Best and Worst Sectors for Online Customer Service

Utility companies and local authority services are among some of the worst ranking sectors in the UK for online customer service, according to new research.

Online Customer Service

The new report from social media experts, myclever™ Agency, found that consumers put utility companies (water, gas, electricity, phone and broadband) as the most frustrating sector for online customer service, with local authorities close behind. Retailers and professional services came out as the least frustrating sectors.

The report surveyed 1,000 UK consumers on whether current digital services are fully meeting consumer expectations, and their views on whether new technology, such as Chat Bots, could help improve customer service.

Biggest Frustrations

It found that the biggest online service frustrations across all sectors was a lack of basic information contained on everyday commercial websites such as retailers, utilities, banks and local government services (45 per cent).

Close behind was the inability to ask simple questions (40 per cent), while a third of the sample (33 per cent) said that, even when the option to ask questions existed, the tools they had used in the last month were of poor quality and didn’t provide a timely response.

The main frustrations lie in the inability companies have to answer simple questions quickly. However, when told about the benefits, consumers regarded Chat Bots as the key-holders to speed, unlocking immediacy and convenience in online services. They felt that these virtual assistants, designed to simulate conversation with human users, would significantly improve online services.

More than two thirds (68 per cent) liked that Chat Bots would be able to provide a 24-hour service, and 64 per cent felt it would resolve the problem of not getting quick answers to simple questions. More than half (51 per cent) felt happy they would get an instant response, mirroring the frustrations felt about current online customer service providers.

When compared to other forms of customer service channels such as apps – an area where businesses have invested heavily – chat bots scored more highly on all perceived benefits.

Demand for Online Customer Service

Rob McNair, managing director of myClever, commented on the findings: “Ever-evolving technology and an increasingly digitalised world has changed commerce forever. Online services that were once a luxury are now being demanded by consumers 24/7. In order to stay competitive, businesses are racing to keep up with consumer demands and technological innovations.

“The frustrations clearly indicate the need for online customer service to improve. And, although frustrations exist in all sectors, it’s interesting to see that the industries exhibiting the most frustrating customer experiences online are the least likely to improve them. Public sector bodies, for example, are notoriously slow to provide accessible online services – and when they do, they’re often inadequate, confusing and riddled with poor user experiences.

“It’s one thing if bots can make that a thing of the past, it’s another whether those ranking highest on this list will be prepared to adopt and invest early enough. However, while modest budgets can be a challenge for the demands of digital innovation, the investment in the long term will mean huge cost savings.

“Businesses offering the best customer experience will be at considerable advantage in converting browsers into buyers and earning repeat business. Chat Bots offer a solution to most major problems of each sector by promising a swifter, smarter online experience. New virtual assistants will be ever-ready, able to listen to our questions and respond intelligently. They will answer our queries, aid our searches and anticipate our needs, learning all the time to refine and improve the experience on offer.”

The full list of rankings and report can be found here. For more information on myclever™ Agency, visit their website.

Big Ideas Summit 2016: Big Idea #1 – Share, Share, Share

Tania Seary, founder of Procurious, believes that procurement needs to share – share learnings, stories, experiences, and questions – in order to change the face of the profession.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Tania believes that the power of positive words and imagery, such as Avenger, Superhero and Rockstar, combined with the business words like collaboration, can make a huge impact on the people who make decisions in business in how they see procurement.

Catch up with all the thought leadership and ours delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

If you want to find out more about Big Ideas 2016, and what we have planned for 2017, you can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today, and connect with over 15,000 like-minded procurement professionals from across the world.

Big Data Success Stories in Procurement?

At the end of our last Big Data article, we indicated that we were going to track down some Big Data success stories from the procurement function.

Big Data Success Stories

What we found, or rather what we didn’t find, was a cause for concern. A criticism of Big Data has always been that it is nothing more than the latest marketing buzzword, and that Big Data is something that everyone talks about, but very few people or organisations actually do.

We remain unconvinced by this, but based on some fairly high level research and trying to find some real world examples, it would appear that procurement either isn’t properly utilising Big data, or it isn’t actively promoting its use, and celebrating successes, externally. The latter is bad enough, but the former is worse.

A search for how Big Data is being utilised in procurement around the world returned very few real-life examples. There were a number of great case studies around how other business functions have used big data to solve business problems, but procurement solutions appeared to be fairly thin on the ground.

Rio Tinto Trucks

One of these Big Data success stories, leading towards cost savings and procurement-led wins, that appeared as a result of our search was from the Australian mining giant, Rio Tinto. The company is using Big Data to monitor the state of the roads at their mine sites.

Site roadways are a critical asset for mining organisations and, in the past, their maintenance checks have been carried out by members of the workforce. This makes for a very time consuming and costly manual process, which ultimately is still vulnerable to human error.

Rio Tinto has recently improved this process dramatically by using a data driven approach. The company’s mining trucks now carry 300-400 sensors that constantly send data back to an operations centre.

A team in this centre processes the information received to provide the business an understanding of the condition of site’s roads, feeding back on the state of degradation and any maintenance work that might be required.

This analysis is carried out at a remote location, where staff are provided notifications on when an issue is likely to occur, rather than once it already has. This saves precious time and money that would be spent on manually reviewing the road condition, while also enabling preventative maintenance to be carried out, rather than disrupting operations when a larger issue is reported.

Challenges for You

Maybe we have missed something, or our search hasn’t been focused enough to uncover more Big Data success stories in the procurement space.

There are are guaranteed to be more examples in the business world of how procurement teams have used data analytics to improve the processes and performance of their business. In light of this, Procurious lays down the gauntlet with a couple of challenges for you:

  1. If you know of a great example of a successful application of Big Data in procurement, let us know! We would love to tell your story and share your experiences, thoughts and plans with the rest of the procurement community.
  2. If you think your organisation has a great example, find out who you have to speak to and get it publicised. Making more people aware of this can position your organisation as a leader in this area, and get people talking about it too.

Comment on this article, or send us an e-mail at info@procurious.com and we’ll profile it in an upcoming article!

Mastering the True Art of Saving

Why addressing demand management, and bringing down your demand can realise more of a procurement saving than simply cutting costs.

Art of Saving

This article was written by Jon Milton, Director at Comensura.

Most of us know too well the need to tighten the purse strings occasionally in our daily lives. When doing so it’s a natural response to search for cheaper alternatives to the services and products that you’re already buying.

Think about your home energy expenditure for example. Let’s say that you shop around and find a supplier that charges 5 per cent less than you already pay. That’s a good reduction, but it’s a saving within the scale of pricing which, aside from some major shift in energy production trends, is only going to vary to a certain degree. This kind of cost-saving approach will typically only be incremental and rarely save you a dramatic amount.

However, there is an alternative way to save – by managing down your demand. Rather than the pain of switching provider, you could install a smart energy meter and manage down the demand for energy throughout your home, eliminating excessive energy used, and pinpointing when and where you need the heating on. A smarter approach like this could save you much more than 5 per cent.

Smart Saving

It’s for that reason that a cost cutting approach that goes beyond incremental savings should be applied to the corporate world too – especially in complex spend categories such as temporary labour. It’s difficult to know for sure how many workers you need, as it requires you to have an overall view of your organisation’s demand.

And once you establish a number, the sample of workers that are on offer to you vary by qualifications, experience, skills, availability, geography and more – all of which affect how much the candidate costs – making temporary recruitment a complex service category.

Think about how much money organisations could be wasting by hiring the wrong number of temporary workers, the wrong kind, or by not utilising their skills properly. Our evidence as a labour supply management specialist shows that by accurately sourcing the right skills against the organisation’s demand, you can take your cost saving on temporary staff from less than 20 per cent, to over 50 per cent.

Addressing Demand Management

Here are some steps you can take to address temporary labour demand management issues:-

1. Understand your expenditure

Temporary labour is typically ordered directly by line managers as it is under their supervision and control that workers are engaged. There’s usually a business rationale, but is it justifiable?

Additionally, the original rationale for engaging temporary labour will normally be linked to a set time period, such as three months. Any expenditure beyond this initial period should therefore be questioned as to why it is required. 

2. Challenge usage

Once you’ve established an understanding of what’s being spent on temporary labour, ask your managers to justify any anomalies. If they cannot provide sound business rationale, ask them to create an exit plan for the worker and an agreed date. When you review usage the following month, make sure that the worker has been exited.

3. Start planning your workforce

If your use of contingent labour is reactive, ‘fire fighting’ to meet business demand, it is unlikely that you will be in control of your expenditure. Try and review your ordering patterns to identify trends, as this will enable you to plan the workers’ tasks and/or help you to plan your permanent headcount’s activities better.

For example, if historically your usage of contingent workers has a spike in August when staff go on holiday, you may want to review the way that you co-ordinate leave requests, and then plan ahead where cover is required.

4. Properly evaluate needs

Feeling the pressure to hire contingent staff and then recruiting staff that are over qualified (and paid more than the work requires) is one way to rack up an unnecessarily hefty bill. By understanding your requirements fully, you can better establish the experience and type of individual required.

5. Provide a detailed specification

Once you’ve established and understood your requirements, make sure that you, or managers across your organisation communicate these requirements properly. If you want someone with certain skills and experience, be specific about what you need. It sounds simple but it is one of the most common pitfalls that we come across and can cause significant issues.

Often the role is specified (which in an applicant’s mind they could do), but the experience, demonstrable evidence of skills and attributes are not. The more detailed you are, the closer your applicants should be to the requirement. You may get fewer applications, but the quality of hire should be much better.

Saving on Category Procurement

Many organisations are already taking a sound approach to complex category procurement, and with the financial benefits they’ve seen, it’s safe to say that they don’t regret the decision. One of our customers regularly uses temporary staff, and chose us as a single platform to place orders, assign candidates, and manage its temporary staff time sheets.

Having saved £900,000 on temporary staff in 17 months, and delivered a 10 per cent cost saving overall, the customers’ smarter approach to managing temporary staff means that it can invest more funds into vital areas of the organisation.

Just as its name suggests, complex category procurement is a tricky process, particularly when looking for ways to make procurement cost-effective. But provided you look at the wider picture of your organisation, you can restructure processes and gain the benefits.

It starts with making a distinction between your complex and simple procurement, and approaching processes like temporary recruitment in a smarter way that means not just finding cheaper providers.

I Can’t Get No (Job) Satisfaction

A third of workers are in struggle town to get job satisfaction and almost one in ten say choosing the wrong career is their biggest regret in life.

satisifaction

A study commissioned by Start Profile has indicated that job satisfaction in the UK is low, with many workers wishing they were doing something entirely different with their lives.

The Satisfaction Results

 The research into job satisfaction uncovered that:

  • 39 per cent of people are happy in their career
  • 24 per cent confessed that they ‘fell into’ their profession
  • 36 per cent are unhappy at work
  • 14 per cent actively admit to seeking new job opportunities

The results are a little alarming, indicating that 61 per cent of participants are unhappy in their current jobs. The research went on to reveal that in Britain, people working in retail were the most likely to seek alternative employment opportunities, closely followed by the transport and healthcare industries.

So why is job satisfaction so hard to come by?

On an interesting note, the study revealed that nearly 1 in 10 participants stated that choosing their current career is the biggest regret in their life. A further 17 per cent wished that they had followed their dream instead, while 11 per cent are just putting up with the job.

Andy Pickles, CEO of Online Careers Service at Start, commented that, “Many of us end up in a job we don’t enjoy because of decisions we make at a young age, whether that be choosing the wrong subjects, or not having enough guidance at school.”

Interestingly, a third of respondents said their parents had provided the most influence on their careers. 9 per cent indicated that it was their teachers who inspired their career path, and 6 per cent claimed to have been influenced by a literary or TV character.

satisfaction

With Job satisfaction getting harder to achieve, is salary the key to our happiness?

The relationship between money and happiness isn’t as straightforward as we might think. Michael Page, the British based recruitment business, used data from the Cabinet Office’s Wellbeing and Policy report to plot salary against happiness of 260 occupations.

Screen Shot 2016-06-13 at 12.09.21Click here read more on Salary vs. Happiness

‘Happiness’ was measured as the mean life satisfaction rating (a score out of 10) taken from the Annual Population Survey 2011-2013. The life satisfaction ratings were grouped as followed:

  • 0 to 4, (low);
  • 5 to 6, (medium);
  • 7 to 8, (high);
  • 9 to 10, (very high).

Salary data has been sourced from the 2013 Annual Survey of Hours and Earnings.

The Happiness Curve

The happiness curve indicates the overall relationship between happiness and salary. Compared with the general trend, occupations appearing above the curve are happier than you might expect for people on their salary, and those below the curve appear less happy than you’d expect.

Who are the happiest outliers?

Screen Shot 2016-06-13 at 14.13.54

Screen Shot 2016-06-13 at 14.13.48

Happy outliers are those jobs which appear furthest above the curve. The biggest outliers are fitness instructors, who despite earning significantly less than many occupations, are actually happier. Dental nurses (who are happier then dentists) and school secretaries follow closely after fitness instructors.

When you look at the top happiest jobs, we see a huge salary range from £18k for company secretaries, to £117k for CEOs and senior officials. The clergy come out on top in terms of happiness, despite earning nearly 6 times less than CEOs and senior officials, who sit in second place.

How does Procurement stack up against job happiness and satisfaction?

According to happiness curve, the procurement profession is holding steady, with buyers, procurement officers, and purchasing managers and directors having a high happiness rating of 7.4 (the red dots on the happiness curve below).

Screen Shot 2016-06-13 at 14.31.46

Procurement Leaders highlighted a fascinating point about job satisfaction and happiness – satisfaction levels tend to fluctuate, and can be dependent on a particular day or week.

Furthermore, in the 2016 Procurement Leaders Salary Survey, which provided an insight into the earning potential of those working in roles across the procurement function, it found that there was a clear relationship between earnings and satisfaction. The survey indicated that the more you earn, the happier you tend to be.

The survey also revealed a difference between men and women. Men’s satisfaction levels increased with their earnings, whereas women’s satisfaction levels did not follow the same pattern.

Throughout the results, the conclusion is clear – job satisfaction is the dependent variable. Happily, the procurement function is positioned uniquely to offer global travel opportunities, participation in stakeholder negotiation and collaboration on an internal and external levels.

Combined with higher than average pay, and the chance to create meaningful impact across organisations, this has the potential to make procurement a very attractive career choice (and not one to regret!).

So maybe Mick Jagger was wrong after all…

Businesses Alarmed by Digital Skills Shortage

A major training effort is needed to improve digital skills, and make sure people are not left behind in the digital age, say the Institute of Directors.

Digital Skills

The Institute of Directors (IoD) have stated that a major effort is required in the UK in order to ensure that workers have the digital skills required to keep up with technological advances.

The IoD was responding to a report from the House of Commons Science and Technology Committee, which suggested that, while 90 per cent of current UK jobs required digital skills, over 12.6 million UK adults did not have the skills to allow them to perform these roles.

The report also stated that two-thirds of digital-based organisations have struggled to fill a vacancy in the past 12 months, and that 93 per cent of technology companies have seen a direct impact on commercial operations from a digital skills gap.

This is despite over 12 per cent of Computer Science graduates still being unemployed six months following graduation.

Digital Exclusion

The House of Commons report also highlighted a worrying trend in digital exclusion, with 23 per cent of the UK population lacking even basic digital skills. These include a high percentage of disabled and elderly people, as well as those without a formal education.

However, the good news on this front, is that around 4.5 million of the 12.6 million are currently in full time employment, with employers being asked to assess how to aid with digital skills education and training.

While the impact on the economy of these statistics is estimated to be in the region of £63 billion per year, in lost potential GDP, individuals also miss out on savings of £560 per year on average by not being online.

The report concludes that there is more to be done by the UK Government, both in terms of facilitating the training of digital skills, but also putting the infrastructure in place to enable the entire population to have access to the Internet.

Digital Skills Education

In April, the IoD released a major report arguing significant changes to education and life-long learning were needed to enable the UK to adapt to rapid advances in technology and automation.

The IoD’s Chairman, Lady Barbara Judge, in a piece for the Sunday Telegraph yesterday said that society needs to make “a concerted effort to upskill and reskill its population, and not leave a whole generation ill-equipped to meet the new reality”.

Seamus Nevin, Head of Employment and Skills Policy at the Institute of Directors, said of the House of Commons report: “This report shows the need for businesses to invest more in training British workers. We also must make sure tomorrow’s workforce is leaving school or university with the digital skills that employers require. Just as importantly, we must enable people already in employment to retrain or up-skill in order to meet the demands of the changing workplace.

“The IoD has called for the government to increase the use of technology in education — such as use of MOOCs (Massive Open Online Courses) — to provide training at much lower costs and improve access to learning for all. We have also suggested the creation of tax incentives to encourage and enable people at all stages of their career to return to education and learn new skills”.

“The Committee says the UK needs another three quarters of a million workers with digital skills by next year. In order to meet the immediate shortfall, businesses must be able to access workers with the right skills from abroad.”

Working from Home: Heaven or Hell?

Working from home has become the latest trend and we are talking globally here. Every day, more and more companies are allowing their employees to work from home at least once or twice a week.

Working from Home

And even more companies are looking to outsource, looking for employees who can work from home and, sometimes, from a different country. We can see these “work from home” job offers increasing every single day on the different job boards and people are really starting to get into this new groove because, let’s face it, staying at home has to be better than going to the office every day.

However, this is not true for everyone. Working from home has its pros and cons, but, in the end, it depends on each person.

Benefits and Balance

Let’s begin listing some of the pros:

  • No commuting – That alone should convince you to stay home. No traffic, no public transportation, no people on top of you during rush hour, just bliss while you walk from your room, to the office space.
  • Flexibility – of both hours and in managing that time. Most of these jobs do not necessarily have a rigid schedule you need to follow, so you are able to manage your own time, especially if you are a freelancer.
  • Less stress – Since most people working from home are their own bosses, or their bosses are nowhere near them, stress can be reduced to a minimum.
  • Fewer distractions – hence more productivity. No useless meetings, no coworkers telling you about their 13 cats or children, no running around the whole office looking for a photocopier that actually works, no wasting time with small talk, just you and your family.
  • More family time – Since you are already at home, there is a really good chance you can spend more time with your family, or your dogs, while working from home. You just need to be organised, and know how to manage your time in a productive way.

Not All Good

Even though you are now probably ready to pack up your desk and go home, you need to know that working from home also has its disadvantages:

  • Isolation – Even though some people prefer being alone, others would rather have some company during the day, but if you have a family, this is not really a problem.
  • Distractions – we might have more distractions in an office, but that does not mean there are not any at home, browsing social media becomes your biggest enemy while working from home.
  • Separating work from home – this is probably one of the worst disadvantages of working from home. You need to be able to organise your day in a way you get to spend enough time working, and enough time with your family or friends. Try to have a separate space for working – do not stay in your bedroom, find a good nook in the house to do so.
  • Working endlessly – Since you have no one controlling your hours but yourself, you might feel the need to work at all times. That is why you need to be very organised with your time and prioritising your responsibilities.

Now you are ready to consider your options and decide whether you are a good candidate to work from home or not. Welcome to the future!

Vanessa Fardi is the Leader of US, Central America, and Latin America Team for Canadian startup neuvoo. Neuvoo is a job search engine that indexes jobs available online in one unique platform, without any charge for the source of the job. It was created in 2011 and is currently available in more than 60 countries.

Meet the Procurement Young Gun Making Her Mark Globally

It’s a big deal to be charged with the task of managing a significant spend portfolio that covers the Asia-Pacific region. But this BP strategic sourcing manager takes it all in her stride. Meet Joanna Graham, winner of the 2016 Future Leader in Procurement Award.

Johanna Graham

Graham looks after procurement for the retail networks of one of the world’s largest oil and gas companies. Her role encompasses the entire BP service experience, including building new service stations and travel centres, maintaining them and supplying them with equipment. She manages a team of four people.

It’s no mean feat,  particularly given that she’s played an integral role in a number of significant strategic projects recently undertaken by BP.

Driving Procurement Value

“It’s a really exciting time to be working for BP, especially as there is a growing culture of innovation. There have been real opportunities to create value for the business as BP strengthens its competitiveness. This all creates an environment ripe with opportunity for Procurement to drive value in fresh and creative ways”.

Graham’s manager and BP’s procurement director, David Macdonald says: “Joanna exemplifies everything that’s good about the modern procurement professional. She’s got remarkable commercial acumen, negotiation planning and stakeholder management skills all brought together with a tough-minded determination. From my experience, it’s very rare to see all those attributes in the same person.”

A glowing endorsement for Graham indeed, who spends a lot of her time on sourcing activities and negotiating complex contracts.

Graham was also the procurement lead on a major process to select a joint venture partner and launch a new company to manage operations, engineering and maintenance of BP’s network of 18 fuel terminals dotted across the country. This piece of work subsequently extended to establishing a procurement function for the new company.

Broadening Experience

Prior to BP, Graham worked in procurement roles for British multinational alcoholic beverages company Diageo, owner of brands Johnnie Walker, Smirnoff and Baileys, among many others. These roles took her around the world including to China, broadening her experience significantly as she perfected cross-cultural negotiation techniques. Graham says she learnt about cultural nuances and how they impact upon sourcing, as well as navigating supply chain complexities.

“Living in China was an amazing experience both personally and professionally. I learnt so much in the time I was based there, and was lucky to work on some really exciting projects in a market that was at that time experiencing exponential growth”.

After making three international moves in less than six years, relocating to Melbourne in early 2013 was a lifestyle decision. Graham continued to work for Diageo for a period, though the time difference made working with global colleagues in the UK and US difficult.

“Since settling in Melbourne, I’ve been blown away by the strength of the Melbourne procurement community. They’re a very tight-knit community here, with networking events and Roundtable forums. Procurement professionals here are incredibly supportive, and willing to answer hot topic questions.

“In my experience, there’s just not that same sense of community in the UK due to its size, although I know that given the explosion of growth being experienced by www.procurious.com, that it’s only a matter of time before that changes.”

Strengthening Global Connections

Graham also praised the work done by The Faculty to build the procurement community in the Asia-Pacific region. Next on the agenda for Graham includes strengthening global team connections.

“There’s a lot more that we can do to make the BP team here closer. I want to leverage global team members and manage conversations to bring better value to the Asia-Pacific region. My focus is on being best in class, and I won’t stop until we get there.”

Graham is advocating the use of social network tool Yammer as a valuable way to enable procurement team members from around the world to communicate quickly.

“The intelligence that’s flowing internally through Yammer is absolutely phenomenal. I can post a request for some information for a supplier presentation, and less than 24 hours later a stack of brand collateral on a similar presentation on the other side of the world has been posted for me to access. It’s far more efficient than email.”

The Future Leader of the Year award is sponsored by American Express.

How Automation Could Shift the Negotiation Landscape

Ever wanted to know exactly what the other party in a negotiation is thinking? The growth of automation could potentially provide this and change the negotiation landscape for good.

Automation Negotiation

I read a very interesting scare story in the press recently. The claim was that the Uber smartphone app was monitoring the status of the phone’s battery and, when customers’ batteries were very low, raising the prices of their Uber rides.

For anyone interested in negotiation, this is a fascinating development; an example of automated gathering of information to develop actionable insight and take a position based on the expected influence of that information on the counter-party’s price sensitivity.

Or, to put it in plain English, guessing that a person looking for a cab with a dying phone in their hand will be that bit more desperate and price insensitive than the person who has plenty of power to find an alternative if they don’t like the Uber price.

Data Gathering & Behavioural Economics

The truth behind the story is less sensational but no less impactful. A little more research led me to the source of the story – an interview on NPR’s excellent ‘Hidden Brain‘ podcast with Keith Chen, Uber’s head of economic research.

The episode (entitled “Your Brain on Uber”) gives fascinating insight into the ways in which Uber combines unprecedented levels of wholly automated data gathering and insight with understanding of behavioural economics to assess what price they should be charging for a ride.

Uber does track your smartphone’s battery level and, while they’re adamant they won’t charge you more just because your iPhone is low on juice, they do know exactly how much more likely you are to accept their already controversial “Surge Pricing” when you’re low on power.

Uber raise prices when demand surges. So if demand temporality exceeds supply, Surge Pricing kicks in and the Uber drivers charge more for their service. Uber defend Surge Pricing by saying it provides an economic incentive for their drivers to “Surge” to where the excess demand is. This can be extremely useful where that Surge is unforeseen.

For example, a recent strike on London’s Docklands Light Railway led to me and several thousand other unfortunates to become stranded on Canary Wharf. Uber drivers all around London got the message; “Get to the Canary Wharf area. Surge Pricing is in effect”, and the message had the desired effect. Every Uber in town made money that night. Drivers who weren’t even planning on working saw the message on their phones and drove down.

To give you an idea of why they would do that, Surge Pricing can be up to 9.9 times the normal fare. That’s a powerful incentive to get yourself to the right place at the right time. Contrast this with Black Cabs’ static pricing. If the cabbies were doing ok in the West End, they weren’t going to make any extra by driving for free to Canary Wharf to pick up passengers who wouldn’t even pay a premium for their efforts.

The Buy Side

So the behavioural economics of the supply side of the deal stack up, but Uber talk less about the buy side of that trade. Yes, the opportunity to make more money out of short-term scarcity of supply will incentivise more supply, but while that imbalance persists you’re going to make a lot of money by exploiting desperation on the demand side.

For the most part I’m not minded to criticise Uber for that. If it meant a bunch of bankers and consultants had to pay more to make their table at Nobu Berkeley, I’m inclined to say “They can afford it”. And if they can’t, they can always pick up a sandwich and wait it out in a pub.

But there are people who can’t afford it. There were people on the Wharf that night who had to choose between not being there to pick their kids up from childcare and paying a week’s worth of disposable income to be there. As in all negotiation, it’s rarely about fairness. One other factor in Uber’s defence; the app makes finding people to share a ride with quite easy, which might mitigate against the impact of Surge pricing.

Optimising Yields

Uber’s Surge pricing algorithm is a particularly effective, automated negotiator. It is hugely well prepared, in the sense that it knows it’s counterparty and their motivations intimately. It is implacable and unemotional and it does the job that is intrinsic to all negotiators; it gets more for its stakeholders.

Surge pricing is a development of Yield Management, which is extremely commonplace in certain industries (travel in particular). What’s interesting in the Uber example is the innovative way that Uber is optimising yields through the use of ever more data.

As in everything else we do, automation is going to become a bigger and bigger part of negotiation. Negotiators will find more and more innovative applications for data science to equip them with information which leads to actionable insight, and some of these innovative applications will be more intrusive than others. Today it’s Uber accessing the battery meter on your smartphone, tomorrow’s risks will be far more wide reaching.

Automation in Negotiation

Ever thought how interesting it would be to hook your negotiation counterparty up to a lie-detector? You can have the next best thing today. If you could find a hacker to plug you into the data flow between your counterparty’s iWatch and their iPhone, you could watch their heart rate in real time on your phone as you negotiate with them. It’s an exaggeration, but that doesn’t mean it isn’t feasible and useful.

Recently I sat in on a meeting between a client in professional services and an Artificial Intelligence-based IT vendor. At the close of the meeting the vendor showed off his company’s personal assistant app on his smartphone, and a senior figure in my client was so impressed he immediately downloaded it from the App store and installed it on his company smartphone.

When the vendor left, I pointed out that he had probably signed away access to his email, phone records and contacts and diary to a vendor who was likely to be involved in a sourcing process, meaning that vendor could in theory see which other vendors the client was meeting, and when, and with which internal stakeholders coming along for the ride.

I’m not suggesting for one moment that the vendor in question had any intention of doing any such thing, but I can say that the client in question looked very sheepish and quickly deleted the app!

Technology constantly changes and develops but information is and always will be key to the balance of power in our negotiations. Think carefully about what you share, how you share it and who you share it with.

Don’t Risk It – Why Your Organisation Needs Supplier Pre-Qualification

Workplace accidents have other costs apart from the tragic loss of human life. They can damage your brand, cost your company millions and, if you’ve failed to mitigate a known risk, could put you behind bars.

Pre-qualification Risk
Cell tower climbing – One of the world’s deadliest jobs

It’s difficult to write about the business consequences of a workplace fatality. It can be hard to see beyond the immediate human tragedy – from shattered families to a saddening waste of life when someone is killed on the job.

But the business consequences do need to be talked about, not only due to the financial impacts, but also because it’s up to big businesses to drive the safety improvements that could one day make workplace fatalities a thing of the past.

Risk Management Expertise

Insurance companies understand this, as do the risk management experts who take a holistic view of the impacts of accidents and fatalities. Angelique Navarro, of supply chain risk management firm Avetta, gives the example of a major telecommunications organisation that suffered eleven fatalities amongst its cell tower climber contractors before it acted to pre-qualify suppliers.

“The human cost was horrific, but the business costs were high as well. There is always significant public anger when preventable deaths occur, and people generally vent their frustration at the provider at the top of the chain – even though the safety lapse may have occurred two or three tiers down the supply chain.

“Cell tower climbers potentially have the deadliest job in the United States, so it’s a prime example of an area where you need to be 100 per cent confident that your suppliers, and their suppliers, are doing the right thing. Since the telecommunications organisation has partnered with us to bring in rigorous pre-qualification, there have been zero fatalities to date.”

Highly Visible Organisations

Navarro’s point about the most visible corporation taking the blame for its suppliers’ errors is borne out by the example of the Deepwater Horizon oil spill in the Gulf of Mexico. Public anger – from placard-waving protesters to President Obama himself – was directed almost entirely at the highly-visible oil giant, BP.

We didn’t hear anywhere near as much about the operators actually responsible for the spill, namely oil-field service company Halliburton and offshore drilling contractor Transocean. Almost seven years on, BP is still suffering from the enormous brand damage that this environmental disaster incurred.

“Consumers lose trust and confidence in what your organisation can do for them”, says Navarro. “But brand and reputation damage aren’t the only negative effects. There are huge insurance payouts involved, and of course lost production time and revenue. Knowing that you work with suppliers who are completely qualified mitigates that risk.”

Avetta’s 300+ major clients, such as Coca-Cola, Shell, Verizon and John Deere, tend to come from some of the riskiest industries – oil and gas, chemicals, construction, utilities and energy, telecommunications, transport and manufacturing. This core group of more than 300 clients has approximately 50,000 suppliers over 100 countries – every one of which carriers a degree of risk.

“We vet suppliers and partner them with clients and industries across the globe”, says Navarro. “And the results speak for themselves. We’ve saved a global leader in oil and gas $6 million in one year by managing its health and safety program.

“We’ve reduced the incident rate at a chemical company by 74 per cent, saved lives at a major telecommunications company, conducted 14,000 performance reviews for a well-known construction company, and Avetta is an integral part of a major airline’s recognition as the safest airline in the world.”

Six Steps to Pre-Qualification

While every industry and business model is different, there are six key steps that can be taken to pre-qualify suppliers and reduce your risk profile. Ensure your suppliers have:

  • risk as a top agenda item for their board or senior team
  • the right employees: conduct background checks, ensure rules and regulations are being followed
  • the correct level of insurance protection with up-to-date insurance certificates
  • safety manuals in-hand and accredited training programs in place
  • prequalification for anyone coming on site
  • a consistent level of auditing multiple levels down the supply chain
  • rigorous tracking and data collection.

Navarro comments that risk-savvy procurement professionals work very closely with their organisation’s environmental health and safety teams, who have been in the risk-management space for a long time and can give some valuable advice. It’s important that we share safety learnings across industries as well. “You need to ensure your organisation is competitive”, she says, “but when it comes to safety we’re seeing major organisations come together to share best practice”.

Personal responsibility

There are executives behind bars for not acting to mitigate risks, with members of the C-level now being held personally responsible for fatalities and other accidents. “There’s little defence if you knew about a risk and didn’t act on it, or if you’ve been warned before yet let it happen again”, says Navarro. “When someone goes to work for a company, they have a reasonable expectation that they will come home safely to their family at the end of the day.”

To learn more about Avetta, visit their website. Avetta Founder John Moreland is President of Operation Underground Railroad, a non-profit organisation dedicated to rescuing children around the world who are victims of sex slavery. Click here to learn more.