All posts by Elaine Porteous

Hiring And Retention In The Digital Workplace

Hiring top talent in the age of the digital workplace is going to be a little different. How can procurement prepare for workplace 4.0?

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Workplace 4.0, or the new digital workplace, is not all about data-driven processes, smart devices and the internet of things; it’s about hiring and retaining talented employees to extract the best results from the implementation of new and advanced technologies.

Simple, repetitive work in both manufacturing and administrative industries can be automated, but we will always need human brains for hire.

The Digital Opportunity

Companies are changing what they buy. We need new suppliers from different markets; end users are putting revised requirements on the table all the time. It’s a bonus for procurement to be able to participate directly in the sourcing process and show where they can add value in this field.

For example, the traditional I.T. category has expanded to include telecommunications and packaged systems solutions and has become a high value category with multiple and complex commodities. Software, communication devices and electronic components which require a greater level of skill to manage will be sourced more frequently.

Job descriptions need to be re-written and a different approach is needed to hire and retain these skilled employees. People are increasingly being hired for fixed-term contracts and project work in these types of procurement roles rather than being offered full-time permanent jobs. Much of the work is not location-specific and does not require adherence to strict office hours. To understand how to manage these workers, we have to know what drives them at work.

What Do 4.0 Workers Want?

The job seeker wants to work for an organisation that, in no particular order:

  • Provides opportunities for ongoing learning, growth and creative challenge
  • Has an equitable reward system that recognises success
  • Allows time and location flexibility in working practices
  • Employs far-sighted leaders that support collaboration and innovation
  • Supports a team-oriented work culture based on open communication and feedback
  • Has a pro-active approach to ethics and transparency
  • Promotes sustainability and recognises the “triple bottom line” — financial, social and environmental measures of success
  • Knows how to have fun (within limits)

Attracting and Retaining a Mobile Workforce

Are employers ready to provide everything on the wish list? According to  a recent Deloitte study, today’s millennials place less value on visible, well-networked and technically-skilled leaders. Instead, they define true leaders as strategic thinkers, inspirational, personable and visionary.

Organisations that want to keep pace will not only have to upgrade technically, but work on their organisational structures, flatten hierarchies and adjust their corporate culture, even soften some maybe outdated workplace rules.

The key to success in retaining talented employees is for organisations to have the structure and policies that support the new flexible working conditions. Human Resources managers are still scratching their heads about how to devise suitable reward systems, manage worker performance and provide training, especially for part-time employees and freelancers.

Training and Up-Skilling

Traditional methods of upgrading skills such as classroom training and on-the-job coaching may not be suitable in the Workplace 4.0. Continuous lifetime learning will have to be provided as roles evolve and advances in technology demand changes in job content. There will be a greater need to provide on-line facilities for e-learning so that everyone, including remote workers, can keep pace with the developments in the profession.

Work Is Life

There is already a blurring of the boundaries between work time and leisure time. Some conflict areas are arising such as actual or perceived electronic surveillance and having to be available or on standby every waking hour.

Companies must develop strategies for a healthy balance between security, privacy and trust in their workers, applying the same level of management and administrative support to those that check into the office every day and those who work remotely.

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Procurement And Its Role in the Gig Economy

Predictions suggest that gig workers will represent a third of the workforce by 2020. What does the gig economy mean for procurement?

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The Gig Economy – an overused buzz phrase, refers to the growing number of people who work on a contingent basis. These people are not on a company’s payroll; they provide services on a consulting, freelance or temporary basis, either full-time or part-tine.

The number of people taking this route, because of a tight job market and pressures on the global economy, has risen dramatically in the past few years.

Millennials love the opportunities it brings and some over 55s are reinventing themselves in a new role. This is the new world of work. It is projected that gig workers will represent a third of the workforce by 2020.

Benefits of the gig economy for companies

Companies are struggling with rising labour costs and they need a workforce that can quickly adapt to market conditions. the benefits of a gig economy include:

  • Easily source skilled workers and experts for projects via on-line platforms or using third party staffing agencies
  • Scale their workforce up and down quickly to meet business demand
  • Increase speed of hiring and mobilisation due to simpler recruitment and faster budget approvals
  • Invest less in training and employee benefits
  • Reduce the cost of administration, office space and facilities

However, this attractive solution to the talent management headache comes with challenges for both Human Resources (HR) and Procurement.

What does it mean for the procurement function?

The procurement function is already benefitting by engaging contingent or temporary staff for its own use but has not fully explored the potential of the gig economy for filling job roles that are not repetitive or are not project-based. CPOs can ramp up their procurement savings and process efficiencies through using contingent workers more extensively.

Procurement  also has a role to play in the wider business, along with HR, to manage this growing trend. The ways of engaging with suppliers of services will change; potentially simpler contracts but using more specialist suppliers and even engaging with individuals.

What does it mean for the HR function?

Line managers will have staffing requirements and demands that HR has not experienced before, attracting and engaging a diverse workforce to satisfy their internal clients will require an adjustment in mind-set. It may help HR to engage with procurement professionals to apply tried and tested stakeholder management techniques.

  1. HR strategies for recruitment and retention will have to change.
  2. Policies for non-permanent employees must be more flexible
  3. Performance management measures such as key performance indicators (KPIs) will have to be adapted to suit the new ways of working
  4. More attention is needed to benchmarking market pay rates
  5. Additional effort is required to engage and motivate people working remotely

Risk and compliance

A bigger contingent workforce means increased risk. How do you manage to control hundreds or even thousands of workers that have access to your systems and technology?

It can become an HR nightmare to ensure compliance with policies and procedures and, at the same time, handle the administration. Specialist recruitment companies and HR service providers are relishing the opportunity and taking up the slack. They have experience in the legal and compliance issues in HR and have more capacity and energy to handle the day to day issues. Who sources and manages the outsourced services? Why, procurement of course!

Experts and advisors

There are also interesting developments among the more experienced and specialised independent consultants offering their services, especially in procurement. These people are not to be found through conventional recruitment channels, they are mobilising themselves into small professional services firms that network and collaborate to provide skilled professionals to commercial companies and government. 

Success factors for managing gig workers

  • Managing a remote and mobile workforce means providing the right collaboration tools and technology to ensure that they can honour their deliverables. Connectivity is the key: wireless links, video conferencing, internet access and suitable work spaces.
  • An organization needs to be agile enough to mobilise new teams and scale operations up or down to adapt to changing business needs. Inflexible polices, fixed locations and traditional office hours do not suit this solution.
  • A robust administration system is needed to manage a contingent workforce – external support may be the answer.

There’s no question that the benefits of the gig economy to an employer are many but it also comes with complexity.   Procurement and HR both need to play roles in this process but can they work together on the best solution?

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Treading the Fine Line Between Assertive and Aggressive

What is the difference between assertive and aggressive, and why does it matter in job interviews? 

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Assertiveness is saying what you mean without being impolite, asking for what you want without making demands. Assertive behaviour helps you to avoid being manipulated or put off easily. This style is far more likely to create a positive impression than either aggressiveness or non-assertion.

Aggressiveness means that you stand out, but not in a good way. Being overly pushy or contrary will probably irritate and alienate the interviewer. You may get what you want in the short term but it may hinder your progress later. On the other hand, passive or non-assertive behaviour can lead to a loss of your self-respect. This is where you let others get their own way and make yourself into a walkover.

It has been reported that interviewers reach a decision about an applicant within five minutes after meeting them. In this time there is little more to evaluate than how you look and speak, how you carry yourself, and how you greeted the interviewer, all clear indicators of your level of self-confidence.

Being confidently assertive helps you reduce the stress in an interview situation and to exercise more control over your working life. Here are three ways to sail through the interview assertively.

  1. Prepare well

It’s a bit like preparing for negotiations. Research your interviewer and the organisation you are intending to work for. Know how to respond to those difficult, and sometimes inane, questions, like what would you do in a conflict situation or what makes you the best candidate for this job. Remember that assertive behaviour is not specifically designed to get you what you want in every situation; in fact, it involves negotiation and compromise.

Bring your notes and don’t be afraid to use them. It makes you look well-prepared. If something of interest is mentioned about the job, pause and write it down. Be professional and be the best prepared candidate they are likely to interview.

  1. Practice your success stories

It is crucial to create a strategy for communicating your accomplishments to your interviewer in a succinct and memorable fashion.  Do you have a C.A.R?  Skilled interviewers will look for proof of your stated achievements by drilling down into the details of what you say you have accomplished.

C.A.R. stands for Challenge » Action » Result.  Write down a few gems relating to work areas that will come up in the interview. By dropping a story into the conversation you can showcase the action that you took to overcome a problem and can demonstrate to your interviewer that you achieved the desired result.

Mini-stories should be succinct and limited only to relevant details, just a few sentences. They will allow you to share examples of your past successes and let your actions speak.

  1. Polish your communication skills

Candidates demonstrate their assertiveness by the questions they ask, as well as the questions they answer. One trait employers look for is the ability to communicate effectively at all levels in an organisation. Being too tentative with senior managers is not a good sign.  People are just people, so speak with confidence and show a positive attitude but with respect.

Come prepared with questions about the job, such as expected results after the first year, where it fits into the organisation and what happened to the person who had the job before. Practice your questions as well as your answers in preparation for your interview.

Speak clearly and use good diction at a reasonable volume. Talking too quickly and loudly is not being assertive, it shows nervousness. Non-verbal cues influence an interviewer’s impression of you just as much your words do, so keep up the eye contact. Express your opinions honestly, but wisely.

What the recruiters say

Candidates show a poor level of assertiveness when they:

  • Show a lack of confidence in expressing achievements and abilities
  • Sound unsure of themselves when answering questions
  • Are overly agreeable to everything said by the interviewer
  • Trail off or mumble instead of clearly completing a thought

At the end of the interview, ask what’s next in the hiring process.  You may not get a straight answer but it is clear that you want to know.

7 Habits of Highly Effective Networkers

Your network is one of the most important things to cultivate during your career. But what habits do the best networkers have? And how can you develop them yourself?

Networking with career advancement in mind requires some planning and focus. The key to successful networking is to market yourself using resources available to you and uncover job opportunities that may otherwise be hidden.

Look at your network as a living and breathing organism that needs food and nurturing to allow it to flourish.

Your network should include anyone who can assist you with a job search or career move. It may include ex-bosses and ex-colleagues, current co-workers, HR managers in other companies and even recruiters. The best sustainable relationships involve considerable up-front investment and patience.

The best up-front investment and patience is done by developing good networking habits. So where to start?

  1. Who do you know?

Your best resource is the people you know already. Make a list of people that you feel can assist you in your career search, contact them informally and let them know you are in the market for a change. Let them know what type of role you are looking for, and if they ask for your CV, that’s fine too.

Don’t be shy to ask them who else they know that could help you. Remember the 6 degrees of separation? It has been said that there is only three degrees of separation between people in procurement.

The greatest value of your network for career advancement may be in the second degree, the contacts of your contacts.

  1. Get focused

While the first of the habits above is in progress, compile a list of specialist recruiters or HR professionals in the companies that you have identified as targets. Pick only the recruiters that have expertise in your niche, generalists may waste your time.

Make sure your CV and contact details are up-to-date. It sounds obvious but is often overlooked. Contact the identified person directly and ask them for information and advice about working for their company or for their clients.

Where you make good contacts, follow up regularly and be persistent.

  1. Keep tracking your network

Keep a journal of your networking activity. Who did you contact, when and what transpired? Schedule the next actions and continue to follow up. This is what all the best salespeople do.

When people change their job their address and other details change. When they move, drop them a note to wish them well and find out what they are up to. Their new opportunity could lead to a new opportunity for you.

  1. Be a resource

Help others with sharing your contacts, experience and knowledge before helping yourself. Many people fail at networking because it’s obvious they are just a one way street. You get back what you give, it’s called pay it forward.

If you expect to leverage people in your network, you have to be prepared for people to use you too. People will invariably return the favour if they consider you to be a good resource. If you become aware of an opportunity or an event, send it on to the appropriate people in your network.

  1. Listen carefully

Take time to find out about the person you’re talking to before showcasing your own achievements. Standing and speaking in a similar way to your colleagues – i.e. ‘matching and mirroring’ their body movements and tone of voice – is an excellent way to relax people, which helps to build rapport and establish areas of common interest.

Be interested – turn the conversation back to the other person. People love to talk about themselves! If the conversation has reached its natural end, move on, respectfully.

  1. Networking at events

Conferences, industry events and trade shows offer great opportunities to network with people from other companies in your industry or your area of functional expertise.

You can tap into an organisation through the delegates even if they are not from the area you are interested in, they can open the door to a more relevant contact, maybe a senior executive or HR manager.

As they say, just work the room.

  1. Be online, but selectively

Any information you provide online about your job background and accomplishments should be consistent across social media.  Don’t assume a prospective employer or recruiter will only be checking you out on LinkedIn.

You can be rejected outright before you get asked for your CV if you are seen to be unprofessional in any way such as misrepresenting your achievements or qualifications. Any inability to communicate clearly in writing will also lose you opportunities.

When networking online, make sure that you know what you want and be specific in any request to your contacts.

Remember, it’s not all about you! Develop these habits, and keep track of your network, and it should set you on the road to success.

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Is Hybrid Best? The Centralised vs Decentralised Debate

Centralised, decentralised and hybrid models – is there actually a ‘best’ way to organise procurement departments. The debate rages on.

Recent studies, and accepted wisdom, have continued to confirm the trend towards a centre-led procurement model. Both fully centralised or decentralised procurement operating models have their downsides, and that a middle (or hybrid) road is preferable.

Centralised organisations unfortunately:

  • do not always understand regional and local supply markets and consumption patterns.
  • run the risk of maverick buying outside contracts.
  • are not suited to managing some indirect commodities.

In decentralised organisations, there is often:

  • inability to leverage corporate spend.
  • poor coordination of information and best practice sharing.
  • uneven supplier performance.
  • higher procurement operating costs.

The Centre-Led Model

The best centre-led procurement organisations concentrate on defining strategy and policy, as well as applying best practices to both direct and indirect procurement. They mostly employ a category management structure, which supports the roll out of their directives to business unit and regional level.

In the Aberdeen Group’s recent report, they noted that centre-led companies reported more spend under management than others. This was twice more than companies with a decentralised structure, and nearly 20 per cent more spend under management than companies with a centralised structure.

“Organisations with centre-led procurement considerably outperform their non-centre led counterparts, in both spend under management and supply cost reductions” (Aberdeen Group 2015).  

Leading from the Centre – Levi Strauss  

The Director of global indirect procurement at Levi Strauss, Celeste Smith, said recently that the while the company wants to create a centre-led global function, there should be good regional support.

“Success for me looks like centre-led, a global approach to managing indirect – not necessarily with global suppliers – but that we have a very consistent and disciplined approach to procurement globally.

“Centre-led means that everyone is on the same page in terms of methodology and approach. But I think it’s very important to have the same regional support.”

Levi Strauss has a global spend of around $1.8 billion (£1.09 billion), of which it wants to manage $1.2 billion (£723 million).

Leverage Central Knowledge – Fluor

Fluor is a world-leading engineering and construction firm. It also offer clients procurement and project management services for capital projects.

Fluor uses a centre-led procurement model, leveraging international procurement expertise and market knowledge, with the aim of providing the best value for their clients’ capital projects.

Their procurement organisation manages an annual global spend of more than $16 billion. This is done through consistent execution strategies across their worldwide network of 1,900 procurement professionals.

For example, Fluor’s local operation in South Africa uses a global logistics planning strategy to help clients overcome procurement execution challenges unique to operating in Africa.

Stakeholder Challenges for Hybrid

A hybrid model seems to combine the advantages of a centralised structure and decentralised execution with minimal downside. So why isn’t everyone doing it?

It’s not that easy. Whatever the model, the satisfaction of stakeholders and end users is paramount. The best model seems to be one that delivers results through open lines of two-way communication, and processes that are flexible enough to take into account regional and cultural differences.

One way to generate higher levels of stakeholder support is to ensure that the global category management structure is replicated in decentralised business units or regions, probably on a more limited scale.

It has been suggested that this type of structure encourages agility and innovation, as well as better compliance to contracts.

The Wheel Turns     

Procurement Leaders’ recent survey on procurement operating models found that no one single model can sustain the expected benefits indefinitely.

They report that savings delivered from a given procurement operating model can erode over time as behaviours become ossified. Incremental savings thus become more and more difficult to achieve. The model just gets tired.

A structural change may be needed to allow procurement to deliver value in new ways, and enable benefits to be sustained or even improved.

Procurement Leaders say that procurement organisations must tackle a wide range of hindrances that arise from change, in order to maximise the benefits from a change in operating model.

Their research also found that the greatest factor preventing transition in procurement is its own lack of change management capabilities.

As a procurement organisation matures, it is likely that it will revise and adjust its hybrid or centre-led structure, in order to stay aligned to corporate objectives and continues to deliver value.

Is Indirect Procurement Really So Complex?

You could be forgiven for thinking the management of indirect procurement is akin to rocket science. Is it really so complex?

Sourcing and contracting indirect goods and services in categories like I.T., consulting, HR and travel is important to keep the business running.

You could be forgiven for thinking that the procurement of such services is akin to rocket science, especially if you listen to those many external “solution providers” whose income stream may depend on you.

It may be tempting to consider outsourcing some or all of the management of your indirect spend. In many organisations it is often poorly recorded, loosely managed, widely dispersed, and, generally, messy or neglected. But first let’s consider the issues, and how this indirect spend could be managed internally.

Direct and Indirect Procurement 

Direct (or core) procurement traditionally focuses mainly on the sourcing of goods, and some allied services, that are used in the manufacturing or production of goods for sale. These items are usually clearly specified, often with a pre-defined supplier base.

Indirect procurement is different. It is essentially the sourcing of services (and maybe some goods) to support day-to-day operations.

The indirect spend may make up around 30 per cent of all third-party spend, but there are significantly more suppliers and the buying community is more decentralised. Add to that, a higher potential for maverick spend and sensitive stakeholders, and there is the added complexity.

What is happening now is that the percentage of indirect spend-under-management is growing in many companies. Difficult areas such as advertising, insurance and consulting fees are slowly being brought into the category structure.

It is often said that indirect procurement is not strategic. However, some high spend categories, such as sponsorship and employee benefits, could definitely qualify.

Key issues in Indirect Procurement
  • Buying decisions are often dispersed throughout an organisation into diverse and competing business units or locations.
  • Stakeholders can, and will, resist any changes on which they have not been consulted.
  • Managing an indirect category such as marketing services or consulting requires assembling the historical data and providing reliable spend information. Often transactions are miscoded – sometimes on purpose – which creates the wrong picture.
  • Suppliers can only be a resource for continuous improvement if the communication channels are open in both directions.
Strategies for Indirect Procurement  

The first step in a category strategy should be to aggregate the spend and understand it and its sub-categories. Next, present this information, in a digestible form, to stakeholders to elicit their input.

It is never too early to talk to stakeholders about the data or the proposed Scope of Work. After the Request for Proposal has been issued, it is too late.

Two of the success criteria in indirect procurement are a robust Scope of Work and a detailed Service Level Agreement with workable measurements.  Without these, any contract can fail.    

Indirect Procurement as a Career Choice

The requisite technical skills for individual success in procurement have been well-documented. One of the key skills of the future is to be numerate and have analytical ability, but not necessarily be a mathematician.

Managing indirect categories requires a different skill set from that which is needed for working in direct procurement. Behavioural skills, which can also be acquired, come into the spotlight here.

Particularly important is the need to collaborate with stakeholders. An aspiring category manager needs Influencing and listening skills, empathy, and the ability to take the initiative as well as being decisive when the need arises.

Indirect categories (when the tail-end spend is excluded) do not easily lend themselves to automation or the use of the e-procurement tools, such as e-catalogues or vendor management systems.

This creates a dilemma for external service providers who have these tools, but readily admit that there are nuances and emotions at play that may be beyond their control.

The organisational culture and landscape on the indirect side has many nuances that do not exist on the direct side. Procurement executives will therefore need to traverse the waters of indirect spend with unique strategies to ensure success.

Indirect procurement is all about building trust with stakeholders and suppliers to ensure continuity of supply and smooth operations.

Just try to procure the same make and model of smartphone for everyone, or change the catering company without considering end-users.

Leadership & Chicken – Reflections on SAPICS 2016

Visibility, leadership and SRM in chicken sourcing – highlights from the 38th SAPICS Conference in South Africa.

Earlier this month, I attend the 38th Annual SAPICS Conference, held in Sun City, South Africa. With the theme this year of “A Concert of Coordination”, the conference focused on bringing supply chain professionals together to network, and to discuss topics and access resources relevant to the supply chain profession.

A number of high-profile individuals and organisations graced the speaker list for 2016, far too many to see in 3 days, let alone cover off in a post-conference article! However, I have picked out three major themes and points that I took away from the conference.

1. Gaps in Supply Chain Visibility

Lora Cecere, the renowned Supply Chain Shaman, was in South Africa this month to share her US survey results and some views on the wide range of topics at the SAPICS Conference.

Of particular interest to the procurement community was her take on the challenges in two of the main identified areas of pain: supply chain visibility, and problems in talent management; the latter being that all-time favourite topic of speakers that has no clear solution.

When comparing the importance of visibility of information on first tier material suppliers vs. their actual performance, respondents acknowledged that there was a big gap between importance (83 per cent) and performance (38 per cent). Almost all respondents (96 per cent) identified that there was also a similar gap in visibility into transportation and logistics networks.

Supply Chain Insight

In some cultures, a shaman is believed to be able to use magic to cure sick people, to control future events, and more. Since Lora Cecere is seen as a shaman, we could look to Supply Chain Insights for help when trying to work out why visibility into first tier material suppliers is such a challenge.

What is also interesting from the research, is that respondents did not identify much of a gap between the importance of visibility and actual performance in second and third tier suppliers. Could that really be the case in other markets?

2. Leadership – a hundred years ago

An interesting parallel was drawn by a speaker, Kate Stubbs of Barloworld Logistics, about styles of leadership 100 years and today.

She was reporting back on the annual study, supplychainchangeforesight 2016which was undertaken in conjunction with Frost and Sullivan. She considered the leadership style of Sir Ernest Shackleton, the 1920’s polar explorer, with the traits and approach required of current supply chain leadership.  Shackleton was:

  • a leader that could create order from chaos.
  • one who had to adapt and change to suit his rapidly changing circumstances.
  • optimistic and had a people-centred approach to success.
  • able to reconsider his path and redirect his goals when he hit serious snags.

Shackleton

Sound familiar?  We often have to change direction mid-stream track due to circumstances, often because of events beyond our control.  Constantly redefining our plan has become the norm.

How much has changed in 100 years?  Men (and women) wanted for hazardous unknown journey, that part’s definitely true. People hope for honour and recognition in the event of success, but it’s not always delivered.

3. Chicken and chips, anyone? Nando’s supply chain

Perinaise

A category manager in the casual dining restaurant business (a more polite term than fast food), has a very different life to the rest of us.  Sourcing electrical parts or software licences is not half as exciting as negotiating for containers of African bird’s eye chillies from Southern Africa, or for the manufacture of bottles of Perinaise.

Nando’s supply chain, although directed from its HQ in Johannesburg, has staff in many of the 30 countries it trades in. Linda Reddy, Supply Chain Director, says that one of their main areas of focus is supplier relationship management, with a major emphasis on continuous improvement. That’s quite important when you have to get fresh-not-frozen chickens from factory to table in less than 8 days.

Next time you are in Nando’s, take time to view the art while you are considering how your hot sauce got to meet your half-chicken. 

References to Powerpoint Presentations at SAPICS:

Lora Cecere: 15 Years Forward: 15 Years Back :  Supply Chain 2030

Kate Stubbs : “supplychainforesight 2016”. Barloworld Logistics.

How South Africa is Building Engagement with Small Business

A thriving small business community is a sign of a prosperous economy. In South Africa, a new network has been launched to help build engagement with these enterprises.

Procurement on-line portals that efficiently link prospective buyers with qualified small enterprises are the next big thing.

Technology is now available that allows us to quickly and smartly facilitate business transactions for mutual benefit, why are we not doing more to support Small, Medium and Micro Enterprises (SMMEs)? Central and local government departments spend billions; some of this procurement expenditure can be channelled in to the development of the SMME sector.

Some ‘portals’ exist primarily to deliver advice and guidance, that’s useful but it’s not enough.

Why is developing SMMEs important?

A thriving and growing small business community is a sign of a healthy economy. One main objective across Africa is to stimulate economic growth and create jobs; this is one way to do it.

Public sector bodies in South Africa have been urged to ensure their purchasing strategies “explicitly recognise the significant benefits of procuring from local small businesses”. The Minister in charge of small business development said that small businesses have been “historically shut out as a result of bureaucratic and costly procurement practices which favoured big suppliers”.

Developing the SMME sector solves many challenges for governments and for companies that have diversity or enterprise development targets.

South Africa’s initiative

South Africa has a fully functioning SMME solution that has now been in operation for five years. The Supply Chain Network (SCN) came about by necessity. Organisations are required by government to assist in creating jobs for the lesser skilled and unemployed sectors of the population. This portal is made affordable by the support of big businesses and especially by one of the major banks.

It works for the seller by…

  • Providing a profile page with all key information about the seller
  • Showing the seller’s credentials, certifications and trade references
  • Providing a platform for advertising goods and services using an e-catalogue with images

SCN provides a verification service that allows the approved seller to get a priority listing in search results.  Sellers with a high profile score have a better chance of attracting bigger and better clients.

A great feature is easy access to tenders. Available tenders are interrogated using a powerful search facility which all allows for setting up alerts using key words. Tenders can be accessed in summary form or in full detail, saving time and effort for the seller.  

Better still, it works for the buyer…

  • SCN manages vendor certification renewals so that all credentials are current, including Tax Clearance and Company Registration
  • Buyers can use verified information to update their master vendor files
  • Due diligence is simplified, as buyers can rely on the integrity of the profile information
  • The search function uses standard industry terminology (UNSPSC) and smart filters

The SCN system also provides an eRFQ facility with built-in rules. Suppliers can upload all their attachments electronically as part of the response. It is an on-line paperless solution that includes automatic notification to suppliers of any changes, updates, withdrawal, regrets and awards. Particularly useful is the full audit trail on all sourcing activity.

Supply Chain Network in South Africa is a low-cost solution that aims to promote the objectives of growing a healthy small business community. Why can’t it work in other emerging markets?

You can find out all you need to know about the Supply Chain Network on its website.

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?

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?

Curbing Public Procurement Fraud in Africa

Are we making any progress curbing public procurement fraud in Africa?  The consensus seems to be very little, although there are pockets of not quite excellence, but at least some promise.

The Anti-corruption Agencies

10 years ago the World Bank reviewed the activities of anti-corruption agencies active in Africa and came to the conclusion that they were not particularly effective, despite some significant funding.  They concluded that African governments, in general:

  • lack the know-how or the political will to control corruption and procurement fraud
  • want just to be seen to be taking some action, however ineffectual it is in practice

In reality, if a study was undertaken today, the results would be about the same. This is despite efforts by the Organisation for Economic Cooperation and Development (OECD), Transparency International (TI) and Corruption Watch and others.

TI’s arm in Ghana, GII, says that their “vision is to make Ghana a corruption-free country in all spheres of human endeavour, where people and institutions act with integrity, accountability and transparency”.  Worthy sentiments, but is it just rhetoric?

The OECD tells us that “public procurement remains the government activity most vulnerable to waste, fraud and corruption due to the size of the financial flows involved”.  On average, 12-15 per cent of a country’s GDP is spent on public procurement. Some of this is wasted. However, there are no reliable statistics of how much money is lost to procurement fraud and corruption across Africa, as much of it goes unreported.

Kenya’s Procurement Woes

Despite an active but bureaucratic watchdog in Kenya: The Public Procurement Oversight Authority (PPOA), public procurement fraud and collusion in tenders is alive and well, and some say endemic. Many of the reported high value failures are in transport and logistics including railways and ports, and particularly in education.

PPOA has as its tag line “transforming procurement”. It has a laundry list of tender appeals awaiting attention and looks like it is losing the battle. Ask Haier Electrical or Hewlett Packard who together won a case against the Ministry of Education, Science and Technology in 2014 involving a project of more than US$400 million.

PwC says in a newly published report that one in every three Kenyan business leaders reported procurement-related fraud in the past two years, making it the most common type of economic crime in the country. The report faults Kenya’s procurement processes as not being robust enough to guarantee integrity at all levels.

The Politics of Preference – Women, Youth and Local Sourcing 

There is growing disquiet about preferential procurement rules and guidelines like those legislated in countries such as Nigeria.  The Nigerian government wants to help the local economy by developing emerging businesses, but new legislation on local sourcing may have the opposite effect if it is prescriptive.  Will “Made in Nigeria” allow suppliers to charge more for inferior products and services and will government buyers somehow be tempted to offer guarantees – for a fee or other benefit?

Initiatives being taken to tackle the scourge

The World Bank’s new procurement framework will allow it to better respond to the needs of client countries in Africa, while preserving robust procurement standards throughout Bank-supported projects. Since they have a portfolio of about US$42 billion in over 1,800 projects in 172 countries, this is significant.

There’s also some good news coming out of South Africa.  The Chief Procurement Officer, Kenneth Brown, has kept a low profile. Behind the scenes, his team are quietly reviewing all tenders over R10m for compliance to the rules and are looking for opportunities for cost savings.

On an expenditure of R500 billion annually, its target of savings of R25 billion looks achievable.

The State’s fragmented spending practices are now being centralised to reduce waste and get more leverage through technology. They have set their sights on some key categories: travel at R10 billion per annum, ICT, construction and leases.

The new online eTenders portal launches in April 2016 with a modest maintenance cost of just R16,000 a month. It introduces much needed transparency and will save a staggering R400 million a year that the government spends on advertising the tenders in newspapers.