All posts by Euan Granger

3 Top Tips For Dealing With Legacy Contracts

How sure are you that all your current contracts are still delivering their intended value? Or is the legacy beginning to hold you back?

In the third article in a series charting the key issues in public sector procurement, we examine the challenge of delivering value in long-term contracts.

As we have discussed in previous articles, time is a precious commodity in public sector procurement. The time taken to tender, retender or extend contracts needs to be factored in when making an initial decision on contract length.

Make the contract too short and there’s less scope for realising the value that you have worked into it, or very little incentive for suppliers to invest in the relationship (and potentially offer something of more value, for example, innovative solutions).

However, a contract that is too long has just as many issues. There’s more time for relationships to sour and more time away from the market where new solutions and technology might be providing better services and efficiencies. Finally it’s more time locked into a contract where costs are only likely to be on the rise.

There’s no right or wrong answer when it comes to contract length. A goods contract might benefit from a shorter term as it means new products or solutions can be assessed as the market develops them. There’s also the argument that for less complex goods a strong business relationship isn’t as critical, particularly if you aren’t going to do business with them again in the future.

That’s not to say certain products shouldn’t have longer contracts instead. Where there is high value, or a high level of complexity, a longer contract term may be necessary to ensure continuity of supply, or ensure the stability of a supplier.

A service contract might be better served with a longer contract. There’s more time for both parties to develop their relationship and gives the supplier time to understand the service without looking over their shoulder from Day 1.

But what of the contracts that professionals have no say over their length?

The Legacy Issue

It’s inevitable with the churn of professionals that at some point you will end up in a role where there are contracts that have been put in place by colleagues who have moved to a new role, or left the organisation entirely.

And you’ll certainly not be alone in thinking, “why have they done this?” when you get your hands on the contract specifics. You’ll probably even end up attributing issues on the contract to PBE (Previous Buyer Error) – even if you swore you’d never be one of those people!

In the public sector, the majority of these contracts will be in place for 3-5 years, potentially with an extension period should it be applicable for the contract, good or service. The extension could be up to another two years, meaning there’s a long time between procurement exercises for the product in question.

A hangover from previous public sector practice in procurement is perhaps the willingness to set contract length at 3 years and rarely changing. This might be the norm for frameworks (limited to 4 years at its longest length anyway), but as we have mentioned, there’s scope to make the length shorter where appropriate.

Another consideration for legacy contracts come in the information that is attached to them. It’s likely that, unless it’s been refreshed, most of the information will be out of date. Without the up to date information, you may not be able to see the full picture and it’s something that will have to be done as a priority when it comes to any extension or retender.

Finally, you should always be aware of what Terms & Conditions the contract was issued with and if it complies with all current regulations and legislation. Compliance is key here, so you shouldn’t hesitate to speak to your Legal team. It’s also something to remember when setting up new contracts that they account for all legislation, both current and potentially to come into force during the contract term.

From Legacy to Cutting-Edge

There’s no getting away from the legacy issue. You might put in a terrific, watertight contract now, but in 3-5 years’ time, it could be one of those legacy contracts your colleagues are wrangling with! If there’s no getting away from it then, what is there to do?

Never think you can’t put your own mark on a contract, even if it’s already up and running. Even a contract that’s over halfway through still has another half where you can contract manage and add value, all the while looking at options for the new contract.

So what are my top tips for dealing with the legacy issue? I’ve put some below:

1. It’s never too late to start contract management

Ultimately, preserving or releasing value in a contract comes down to the quality of the contract management. And it’s never too late to do some good contract management. If you work on the basis of any value is good value then even half a contract is enough time to make sure that your organisation is getting something out of this.

2. Use the time to build relationships

If you’re struggling to release any value from a legacy contract, use the remaining time to build up good relationships with the incumbent supplier. You’ll get to know their business and anything you learn can help when it comes to putting together new requirements for the next contract. At the very worst, you’ll get a chance to assess the whole market and see your other supply options!

3. Prepare for the new contract

Don’t leave it too late to start working on the new iteration of the contract (or retender). You might have planned for a good exit, but you need to be sure that any new contract going to do a better job. Use the time wisely and make sure that you put any lessons learned into practice.

Late, Late For An Important Date? Why Time Isn’t On Public Procurement’s Side

Time is fleeting and never more so when a contract deadline is looming large. How can public sector procurement professionals use their time more effectively?

In the second in a series of articles on the challenges facing public sector procurement, we examine the issue of time and why it must be managed better.

Before we begin, I have a riddle for you:

This thing all things devours;

Birds, beasts, trees, flowers;

Gnaws iron, bites steel;

Grinds hard stones to meal;

Slays kings, ruins town,

And beats high mountain down

Extract from ‘The Hobbit’ by J.R.R. Tolkien, 1937

Those of you familiar with the great J.R.R. Tolkien will recognise this as one of Gollum’s riddle to Bilbo Baggins in ‘The Hobbit’. The answer? Time, of course.

Time is the one thing none of us can avoid and all wish we had more of. How many times have you wished you had an extra hour before a work deadline? And that’s before we even consider more time at the weekend, or an extra hour in bed!

For public sector procurement professionals, it frequently feels like time is not on our side. An increasing volume of ‘Business as Usual’ work, combined with new ‘one-off’ projects, means it can feel like a juggling act to meet all the relevant deadlines.

In the public sector, these deadlines can sometimes mean the difference between the delivery or not of critical goods or services across a city.

It often feels like we’re like the White Rabbit from Alice in Wonderland, constantly running late for an important date. And the more time pressure builds, the more likely it is that mistakes will be made, costing even more time in the long run.

Typos in letters, ambiguity in specifications and issues with evaluation or award criteria – they all have the power to send us back to the drawing board. Getting it right first time is critical as the more time spent doing tendering, the less time there is to actually manage contracts.

When it comes to creating the value and savings required in the public sector, contract management is key. After all, you can agree savings in a pre-contract phase, but without effective contract management, organisations will typically lose 50 per cent of this value in the first year of the contract.

And that is why we need to manage our time more effectively.

More Haste, Less Speed

Before looking at how time might be managed more effectively, it’s worth examining why procurement in the public sector can be so time consuming.

Public sector procurement is a very bureaucratic, very legalistic, very risky – for both buyers and suppliers – and, ultimately, very slow process.

For procurement exercises above the EU Procurement thresholds, and requiring advertising through OJEU (Official Journal of the European Union), it’s not unusual for the process to take up to nine months (and frequently even longer) from identification of need to the award of a contract.

And while that may seem like a complete anachronism to those of you in the private sector (and believe me, it did when I first started in the public sector), there are good reasons for this. The process is aimed at promoting competition and procedural conformity, not necessarily value for money, though this is what most public procurement professionals are aiming for.

Greater competition allows for more open and transparent tendering and contracts, where SMEs, local suppliers and parties that may not ordinarily have access to these markets can get involved. A wider supply base may lead to new ideas, innovations and process improvements while at the same time potentially being a boon to the local economy.

The bulk of this time is taken creating a set of fully auditable documents for any procurement exercise above these thresholds. This includes a sourcing strategy, outlining key decisions and the reasons for them, detailed tender documents, including specifications, selection and award criteria, and a fully tracked evaluation process.

The type of route to market will, of course, be determined by the product, service or public works being procured. The detail of all of these routes is too much to go into here, but you can find a lot of useful information on ‘The Procurement Journey’, if you want to understand the end-to-end process.

There is limited scope for reducing the time taken to complete these processes, so where can time be saved to allow for more contract management? This is where good planning comes in.

Proactive Procurement

Procurement could be accused of operating in a reactive manner and it’s no different in the public sector. However, this can often be attributed to the nature of procurement’s place in the organisation and the changing nature of how organisations operate and procure goods and services.

The increasing number of ‘one-off’ projects, on top of the ‘Business as Usual’ work, can make even the best procurement functions feel like there is a never-ending volume of tenders to complete (referred to as the “tender sausage machine” where I work).

Moving from a reactive to proactive approach can help in this and crucially buy more time for that all important contract management. There are three suggestions below to help make this work, but it’s important to understand the caveats on these at the same time.

Making this a reality takes not only input from procurement, but from all its stakeholders and end users across the organisation. Procurement needs to be seen as a key strategic function and help mould the strategic direction that underpins procurement requirements.

That said, there’s still plenty scope for procurement to make changes and help things run that bit smoother.

  1. Proper Planning Prevents Poor Performance

This is very simple to say, but very hard to do. Get all your contract details in one place, including the dates of when they need to be retendered or procured and plan accordingly. Have quality project plans available to help understand when the procurement process needs to start and the key dates involved. Most importantly, share these dates with your stakeholders and then stick to them.

  1. Don’t “Boil the Ocean”

Once you know the procurement requirements, assess the market to see if other organisations or Local Authorities are doing the same or have been there before. Ask for documentation – my experience is that people are only too willing to share if they know it will be reciprocated in the future.

Also check out organisations like Scotland Excel, Yorkshire Purchasing Organisation (YPO) and Crown Commercial Services (CCS) for frameworks. If the framework is applicable, that’s half the work done for you and a major time saver.

  1. Kick-off Means Buy In

A kick-off meeting is a good way to get all the appropriate people in the room to discuss the requirements of the contracts and make sure that all the vital details are captured. Getting this done up front not only means you are better prepared, but you also get buy in from stakeholders who feel involved and will be better placed to help push the project along.

These suggestions by no means cover everything that can and probably should be done to make the procurement process more efficient. However, from the point of view of marginal gains, making these adjustments should help increase procurement efficiency and free up time to manage the contracts you’ve put so much effort into creating in the first place.

Public Sector Procurement Talent: Fact V Fiction

The search is on for top talent to fill an increasing number of procurement roles. But is the public sector being beaten to the finish line by its private sector counterparts?

In the first in a series of articles charting the key issues facing public sector procurement, we examine the facts and fictions of the public and private sector battle for talent.

Talent and recruitment – just two of the key issues for CPOs and Heads of Procurement around the world. As the role of procurement expands, managers need to know their teams have the right skills for the job. For many, this means searching for the profession’s top talent, the high achievers. The superstars.

But identification is only half the battle. Actually attracting these stars to your team is another challenge entirely. And this is where many believe that the public sector loses out to its private sector counterpart. But how much truth is there in this?

The Facts

According to the CIPS/Hays Procurement Salary Guide 2017, 70 per cent of managers said they were planning to recruit within the next 12 months. However, 51 per cent also admitted that they faced challenges in finding the right talent in the face of a skills shortage and budget constraints.

Let’s set budgets aside for a moment. There is a distinct set of skills required for success in public sector procurement. Sure basic skills are all transferrable, but public sector professionals need to adapt to a very different, highly political, environment.

Add in the requirement to drive new ideas, use specific IT systems, and operate within the bounds of EU Procurement Regulations and you’re starting to look at quite a bespoke skill set.

Speaking from experience, the majority of these skills can be learned or trained. But with budgets (that word again!) tight and time short, training is becoming an increasingly unaffordable luxury for many in the public sector.

This means public sector hiring managers are chasing the white rabbit – those professionals with all these skills, able to hit the ground running on Day 1.

But in a sellers’ market where there are an increasing number of procurement jobs to be filled, professionals with these skills are in demand. And this comes at a price.

All About the Money, Money?

Money isn’t everything and it can’t buy you happiness (according to Rousseau at least), but it is a key driver for procurement professionals when they look for new roles.

According to the CIPS/Hays Guide, 72 per cent of respondents highlighted salary as the key factor for a new role. This is compared to 41 per cent and 36 per cent for flexible working and non-salary benefits respectively.

The money argument seems to be borne out by the average salaries across the sectors in the UK:

  • Private Sector – £46,825
  • Public Sector – £40,915
  • Charity Sector – £40,379

And the trend continues when the average salaries are broken down by seniority within the public and privates sectors (see below):

The picture doesn’t get any better for the public sector when bonuses are taken into account either. In 2017, an average of 50 per cent of professionals received a bonus in the private sector, versus only 13 per cent in the public sector.

However, the public sector may have the beating of the private sector in one facet – non-financial benefits. Over two-thirds (67 per cent) of public sector professionals have access to flexible working (versus 36 per cent of the private sector), along with greater provision for support for study and career development.

The Permanent vs. Temporary Debate

The other option open to hiring managers is bringing in interim or contract workers. This has proven to be a good way of providing additional resources in a flexible manner for specific projects or time periods. The CIPS/Hays Guide states that 61 per cent of public sector organisations will recruit in this way.

While this suggests that there is an attraction for some professionals in contracting, many looking for new roles want the security and safety of a permanent contract. So how much truth is there in the belief that the public sector isn’t able to offer this type of contract?

While it was certainly more fact than fiction when it came to salaries, there is certainly less evidence for the permanent-temporary contract question. A search across UK job sites for public sector procurement roles shows that actually there are almost twice as many permanent roles advertised as temporary, contractor or interim roles.

So taking this factor out of the equation, what solutions are available to the public sector to meet the recruitment challenge?

Redressing the Balance

Unfortunately, there is no easy answer. Budget restraints make it nearly impossible to compete on salaries, bonuses and other financial benefits. However, it’s not all doom and gloom. There is plenty to offer besides salaries that make jobs attractive.

The CIPS/Hays Guide shows that the majority of public sector organisations are making flexible working available to their employees. Having contracts that are as flexible as possible only increases their attractiveness at a time where people (and many organisations) are looking to step away from the traditional desk-bound, 9-5 roles.

Flexible working hours, flexi-time, working from home and contracts allowing greater work-life balance are just some of the non-financial benefits job seekers will look for.

The second area is the attractiveness of the roles. This might seem like a counter-intuitive argument given what’s been said before, but this doesn’t relate to money, contracts, or working hours.

A common (mis)conception of the public sector is that it isn’t as interesting. The truth is far removed from this. From roles that allow procurement professionals to directly impact their cities for the better, to working on major, one-off projects – think the European Championships in Glasgow in 2018, or the Commonwealth Games in Birmingham in 2022.

And these are just a couple of highlights in the vast array of fascinating projects in the areas of sustainability, technology and services only available in the public sector.

Raising the profile of these roles or projects and their interesting, challenging and diverse nature can only help to attract the superstars.

So here’s my challenge to you in the public sector. What are you going to do to help?

Has Technology Tipped the Scales on Your Work-Life Balance?

Information on demand. Constant connectivity. Global coverage. Are these a boon to our working lives? Or can there be too much of a good thing?

We live in a world of unprecedented connectivity. No matter where we are in the world, we have a host of information at our fingertips. Which is great when it comes to accessing vital data on the go, but could be having a detrimental impact on our personal lives.

The benefits of being constantly connected are easy to see. But it’s leading to a situation where people struggle to switch off when they’re not in the office. Checking emails on the way to work, or before going to sleep. Doing that “last bit of work” on the train home. Catching up on work over the weekend, or even the night before returning to work following a holiday.

Work phones and laptops, internet-based document storage and the increase in working from home leaves that bit of temptation to do a little bit more. After all, if you clear some of those emails tonight, you can start afresh tomorrow. Right?

Wrong! If this sounds familiar to you (and yes, there are plenty people in this position) then you should think hard about what you’re doing. No-one minds working beyond contract hours or staying a bit later when there’s urgent work to finish. But why, when there aren’t pressing deadlines, do we voluntarily give up our free time, weekends, or even our holidays to do extra work?

At best you get a reputation for not being able to switch off. At worst, it can impact on your personal life, and could even create an expectation that you’ll be on hand to respond to any query, no matter when it’s been sent.

Right to Disconnect?

Some countries are helping workers rebalance their scales. At the end of 2016, a new law was introduced in France, which meant that organisations had to give employees a “right to disconnect”. Companies had to work with employees to establish a basis for out-of-hours or home working, or make clear what expectations there were of workers.

In other European countries, companies are allowing employees to delete any emails that are sent to them while they are on holiday. Given the choice of a clean slate on your return to the office, it might also help remove temptation to access your inbox in your own time.

The Millennial generation is the first to really confront this issue (though this doesn’t mean other generations aren’t failing foul of it too). However, it’s hard to diagnose an issue until you know what it looks like. Author and motivational speaker Simon Sinek sheds light on some of the key points in this video.

(The key part is at 3:15, but if you have time, then it’s worth watching the whole video.)

So how do you change these habits and start to regain control of your work-life balance? Here are some top tips:

  1. The Phone. Down.

It might not always be possible, but it’s time to create some space between you and your phone. It doesn’t need to be all the time, but having no-go areas in your home, or certain times when your phone is off is a good place to start.

If you have a dedicated work mobile, then leave it somewhere that you’ll just pick it up as you leave the house.

Why not start by not having your phone next to your bed overnight? This will help to remove the temptation to check emails first thing in the morning or last thing at night. It might help you sleep better and start your day off on the right foot.

  1. Time Off is Your Time

You’ve earned the right to some downtime at the weekend. You’re entitled to your annual leave, and to enjoy it as time away from the office. And you’re entitled to be left in peace outside of working hours. Don’t voluntarily give this time up checking your email or finishing work.

It’s not always going to be cut and dried. But try to set yourself a time to stop working each evening, particularly on a Friday. This is particularly important if you work from home. Try to create a separation between work and home.

After all, does it really matter if that email is sent now, or document completed, when no-one else is going to see it until Monday anyway? Your brain will thank you for it (and your family/friends/loved ones probably will too!).

  1. Stop and Smell the Roses

Life doesn’t have to be lived in front of a computer screen or glued to a phone. Get outside and enjoy spending some time away from your desk. Challenge your friends and family to leave their phones behind (or in a bag at least) when you’re out.

Keep phones, tablets, computers, and technology away from the dinner table. Who knows, we might even rediscover the lost art of conversation!

Some of this is tongue in cheek. Most of it needs to be taken with a healthy dose of realism and knowledge that we can’t just drop technology. But we can make it work for us, instead of making it seem like a completely indispensable aspect of our lives.

So take control of your technology, and tip your work-life balance scales back in your favour!

The Big Squeeze in Public Procurement

As budgets continue to shrink, how can professionals working in public procurement do more with less?

We live in a world of apparent contradictions. The amount of money being spent by global governments is rising year on year. And yet, in the majority of these countries, public sector institutions are seeing budgets shrink at the same time.

Governments are increasing spending in order to continue to provide vital services to the public. In the UK, public spending reached £761.9 billion in 2016. This is forecast to rise again in 2017, with total UK public spending is expected to be £784.1 billion.

However, there are a number of factors that need to be taken into consideration when assessing these figures. The average age of the population is on the rise. Health services are dealing with a rise in chronic diseases as a result of lifestyle choices. Investment is not only being put into social care, but also into improving the lives of the entire population. All this means that any increase in spending is swallowed up as quickly as it is released.

In addition, slow global growth means that Governments have to be aware of future spending too. What this means, ultimately, is that spending at a local level is reduced. So what does this mean for public sector procurement?

More for Less

In Scotland, funding for Councils from the Scottish Government has decreased by an estimated £180 million for 2017-18. Some of this will be offset by rising Council Tax across the country, but many Councils and Local Authorities will still be looking to make major savings.

Maintaining, and improving, public services is only the start. The public sector in a situation where they not only have to achieve more with less, but they also have to invest wisely to help future savings targets.

Technology is just one area where this can be achieved. Many cities are investing heavily in technology that will align with existing infrastructure. Following in the footsteps of pioneering cities like Barcelona and Stockholm, a number of UK cities are moving to become ‘Smart Cities’.

Intelligent Street Lighting, sensors measuring urban data including city centre footfall, air quality, and new applications for refuse collection and public parking, are just a few examples of how technology helps to build a smart city.

These technologies have a dual-benefit for Local Authorities, and other businesses in cities. Data collected can be used to drive savings initiatives, while at the same time helping to improve the quality of life for residents.

Public Procurement’s Three Cs

What does this mean for procurement? The profession will be at the forefront when it comes to savings initiatives, and will play a vital, and ever-increasing, role in these projects. But at the same time, procurement still needs to prove its worth to, and make these savings stick.

If you’re looking for somewhere to get started, or to drive continuous improvement, here are three Cs that are applicable no matter your organisation, industry, or category (or even sector).

  1. Challenge

The best saving procurement can make is by not spending money in the first place. And the best time to do this is at the very beginning of a project. By challenging requests, procurement can begin to weed out wants from needs.

Does the organisation actually need this? Does it really need the 24-carat, diamond encrusted version, when an off-the-shelf one will do just fine? Is there an alternative solution to the question that could cost less while doing the same job?

Get your client, end customer, and specification writers to really think through their requirements. Once you’ve done that, you can move on to the next C.

  1. Collaborate

Collaboration should be both an internal and external activity. Procurement should be involved from the start of the project, and work closely with other departments to get the best for the organisation.

The public sector can also collaborate more too. Instead of all setting up individual projects for the same thing, why not share what’s been done in the past? Frameworks, Dynamic Purchasing Systems, and collaborative purchasing can help save time, resources, and money.

It’s also time to be working more collaboratively with our suppliers. Procurement needs to focus, where appropriate, on building long-term relationships. By building these relationships, suppliers will feel more open to collaboration, and potentially start bringing innovative solutions to the table.

And the other thing collaboration is going to help is with the final C.

  1. Cost

As in total cost, lifecycle cost, or Total Cost of Ownership. It’s critical to long-term savings ambitions that the total cost of goods or services is understood. Depreciation, residual value, maintenance and disposal costs all need to be taken into account before any decisions are made.

Procurement should also be focusing more on the cost element with suppliers too. Profit margin is not necessarily the best place to start looking for savings. Rather than creating the perception of going after profit, switching the focus to cost can provide more opportunities for discussion and even innovation.

Getting Started

While these are very good areas to start in, they are just the start of a larger exercise. However, they will help to provide the foundation for best practice, and to change the way projects are put in place across the organisation.

How Sustainability Can Help Procurement Avoid Black Swans

Swans, procurement and sustainability – what’s the link? It’s all to do with procurement taking account for its impact on the wider world.

Seven Swans Swimming

The traditional 12 days of Christmas might not start until the 26th of December. But this festive season, we’ll be bringing you the 12 days of procurement Christmas in the run up to the big day. Catch up with the story so far on the Procurious Blog.

“On the seventh day of Christmas, my true love gave to me…seven swans-a-swimming.”

Black swans are always unexpected, and defy explanation. Seeing two black swans together is highly unlikely. However, seeing seven together all at once? Well, you better hope that you don’t.

Of course, I’m not talking about the bird that you might see in your local park. The Black Swan I’m thinking of is a term coined by Nassim Nicholas Taleb for an event that is both surprising, and has a major impact.

So, if we can’t predict when these events will happen, how can we stop them? This is where sustainability, social value, and procurement come in.

Thinking the Unthinkable

Earlier this year, Nik Gowing spoke extensively about the concept of ‘Thinking the Unthinkable‘ at the Big Ideas Summit. The idea behind this was that current leaders weren’t able to deal with cataclysmic events – either through a lack of skills, or outright denial.

Little did Nik know that when he used President Trump as an example of an unpredictable event, he was actually predicting the future! Nor could he have known that 2016 could provide even greater volatility than 2014, the year Nik and his co-author looked at for these so-called Black Swans.

It’s easy to argue that, without the right skills, these events are impossible to handle. If you then add in the fact that we can’t predict them, even with all the technology available to us, then what can we do?

Swimming with the Swans

Given that Black Swan events can be just about anything, procurement needs to look at its impact on everything to do its bit. And one way to do this, is to be conscious of its impact on the wider society.

Sustainability and sustainable procurement are concepts that are getting increasing focus in the global profession. Organisations have begun to realise that sustainability can build supply chain competitive advantage. Employee engagement is key, but the vast majority of people want to engage if it means a brighter future.

The environment is certainly a major consideration in potential future Black Swan events. And, from management of resources, to responsibility for global supply chains, procurement will play a major role.

Procurement Gets Social

Of course, sustainability is just one aspect of procurement’s future. The profession is taking increasing interest in social value, and working with social enterprises.

And why should procurement be working with these organisations? Well, they give back to the community, and have a positive impact on the community, and the environment. There are also social organisations working hard to ensure that people have proper access to good, healthy food.

And those of us looking to get more meaning in our procurement careers could do worse than looking to work with social enterprises. Career Coach Charlie Wigglesworth, Director of Business and Enterprise, Social Enterprise UK, discussed this at length earlier in the year.

If your conscience has been pricked, then there is plenty you can do to help. If we pull together as a profession, then we can ensure procurement is better equipped to deal with unexpected events.

Or, you never know, we might even be able to stop them happening in the first place. Then the only swans we need to think about would be the ones we see at the local pond. And that would be good for the future, wouldn’t it?

Negotiation – it’s just one of the key skills procurement professionals need to drive value. But do you go for milking your supplier? Or getting something from the wider herd? Get the lowdown on Day 8.

Is Black Friday Still Important for Retailers?

Millions of consumers will be after a Black Friday bargain today. But, as a single day, is it still as important for retailers?

black friday sign

It’s that time of year again. The Thanksgiving turkey is digested, attention turns to Christmas, and Black Friday has arrived. Traditionally an American shopping day, Black Friday has expanded to hundreds of countries around the world.

An estimated £4 billion (nearly $5 billion) will be spent over the next 4 days between Black Friday and Cyber Monday. Of this, around half will be spent today, and an estimated £1.27 billion will be spent online.

However, as consumers change their shopping habits at this time of year, retailers are doing likewise. There are a couple of reasons for this, which we will have a look at now.

In Store vs. Online

The abiding image of Black Friday for most people is massive crowds, stampedes, fights over bargains (and the occasional punch up). The potential deals that stores offer are enough to turn the shoppers against one another.

And for many, this is enough to put them off leaving their house at all. In fact, the number of people heading out to the shops in the US on Black Friday has dropped to below 25 per cent, driven by more Millennials choosing to shop at home.

However, that doesn’t mean that less money is spent. In the USA, experts predict that total holiday spending (the months of November and December) will hit $632 billion. And, for the first time, over half of that money will be spent online.

Retailers are also changing their habits when it comes to opening times today. In previous years, many have started their sales at midnight, in order to maximise the shopping time available for consumers. But many stores are now choosing to revert to normal opening hours (something of a relief for staff, I’m sure!).

Surveys have shown that 59 per cent of shoppers do not agree with stores opening on Thanksgiving. But it’s not just consumer pressure, and benevolence to staff, keeping stores closed. The fall in in-store trading over the Black Friday weekend means that retailers aren’t turning as big a profit as they would like.

Add to the mix increased costs of opening (higher staff wages, security, logistics, and potential bad press), and it shows why retailers are stepping back from early opening.

Black Friday ‘Creep’

Another reason for retailers not seeing the benefits of Black Friday in store is the so-called ‘creep’. Much like adverts for Christmas 2017 started a few weeks ago (I kid you not…), online retailers have started to spread the sales out.

Amazon, largely considered to be the biggest exponent of Black Friday, started their sales in early November. And it plans to run these daily sales until the 22nd of December too. They weren’t the only ones, with Tesco amongst a host of companies starting sales earlier this week.

Some online retailers have done this to spread the logistical load of ensuring everyone gets their purchases in time for the holidays. Amazon are clearly learning their lesson from a few years ago, when it experienced serious bottlenecks in deliveries.

Bad Deals and Brexit

One thing that consumers need to be aware of before splashing the cash is that they might not be getting the best deal. A report from Which found that only half of Black Friday deals are actually cheapest on that day.

Retailers have been accused of inflating their pre-sale price to make a deal seem better. And, in fact, shoppers may have been able to find products cheaper at different times of year. The UK Government’s Pricing Practices Guidelines (PPG) states that any sale “must reflect the most recent price an item has been sold at for 28 consecutive days or more.”

So it’s worth being careful when it comes to your shopping, and not get swept up in the promotions. However, that said, UK shoppers might want to take advantage of the lower prices this year. As has already been seen this year, prices for goods and services look set to rise in 2017 as a result of Brexit and a weak pound.

The majority of rises are likely to happen in January, with Next, electronics retailer AO, Apple, Microsoft, and Dell, all either anticipating rising costs, or putting prices up already. So it might be that British shoppers won’t get the same deals this time next year.

The Last Word

Deals or no deals, I’ll be one of the Millennials shopping online today (after working hours, of course!). However, I wanted to leave the last word on Black Friday to Asda. The retail giant was one of the first UK stores to bring Black Friday deals to this country, thanks to its links to Wal-Mart.

However, following chaotic and violent scenes in 2014, the company shelved its plans last year. And for 2016, they’ve taken a novel approach to announcing a similar strategy for today, and why they’ll aim to have low prices all year round.

If nothing else, the video should make you smile. Happy shopping!

Working From Home – The Great Productivity Debate

Does working from home increase productivity at the expense of innovation? And does it suit you and your company? Join the debate!

working-remotely

Ten years ago, remote working or working from home would have been unthinkable for organisations. Advances in technology and connectivity have played a major part. But just as important has been changing attitudes to the concept of home working.

Gone (or perhaps going would be more accurate) are the days of the perception of home working as a way to skive off for a day. Earlier in my own career, people from my office who worked from home were viewed with suspicion.

The thoughts were that they would log on in the morning, go off to do other things, and return periodically to check e-mails to make it look as though they were busy.

While it absolutely wasn’t the case (the people needed an extremely good reason to be doing it), it might have come from a desire for parity, and knowing that the opportunity could be theirs too.

Seeing the Benefits

But as time has moved on so have attitudes. People are more receptive to the benefits of working from home.

Australian bank, ANZ, polled their employees, and 81 per cent of them stated that they believed that the quality of their work should be measured by what they do, rather than where they do it.

Last year, a survey carried out by the Office for National Statistics found that one in seven people in the UK worked from home. In the USA, 67 per cent of employers were allowing occasional remote working by 2014, up from 50 per cent in 2008.

Companies have woken up to the fact that not only can they offer a better work-life balance to employees, but they can offer a more attractive package to retain their best employees. This is on top of the financial benefits that they can realise too.

Sun Microsystems’ telecommuting programme was saving them $64 million in real estate costs and $2.5 million on electricity each year. Additionally, employees were saving an average of over $2000 each on commuting costs.

Productivity vs. Innovation?

It came as a surprise to many, then, when Yahoo CEO, Marissa Mayer banned the company’s 12,000 employees from remote working. While agreeing that productivity was higher when people were at home, she argued that innovation and collaboration were suffering from people working separately.

Yahoo stood by their decision, and another big name, HP, followed suit soon after. However, more recently, both organisations have softened their stance.

In some industries or organisations, the concept of home working or telecommuting is considerably easier. In industries requiring more face-to-face interaction, or physical presence, things will, of course, be more difficult.

Ultimately, it’s going to hinge on how a job is performed, and whether there is even scope for remote working.

The Great Productivity Debate

But how much of a difference does working from home make on productivity? Speaking from personal experience, I would say that I’m probably more productive working at home than I was working in an office full time.

However, working from home suits both my job – a role that can be done from anywhere with a power socket and decent wifi – and me personally.

And that’s what I believe the productivity debate boils down to. Some roles don’t suit working from home. And plenty people will admit they couldn’t, or wouldn’t want to, work from home.

Some people are more productive when they can get their head down in isolation. Others are more productive when they have other people, and the buzz of an office, around them. And there are people who thrive in both settings.

The ideal situation would be where organisations are in a position to offer both home and office working. Knowing that working from home is an option may be enough for some people when the occasion arises that they need that flexibility.

Making it Work – And Maintaining Your Sanity

Even if you thrive on working from home, you need to plan your tactics in order to make the set-up work. After two and a half years working from home, here are some of my tips to help you stay sane!

  • Plan Your Tasks

Start the day with two to-do lists. One will be tasks you can do on your own, the other tasks you need you colleagues for. Doing this will allow you to line up your next task if you can’t get hold of people on the phone.

  • It’s Still a Work Day

Don’t get distracted, treat your day as if you were in the office. Take breaks and get up from your desk, but remember, you’re working in your house, not doing the housework.

  • Get the Tools

At Procurious, we use Slack and Skype to communicate, Google Drive to share documents, and a good, old-fashioned phone call (at least one a day in my case), to stay in touch. It’s allowed me to continue working remotely, while still feeling like part of the team.

  • Find a Third Place

You’ll inevitably need a chance of scenery at some point. Find somewhere local where you can work. It might be a coffee shop, or a library, but it’s going to help you stop staring at the same four walls.

  • Breathe the Fresh Air

Get out the house once a day, whether it’s a walk before or after work, or running an errand at lunch. Plan some exercise into your day too. You’re going to be less active when you don’t have to leave your house to go to the office.

  • Meet the Team

You might be a remote worker, but you still need to meet your team. Getting into the office once in a while will help you stay up to date and connected.

If you want to work from home, make sure you sell the how as much as the why. With all the tools on offer, there’s no reason that communication should be what’s stopping you.

The Procurious Boot Camp will increase your stamina, get you in the best career shape of your life and help you to punch above your weight.

It’s not too late to sign up. Enlist here and get access to our 15 free podcasts from some of the best career coaches around. Don’t miss out – your career will thank you for it!

Social Enterprise Creating Oases in Food Deserts

The concept of food deserts is nothing new. However, it’s presenting ongoing opportunities for social enterprises to make a real difference.

Food Desert Store

Food deserts are not a modern phenomenon – the concept has existed for the better part of 20 years. However, efforts to eradicate these deserts have stalled somewhat, and there are now calls for more work to be done to eliminate them entirely.

The food desert concept was first introduced by the UK Department of Health in 1999. They defined it as, “areas of relative exclusion where people experience physical and economic barriers to accessing healthy foods.”

Put simply, these deserts exist where access to affordable, healthy food is either restricted or non-existent for consumers. This would be due to the lack of stores or supermarkets in the area, within convenient travelling distance.

A report by the US Department of Agriculture in 2009 estimated that 2.3 million people in the USA were living in food deserts. This is the equivalent of 2.2 per cent of the entire population. However, it’s difficult to fully gauge the impact of food deserts, as global figures are less well documented.

Measuring Food Deserts

Food deserts have traditionally been measures as the distance from households to their nearest supermarket. The original measure, still used by the US Department of Agriculture, is for low income households living more than 1 mile (urban), or 10 miles (rural), away from their nearest supermarket.

The map below shows how that looks across the USA today:

Food Deserts in the USA Based on Traditional Measures (Source: USDA Economic Research Service)
Food Deserts in the USA – Source USDA Economic Research Service

However, there is little consensus on which measures should be used to define food deserts. Some studies have used the measures of the type and quality of food available to purchase, while others have focused on the ability or inability of consumers to purchase them.

Other issues lie in the categorisation of stores. In parts of the USA, small retail outlets that sell food are classed in the same category as larger supermarkets. This is done even when the retail outlet in question sells limited, or predominantly junk, food. This has led to concerns that some food deserts are being missed entirely.

Access Only Part of Problem

Controversy also surrounds the simplification of food deserts as an issue over access to low-cost, healthy foods. Critics have argued that proximity alone would suggest that nearly all of rural America would be classed as a food desert.

In one study in Flint, Michigan, even when a local grocery store was introduced to a food desert, community attitudes and practices didn’t change. In fact, the amount of prepared and fast foods consumed during the 17 month study period actually increased.

Other factors that experts have argued for the inclusion of include poverty (it’s widely acknowledged that low income and poor nutrition are directly attributable), and education or attitude to foods (the fact it’s often cheaper to buy chocolate than an apple).

In the UK particularly, there is still a perception that healthy foods are more expensive. There are also concerns that as confidence and skills in creating meals from scratch decrease, junk food habits will rise further.

Social Enterprise Solutions

Definitions aside, it’s clear action needs to be taken in order to combat the issue of poor nutrition.

There are a number of small businesses and social enterprises in both the UK and USA helping to bring affordable, healthy food to communities.

Fresh Range

Bristol, in the UK, is one place affected by food deserts. Although the city has been awarded a silver ‘Sustainable Food City‘ award, there are still areas suffering from a lack of access to healthy food.

In light of this, in 2015, small company called Fresh Range was formed. Fresh Range sources directly from producers, enabling them to charge lower prices for fruit, veg, and meat. It even offers doorstep delivery for £1 on orders over £20.

On top of this the produce is all locally sourced, meets sustainability and the highest animal welfare standards. The company also re-uses and recycles packaging in order to keep running costs down.

Fare & Square

In the USA, the baton for combatting food deserts has been picked up by social enterprises. The two which have received the most support and airtime are Fare & Square in Chester, Pennsylvania, and The Food District in Columbus, Ohio.

Both are non-profit organisations, however they offer slightly different services.

Fare & Square is a crowd-funded grocery store operating in a food desert. It has committed to charge 8-10 per cent less for produce than other stores. It also offers a further 7 per cent discount for customers meeting poverty guidelines.

The Food District also offers access to affordable healthy food. As well as creating jobs and ensuring that produce is sourced locally, the Food District offers community education and training programmes to overcome all the causes of food deserts.

Time for Action

There are plenty more social enterprises around the world helping to tackle the problem of food deserts. However, the issue of food deserts is still on the rise. And it’s clear that more needs to be done to help everyone in the world have access to healthy, affordable food.

Why not have a look into what’s happening in your local area? You could help out with, or donate to, your local food bank. Or help local charities who are delivering food to people who can’t get out themselves.

If you have a social enterprise in your area, contact them and see what you, or your company, could do to help? If we all take action now, collectively we stand more chance of eradicating food deserts for good.

The Internet of Things Driving Procurement Change

In the business world, organisations are waking up to the possibilities afforded to them by the Internet of Things, connectivity and Big Data.

Internet of Things

The 2015 Gartner CEO and senior business executive survey found that technology-related change was viewed as the primary tool to achieve growth in 2015 and 2016.

37 per cent of respondents to the survey highlighted customer engagement management as a key technology priority, with 32 per cent highlighting digital marketing. Cloud-based business also had high recognition, as CEOs came to realise that the Cloud is where new disruptive industry platforms (think companies like Coupa) get created.

However, on the other side of this were concerns about potentially increasing levels of risk that are seen in line with increased connectivity. 77 per cent of survey respondents agreed that the digital world was creating new risks for businesses. However, 65 per cent also felt that investment in risk management practices was not keeping up with new and higher levels of risk.

Cloud Security – Or a Lack of It

This is a key area for procurement to consider when using Cloud-based technology and Big Data. You’ll all have seen reports and stories in the press about hacking and cyber security problems. This is frequently raised as one of the key issues with moving from traditional systems, to Cloud-based software.

It’s estimated by HP that around 70 million ‘smart’ devices have serious vulnerabilities, including privacy concerns, lack of encryption, inadequate software protection and insecure web interfaces. Worse still is that individuals and organisations either aren’t aware, or don’t have the capability to secure their systems.

The current state of Internet of Things security seems to take all the vulnerabilities from existing spaces, e.g. network security, application security, mobile security, and Internet-connected devices, and combine them into a new (even more insecure) space, which is troubling. 

Internet of Things Driving Change

A number of senior procurement leaders we have spoken to over the past few months have highlighted the potential issues of developing and managing suppliers as we move to operating in an era of the Internet of Things.

The growth of new technology and digitisation of processes mean that traditional procurement methods for managing suppliers need to be changed and updated. While in some cases, long term contracts of 3 years or more may be applicable, but there are certain areas where this cannot be the case.

More than ever, we are actually buying technology more so than the actual product or service. Think about driverless mining trucks – we’re really buying the technology to manage and maintain these vehicles, more so than the trucks themselves.

As technology increasingly becomes the product, we need to keep our options open in order to take advantage of the frenetic pace of change. Our tenders and contracts will need to more broadly define the functionality and utility we require of a product or service, rather than the exacting specifications we know today.

We will also need to ensure we keep our minds, doors and sourcing processes open to engage new suppliers with break-through technologies. Where contracts are 3-5 years long, CPOs will need to build optionality into their contracts to ensure they have the agility and can be opportunistic in adapting and adopting new technologies.

Changing Supplier Engagement

The alternative is to use different supplier engagement processes, potentially dynamic purchasing systems, or supplier panels, or ensuring that you are working closely with the suppliers in order to build innovation into your contracts.

New technologies aren’t necessarily going to be 100 per cent applicable to you, but your suppliers should be able to help with new product development and innovation.

But they will want security in this to know that they are not going to outlay a vast sum of money for development, only for the contract to be taken elsewhere under 3-year procurement processes (where they exist). In this way, Supplier Relationship Management will become even more critical.