working in procurement for the fashion industry, you’re in the hot seat.

Fuelled by consumers’ love affair for fast fashion, the fashion industry is finding ways to produce faster and cheaper apparel than ever before. The latest example of this is Kmart and Target producing school uniforms for $2 an item, in a marketing campaign that made recent headlines for all the wrong reasons, given that factory workers are paid below levels that can cover basic living expenses.

The broader industry is digging its own grave, and, in years to come, the fast fashion industry will cease to exist, warns an Australian fashion industry authority who has worked on both sides of the fence.

A Different Way to Do Fashion

Catherine van der Meulen (formally Taouk) worked her way up in her father’s teen, fast fashion brand SUPRÉ for 15 years, which specialises in mass-produced, cheap fashion. During those years, the potential issues of unethical supply chains never crossed her mind.

She’s since realised the error of her ways, designing the Raw to Store movement to educate businesses about the spectrum of impacts generated by the fashion industry globally.

“Since leaving SUPRÉ, I’ve realised that there’s another way to do business, and it’s not this ruthless, cut everyone down to make money style of business that’s operating in the fashion world today,” van der Meulen says.

“I wish I’d have known back then what I know now about ethical fashion and conscious capitalism in my days at SUPRÉ. I wish I knew that the impact of our decisions can have a negative impact on others without me even knowing it.”

Raising Awareness

But she’s making up for lost time. Late last year, van den Meulen landed the role as head of corporate sustainability at Clean Cut Fashion – Australia’s industry body for ethical and sustainable practice. The organisation connects Australia to the global sustainable fashion movement and encourages national retailers to be more mindful of their supply chain.

She has only been in the role a few months, and is starting by raising awareness and contacting the industry’s worst offenders in search of a commitment.

“I’m starting with exemplifying the ones that are doing well in creating positive impact in the industry. We want to empower the great work of the brands that are committed to change and use that to teach other brands,” she says.

Issues associated with unethical supply chains include building an entire brand on an unsustainable business model, bad publicity, consumers turning to social media to vent about brands doing the wrong thing and, of course, knowing that you’re paying workers less than they need to live on in their own countries.

Collective Responsibility

Cath-van-den-Meulen - Unethical supply chains

Cath van den Meulen

“It’s my job to look at the supply chain of these fashion brands here in Australia and open up discussions around what’s being done to improve the processes. There’s plenty of room for improvement out there. But there’s generational corporate resistance to work through,” says van den Meulen.

She hopes to bring about change among Australian fashion brands that rely on mass sales by producing ‘loss leaders’ (extremely cheap items that are highly publicised), which are commonly mass-produced in unethical supply chains and manufacturing establishments in third world countries, she says.

To highlight the sheer size of the issue of unethical supply chains in Australia, she points to the Australian Fashion Report prepared by Baptist World Aid Australia, which last year named and shamed Australian fashion brands that haven’t cleaned up their supply chain or protected workers overseas.

The report was released two years after the fatal Rana Plaza factory collapse in Bangladesh, which saw the lives of 1,129 factory workers die. This event has put a black mark against the collective fashion industry, and van der Meulen says everyone needs to take responsibility.

Australian Offenders

The Baptist report named iconic Australian fashion brands as worst performers, such as the Just Group (owner of Just Jeans, Jay Jays, Dotti, Peter Alexander and Portmans), fast retail brands like Ally, Valley Girl, Temt and Industrie, and low cost suppliers like Lowes and Best & Less.

These companies each received D or F grades because there was little evidence they were doing much, if anything, to protect workers overseas. Many had little or no publicly available information and/or didn’t respond to requests to engage with the research process.

Oxfam Australia also released a report late last year naming the Australian brands dodging workers’ rights. The report named Best & Less as making the least progress of all the companies Oxfam has been engaging and assessing. The Just Group was also named in the report as another company sourcing from Bangladesh, which has so far refused to sign the Fire and Safety Accord.

“The truth is that you can create a profitable and sustainable business model while also doing the right thing as a corporate citizen. And yet there’s so much toxic fashion out there that consumers can purchase clothing for the price of a coffee is utterly obscene. Everyone needs to take responsibility for there to be change.”

Procurement – Authentic and Transparent

And while almost impossible to put a figure on the cost of cleaning up unethical supply chains, she recommends that procurement professionals approach this mammoth task in an authentic and transparent way.

Procurement professionals need to take responsibility for what’s happening further down the supply chain, starting with an independent audit to uncover and document the issues, she says.

“Where the cotton is from that you’re using, for example, can have one of the biggest impacts on the cotton industry globally. These are questions procurement people should be asking that demand answers.”

“I recommend that fashion brands start out by doing the B Corp assessment, which take just 90 minutes and gives you a rating out of 200 to see where you stand today,” she says.

Next, work out where you can make the most impact within your supply chain, and commit to starting an improvement program.

“Just focus on one thing that will improve your supply chain by 1 per cent this year. This could include improving energy consumption or waste water, changing suppliers, or sourcing more ethically produced products,” van der Meulen says.

Good News-Bad News Week for Global Tech Giants

The good news is that one of your favourite social networks is booming, the bad news is that one of your favourite tech companies is not.

Good News Bad News

It’s been something of a good news, bad news kind of week for a number of major global organisations this week. On one hand, alongside the success of the Big Ideas Summit 2016 (we couldn’t resist one last mention…), Facebook is bucking the trend for growth in 2016.

On the other hand, continuing (and very public) supply chain issues, as well as declining sales, put Apple firmly in the bad news column. And outside of the tech industry there was bad news in global manufacturing, as it became clear that lessons don’t appear to have been learned in Toyota’s supply chain following recent earthquakes in Japan.

Golden Quarter

At a time when other technology companies are beginning to feel the pinch, and slow growth is causing some real concerns, Facebook appears to be bucking the trend with its good news announcement on its first quarter growth.

Q1 of 2016 was the company’s strongest single quarter growth since 2014, with an overall revenue increase of 51.9 per cent. Combined with an increase in user activity (it’s estimated that two-thirds of Facebook users are on the site or app every day), it served to place Facebook far out in front of its competitors in both the social media, and tech, fields.

The revenue growth has been put down to a marked increase in the sales of mobile advertising on both its original platform, and on Instagram, which it purchased for over $1 billion in 2012.

What’s more, there is plenty potential for more good news, as Facebook is yet to release advertising for it’s other 2 major platforms – its Messenger service, and Whatsapp. There is also the release of Oculus Rift, the company’s virtual reality headset, to be taken into account, although this is unlikely to happen until next year.

‘The Fruit’ in Decline?

Facebook’s good news came as welcome relief for investors and markets, particularly in light of other first quarter announcements from the large technology companies came in under expectations.

Twitter’s earnings fell short of Wall Street predictions, with $595 million, compared to an expectation of over $607 million. Bigger problems for Twitter were a less than expected growth in user numbers, hindering the platform’s ability to drive advertising revenues.

However, the biggest news (though some might say not as surprising) came with the quarterly announcements from Apple. For the first time in 13 years, Apple reported a fall in quarterly sales, at nearly 13 per cent, to $50.6 billion. The tech giant expects this trend to continue in Q2, with estimated sales falling to around $41 billion.

Apple were not alone in feeling the effects of the slowing Chinese economy, where its sales dropped by more than a quarter. However, there was some good news for Apple fans. CEO Tim Cook told analysts that, “The future of Apple is very bright”, with a 20 per cent growth in revenue from Apple Music and App Store areas of the business.

However, many analysts are concerned that, in a market saturated with smartphones, unless the iPhone 7 is a game changer, then this decline could continue. With an announcement, and launch, expected later this year, it seems we will just have to wait and see.

Vulnerable Supply Chains

Technology wasn’t the only bad news area this week either. Toyota have come under fire for not learning the lessons of Japanese earthquakes in 2011, with their supply chain again showing severe vulnerability following earthquakes in the country in recent weeks.

Following the events of 2011, Toyota set out to create an “earthquake-proof” supply chain, working with suppliers to create the RESCUE (REinforce Supply Chain Under Emergency) system, aimed at spreading the risk in the event of future natural disasters.

The new supply chain was put to the test in April, and despite early promise, it seems that the same vulnerabilities in the supply chain still exist. The manufacturer shut 26 of its 30 Japanese production facilities in the middle of April, only reopening 5 at the tail end of the month.

With both Honda and Nissan now operating at full capacity, with minimal shutdowns, it seems that Toyota has yet to learn its lesson.

Do you work in the technology industry? What do you make of the latest announcements from Facebook and Apple? We’d love to hear from you – you can get started in the comments section below.

As ever, we’ve been keeping an eye on all the major headlines just for you…

Congress Votes Yes on Russian Rocket Purchase

  • US Congress have voted to purchase $540 million worth of Russian rocket engines, despite a ban on trading
  • The intention of the 2014 procurement ban was to end US reliance on Russian-made RD-180 rocket engines
  • The US relies on these engines to launch national security satellites into orbit, as the US-built engines are still under development
  • Critics say the $540 million will be spent by Russian on modernising its military

Read more at Space Daily

Japan Fury at Australia-France Deal

  • Australia has awarded France the submarine ‘deal of the century’
  • The $AUS50bn submarine contract is the largest defence deal in Australian history, but the move has infuriated Japan.
  • Japan’s Mitsubishi Heavy Industries and Kawasaki Heavy Industries submarine had been seen as early favourites for the contract.
  • In an unusually blunt criticism, Japan’s defence minister Gen Nakatani described Australia’s decision as “deeply regrettable”.

Read more at The Telegraph

Slow Progress on US-EU TTIP

  • Progress is slow on negotiations for a comprehensive Trans-Atlantic Trade and Investment Partnership, or TTIP, between the EU and the USA
  • Negotiators said they would push for a comprehensive TTIP before US President Barack Obama leaves office in January.
  • Among the deepest divides concern Europe’s food safety rules that exclude American beef raised with hormones, genetically modified foods and Europe’s many local food naming rules.
  • The deal exclude European demands for greater access to US federal, state and local government procurement, which often carries “buy American” or local content standards.

Read more at Euractive

Gorman Failing Overseas Workers

  • Australian fashion brand Gorman has come under fire for not doing enough to protect overseas workers in its supply chain
  • The 2016 fashion report by Baptist World Aid Australia graded Gorman as an ‘F’ for policies on preventing exploitation of workers in overseas factories
  • Although the organisation has an ethical compliance statement on its website, fans and wearers of the brand have reacted angrily to the company’s alleged lack of action
  • The company’s founder, Lisa Gorman, has now stated that they will be publishing supply chain audit reports on its website in the coming months to help prove transparency

Read more at The Guardian

How can Procurement Work Smarter, Not Harder?

Time never seems to be on our side. It’s time for procurement spend its time more wisely, and work smarter, by leveraging new technology.

Z Hotels Work Smarter

Procurement, finance and operations have forever been working on ways to integrate simply and effectively. While it is reasonably simple to coordinate small teams in one office, hospitality is one industry faced with the tough task of managing spend and suppliers across multiple locations, multiple businesses within a business and a seasonal spend pattern.

Traditionally, these three departments have been engaged in a never ending paper chase between numerous locations and head office. Not to mention the arduous task of managing budgets across a multitude of locations, geographies and currencies. Until now, managing this extensive workload has meant the headcount in the back office goes through the roof and the time staff should be spent in front of the guest/client, is instead spent on pushing paper and placing orders.

Breaking with Tradition

So how do you fix this expensive problem, and work smarter?

Breaking decades’ old business patterns and cleverly using technology to simplify buyer – supplier interactions and location management. However, Z Hotels have cut administrative tasks by up to 90 per cent through simplifying and digitising many of their previously time devouring tasks.

Frontline hotel staff would spend up to five hours a week on purely administrative duties like placing orders, chasing paper invoices and pushing items through the approval process back to head office. Meanwhile, head office staff lacked the transparency and real time control on departmental spend and relied solely on location staff to be their eyes and ears.

Since bringing in a new, cloud-based procurement platform, they have cut admin duties for location staff time down by 90 per cent.

Bev King, CEO at Z Hotels, commented on the benefits of the new solution. “Customer service is at the forefront of everything we do, InstaSupply gives us the opportunity to have a much more automated solution that allows our staff to have time to focus on the service to the customers rather than try to fill the administrative gaps. The process has become very easy to use. We’re on the right track,” King said.

Supported Growth Ambitions

The platform now pulls together all orders, delivery reconciliation, stock, invoice processing, location management and budget tracking as well as a host of other functions still being refined within the portal. All this with full integration with the business’ accounting software.

When Z Hotels first brought in InstaSupply, at the end of 2014, they had big ambitions to grow. A year later, they have just opened their 10th site and are on course for another five by the end of this year.

Under the traditional model, a flurry of staff would have been brought in to handle the additional workload that growing nearly 300 per cent would have created. In fact, the head office team that deals with finance and procurement has stayed the same as it was in the beginning.

It is this ease of use that makes it a great solution for Z’s predominantly Millennial operational staff. Implementing a fully responsive, one click, cloud solution is in tune with the emergence of a dominant Millennial workforce who will no longer just get by with archaic systems and countless spreadsheets.

With a wealth of new technology available to procurement and finance teams, isn’t it time for your organisation to look at ways you could work smarter?

Watch a video on this case below:

Instasupply employs advanced cloud technology and a user-friendly web application to give users control of their time and their spend. Find out more about Instasupply’s purchase-to-pay ordering system, and supplier invoice management and consolidation functionality, at their website.