All posts by Procurious HQ

Procurious Big Idea #42 – Getting Involved With Risk Management

Matthias Fuchs, CPO at Boral thinks the procurement function needs to broaden its horizons.

Matthias talks about procurement broadening its horizons by getting involved with risk management and insurance management, adding the procurement rigour to the process.

See more Big Ideas from our 40+ influencers

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Did you know that Procurious is also on Facebook? Come and join our 14k+ fans!

There are many other ways to stay connected to Procurious – this post will highlight but one of them. Today we’re talking Facebook.

Like Procurious on Facebook

It doesn’t matter whether you’re a social media maestro, or tentatively dipping your foot into the cloudy networking waters for the first time – sometimes there are just not enough hours in the day to log on, contribute and share.

The folks here at Procurious know this, so that’s why we ensure all of our newsworthy announcements, talking points, notable events, and informative videos (along with the latest stories hitting the headlines in the world of procurement) are signposted across all of our social channels.

This is what our page on Facebook looks like – why not give us a like and share with your network!

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Facebook is also great for those who might have heard of Procurious, but perhaps don’t feel comfortable being a committed member just yet.

So come and join our Facebook page, after-all 14k+ fans can’t be wrong…

Social Sourcing, Talent Gaps And The Future Of Online Networks

A record of our Twitter chat with Xchanging Procurement #Procuretalk.

Last week Procurious took part in a live Twitter interview with Xchanging Procurement (@xchprocurement). During the half hour we talked about everything from social selling to the future of social networks.

We present the dialog in its entirety below, just in case you missed it…

Temporary Worker Costs: Top Tips For Boosting Value For Money

This is a guest post from Jamie Eaton – Head of Marketing & Insight at Comensura.

It might come as a surprise to some, but the cost of temporary workers goes beyond their salary or hourly rate. From ensuring that you have acceptable pay rates and costs in place to standardising expenses, there are a number of steps that organisations can take to ensure they’re getting value for money and they’re not presented with any hidden surprises each month.

By implementing the following measures on pay rates and costs, organisations can minimise costs incurred by a temporary workforce:

Ensure transparency

Recruitment agencies inform you on the pay rate for each temporary worker, and it’s important that you make this information visible to managers within your organisation. Look at the pay rates for temporary workers across the organisation and ensure they are consistent with those of workers performing similar tasks, and align them with that of permanent workers. This will help reduce any anomalies that might exist, and standardise pay rates to prevent workers demanding a raise based on how others are paid.

Benchmark against local employers

Probe into the pay of temporary roles in the area. Local sources such as recruitment agencies, competitors or the Jobcentre Plus may give you access to how much people are typically paid in the types of temporary jobs that you provide. This will give you a better idea of suitable pay rates and prevent you from paying over the odds.

Align with your employer brand and strategy

Your organisation may look for specific traits in candidates to fill certain roles, which you should abide by when procuring temporary staff. Vacancies are then more likely to be filled by a type of worker that has previously performed well in a similar role. Ensure that you’re offering a pay rate that will attract this kind of person.

Implement authorisation processes for inflation

It’s inevitable that you’ll need to uplift pay rates from time to time, particularly as a response to changes in the job market. The most efficient way of doing this is by using an approval process that consults all the relevant people and ensures that the rise is reasonable.

Standardise expenses

Temporary worker expenses such as travelling costs and accommodation can sometimes be forgotten about, even though it collectively amounts to a considerable cost. Determine what constitutes acceptable expenses for your organisation and apply it as a standard rate for every temporary worker.

There are many benefits to reap from the use of temporary workers, such as flexibility and the ability to cover permanent worker absences. But without maintaining the overall costs, you risk it being a drain of resources. By putting processes into place that determine acceptable pay rates and costs, you can ensure that you’re getting value for money when procuring temporary staff and that you’re carrying out the process cost-effectively.

Volkswagen Emissions Scandal: A Lesson In Awareness & Accountability

With Volkswagen caught cheating on emissions tests and its CEO quitting over the scandal, what can it teach us about awareness and accountability?

The past few days have seen the great and good of the automotive industry waxing lyrical in the broadsheets and providing their take on events.

As the Volkswagen board gathered to appoint Porsche’s Matthias Muller as its new chief executive, and amid alarmist claims that it’s a bigger threat to the economy than the Greek debt crisis, questions are mounting over how much ministers knew in advance.

In light of such damning revelations we can expect reverberations to be felt within supply chains for months (even years) to come.

At the time of writing, US authorities predict the scandal affects over 482,000 diesel passenger cars sold in the States between 2008 and 2015. Affected models include the VW Golf, Jetta, Beetle, and Passat as well as the Audi A3. Damningly each car that violates the US Clean Air Act faces a fine equivalent to £24,000 – which equates to a £12 billion bill in US fines alone.

‘An investor’s nightmare’

Both Deutsche Bank and JPMorgan have downgraded Volkswagen -with DB cutting VW from ‘hold’ to ‘buy’ and slashing the price target target to €130 from €260. While JP downgraded its stance on VW’s preference shares to ‘neutral’ from ‘overweight’, cutting the price target to €179 from €253, saying it cannot rule out additional engine investigations and does not have visibility over the total liability for VW.

Citi said: “The regulators (not only the US ones) hold the key to answer the question of potential impact (not only on VW, but also on the global auto industry). We think regulators may not overlook the matter, given their stress on the compliance with environmental regulations.

“At this juncture, lots of uncertainties remain, but we cautiously view that some ‘spill-over’ to other regions/ auto industry is inevitable. Germany and Korea have already begun a probe into the matter for more scrutiny. Depending on the outcome, it could lead to some cost pressure and tighter regulations.

“VW commands ~25% share in the EU market, so it faces a potentially higher negative impact on sales in EU, if similar manipulations were to be found in the region.”

Kevin O’ Marah – commenting on the scandal for Forbes made the following astute observation:

For supply chain professionals however the VW scandal illuminates two important things:

  • Awareness of global operations is spiralling upward fed by digital technologies and ubiquitous information visibility.
  • Accountability for what business does, especially in terms of impacts on health, safety and the environment, is something we need to own.

But who really is accountable?

We doubt that talk of the device was included in VW’s procurement plan… Which raises even more questions – namely: who ultimately came up with the idea, and where did it come from? There has to be a paper trail back to the perpetrator, but again, was the true purpose of the device fudged? As we went to press, news sources are even reporting that a Volkswagen engineer warned the company about emissions rigging as far back as 8 years ago…

We’ve covered ethical arguments previously on Procurious – Transforming a bribery-entrenched culture, Rolls Royce accused of ‘buying the business’, Intrigue, money laundering and arrests at the Alhambra and you’ve weighed in heavily using the Discussion forums. Back to that Forbes analysis, which suggests that those involved turned a blind eye..  “Everything from child labour to adulterated foods and conflict minerals come from the same dirty bucket of extended supply chains that make it easy to ignore or even hide bad behaviour.  Accountability depends on visibility, which is expanding by leaps and bounds.”

As supply chain professionals, we together should take responsibility and own this. The buck should stop with us. Why then, didn’t this happen?

Here’s a selection of other big stories making headlines in procurement and supply chain this week…

Coca-Cola Co. is overhauling its U.S. supply chain

  • Coca-Cola said on Thursday it plans to sell nine production facilities to three of its largest independent bottlers as it seeks to unload low-margin assets and reduce manufacturing costs in the United States.
  • The bottlers, Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Company United and Swire Coca-Cola USA, will acquire the nine plants, valued at about $380 million, from Coca-Cola Refreshments, which Coke created after buying its top bottler in North America in 2010.
  • Additionally, Coke said all four entities, along with Coke’s operating group in North America, will form a new supply group to work together on decisions in areas such new packaging launches and ingredient purchases, Coke said. The new group will represent about 95 per cent of the company’s production volume in the United States.
  • The world’s largest soda maker is facing sluggish sales volumes in the U.S.. It has been selling bottling operations, which partly entail getting its products to retailers, to franchisees to shift away from the capital intensive and low-margin business of distribution.

Read more at Reuters

Chancellor George Osborne announces start of HS2 procurement

  • Announcing the bidding process for phase one of the project during a trip to China to woo investors for UK infrastructure projects, chancellor George Osborne said that at least seven new contracts would be opened up to companies, with a total combined value of £11.8 billion.
  • The government is also organising an “HS2 partnering day” to give Chinese companies an opportunity to partner with UK firms on bids.
  • HS2 will provide high-speed rail services from London to the Midlands, and the North and construction of phase one is due to start in 2017.
  • HS2 Ltd chief executive Simon Kirby said: “Together we will transform intercity rail travel in the UK, build specialist skills and expertise across the country, create at least 2,000 new apprenticeships and build a legacy to inspire the next generation of young engineers.”

Read more at Supply Management

Investors look to sew up Vietnam garment opportunities

  • There are big changes occurring in Vietnam’s bustling garment industry, as businesses and investors prepare for changes linked to the upcoming Trans-Pacific Partnership.

  • The agreement being negotiated by 12 countries, including the US, promises radical tax cuts for Vietnam’s garment exports, but only if they use fabric made locally or in other TPP countries, which excludes China.
  • For the emerging country’s thousands of small and medium-sized garment makers, however, the benefits are less certain. The 25 million garments produced every year at the Ho Guom Garment factory in northern Vietnam all bear the label “Made in Vietnam” but more than half the material used to make them comes from China.

Read more at Channel NewsAsia

Using the blockchain to fight crime and save lives

  • Blockchain technology has been described as email for money, but it has the potential to be so much more.

  • According to Blythe Masters, theblockchain represents a watershed moment in technological history. “You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s,” she said in an interview with Bloomberg.

  • Blockchain technology is a hyper-secure record of digital events that is distributed among many different computers. The blockchain can only be updated by consensus of a majority of the participants in the system, and once information has been entered, it can never be erased. Blockchain technology is best known for its connection to the cryptocurrency, Bitcoin. It’s what enables transactions to happen without middlemen or a central body, while protecting against duplication and fraud.

Read more at Techcrunch

Construction & Transport Industry Facing Effects Of On-Demand Economy

The construction and transport industries are beginning to feel the effects of an on-demand economy.

According to popular jobsite Indeed.com, employer demand is now outpacing jobseeker interest in the construction and transport sectors.

While job growth in the construction industry has increased 10 per cent in the last quarter, jobseeker interest in these positions has remained stable since the beginning of 2015.  Similarly, Transport has seen a 13 per cent increase in job availability compared to last quarter, while jobseeker interest in these roles has fallen  2 per cent in August from its peak in March.

The figures suggest these industries are amongst the first to feel the impact of an economy that is increasingly reliant on contractors and temporary hires, with an increasing number of tradesmen and drivers branching out to start their own businesses or work on a contract or freelance basis. This trend is more evident for electricians – job searches for electrician including the term self-employed has grown 61 per cent since Q4 2014.

Gerard Murnaghan – VP EMEA, Indeed, commenting on the market, said: “The tightening labour market in the UK coupled with the prevalence of self-employment is likely to accelerate this trend in the run up to and following the introduction of the new minimum wage, which will come into force in April 2016.  SMEs and micro firms are major contributors to growth in both of these sectors and the backbone of the UK economy. The wage increase may discourage them from taking on additional, junior staff.

This is a particular concern in the construction sector, which is grappling to attract young talent in an industry which does not generally appeal to the new labour force. For an industry that is reliant on boosting its ranks with new trainees, it is also noteworthy that two thirds of construction apprentices are currently trained by micro firms – a talent stream the industry cannot afford to lose.” 

U.K. Industry Employment Trend Highlights – August, 2015

Top Growth in Job Openings (compared to previous quarter)

Transportation   +13 per cent
Media   +11 per cent
Construction   +10 per cent 

Lowest Growth/Decline in Job Openings (compared to previous quarter)

Education – 10 per cent
Human Resources   -8 per cent
Healthcare   -2 per cent

The Secret To Unbelievable Engagement

Office Lens 20150922-123648

Earlier this week at eWorld Procurement & Supply we were lucky enough to sit in (and participate) in Christopher Barrat’s thought-provoking workshop on communication tactics.

Christopher benefits from real life experience in the procurement world, having been a procurement director for a major blue chip organisation. For the last 12 years he has spoken and worked with companies all over the world to help them with commercial communication skills.

At eWorld Christopher explained the key role that networking and collaboration play when working to undo entrenched behaviour.

Christopher’s steps to success:

Gathered in groups of 8-10 we were told to think of someone, (preferably at work but it can be from home life too) with whom we were having a challenging time.

If we didn’t feel comfortable being open about who this person actually way, we could have given them a pseudonym. 

Now we had to think of some specific circumstances where we interacted with this person – we were told to be quite detailed – i.e where/when/what exactly happened on this occasion. This didn’t necessarily have to be a big or dramatic event, just something that was meaningful and challenging to us.

Having thought about this, we then had to consult a diagram that had been placed on our tables. The diagram in question is shown below:

PAC Diagram

Looking at the aforementioned PAC diagram, we were told to think about the position we were going to adopt (as well as the position our antagonist took).

In order to help us gather our thoughts, PAC can be broken down into these respective behaviours/attitudes:

P: This is our ingrained voice of authority, absorbed conditioning, learning and attitudes from when were young. We were conditioned by our real parents, teachers, older people, next door neighbours, aunts and uncles. Our Parent is made up of a huge number of hidden and overt recorded playbacks.

A: Our ‘Adult’ is our ability to think and determine action for ourselves, based on received data. The adult in us begins to form at around ten months old, and is the means by which we keep our Parent and Child under control. If we are to change our Parent or Child we must do so through our adult state.

C: Our internal reaction and feelings to external events from the ‘Child’. This is the seeing, hearing, feeling, and emotional body of data within each of us. When anger or despair dominates reasons, the Child is in control.

Note the adult position – Christopher suggested that if we both ended up on this then maybe we should think again…

Armed with our positions we laid out the PAC circles on the floor, and in our groups discussed each of our difficult interactions. The next step was to physically stand on the relevant descriptor and talk through the sorts of things you would say (and do) from that position, as well as how the other person would be responding.

Finally, we moved ourselves to the Adult position. If we had adopted this stance at the time of our difficult exchange, what would be going through our minds? And how would we have talked and interacted with the other person knowing what we now know?

Office Lens 20150922-123342

Next time you are trying to deal with a difficult colleague, why not go through the steps outlined above? Try and control things, so ultimately you’ll both be able to see eye-to-eye.

How Can Agility Unlock Success In Procurement?

When it comes to procurement – don’t underestimate the value of agility.

As a startup we’re always banging on about agility… we believe that by their very nature startup companies need to be nimble, be willing to adapt to changing market conditions, and fail fast (if something isn’t working). That’s why Procurious was particularly enamoured by The Hackett Group’s opening address at eWorld Procurement & Supply in London this week. Indeed, agility (and what does it mean for procurement specifically) was one of the sticking points in Chris Sawchuk’s keynote…

Agility equals relevance

Chris noted fairly early on that perhaps the greatest challenge facing procurement today is staying relevant in the face of other business functions. It is imperative that procurement finds new ways to create value, not to mention justify its existence as departments across the board vie for slices of the budget. Hackett made this recommendation as far back as 2013, demonstrating that by breaking down traditional borders, procurement could become an enabler of internal business functions thanks to its intelligence around suppliers and markets.

So far, so good (you’d think) But fast-forward to 2015 and it seems that procurement has stalled somewhat – with the function uncertain what it should be doing to innovate (and thus adding value). What then needs to happen?

The problem stems from the fact that sometimes procurement’s idea of innovation comes from a very different place to what the business believes needs to happen. Procurement needs to be on the same page as its stakeholders and be seen as trusted advisor

To do this effectively procurement can’t sit still, it needs to be constantly looking at the market, identifying issues that could lead to business concerns and being perceived as having a sincere interest in helping stakeholders achieve their business goals. How will procurement achieve this? Through being more customer centric and ultimately (yep, you’ve guessed it) – more agile.

Chris Sawchuk

Customer centricity is king

To this end we need to take a view of what procurement organisations can do differently. You don’t need to look far to see that professional organisations are starting to spend more time aligning with their internal stakeholders – services like Uber are already doing this (meeting and exceeding SLAs etc.), and this practice in itself is generating more value.

As a function procurement needs to make the customer central to everything it does. But in order to do this successfully and improve the customer experience, procurement needs to put a structured approach in-place.

Hackett suggest that procurement needs to (over time) build a more holistic approach which incorporates things like channel management, governance, service design, and relationship management.

The first step to making this happen is to begin mapping out the influence and importance of key stakeholders. What criteria do we look at to determine who we measure? They are not all equal, for instance, suppliers can fall into several different camps – there’s strategic, then your preferred etc. Can you identify which of your suppliers represent risk, who are innovating? Likewise, can the same thinking be applied to the customer side? These are all important factors that procurement departments will need to take into account when deciding upon their implementation.

You’ll also fairly quickly come to the realisation that you don’t have the necessary resources to treat everybody the same (or survey thousands). Hackett note that crucially, a one size fits all approach won’t work.

Executives aren’t likely to respond to a survey. How then do we engage with them? The answer is a multi faceted approach. If you’re going to carry out a survey there has to be something in it for them, give something back. Why not provide them with the results?

To round things off Hackett left us all with five quick steps to help getting started (presented below). Hopefully you’ll be able to recognise the value in such an exercise, and in-turn begin to be more agile in your approach going forwards.

  • Define a customer-centric mission
  • Identify key stakeholders
  • Schedule/plan check-in meetings
  • Assess the broader organisation’s view
  • Take steps to ‘market’ procurement’s new mission

If you want to hear more from Chris, you’ll be pleased to learn that he appeared at our very own Big Ideas Summit in April of this year.

Watch the whole thing – here.

WHY And HOW Procurement Must Change

‘Innovation’ – the action or process of innovating.
“Innovation is crucial to the continuing success of any organisation” – it’s a new method, idea, product, etc.
We’re here at eWorld Procurement & Supply in London and Alex Saric – Global Vice President, Marketing, Ariba, wants to talk about innovation…

While ‘The Innovation Imperative’ sounds like an episode title from The Big Bang Theory, today we were told about a different sort of evolution. Alex wanted to drive home the message that in order to truly transform the function into a strategic value driver, procurement leaders need to innovate.

And while it’s all well and good that we toot our own horn, when we’re talking about innovation it is critical that everybody thinks about procurement, and in-turn goes about their job differently.

Why now? The screws are tightening… Today there’s increasing pressure on companies thanks to increased competition. Just look at new players like Uber who have introduced wildly new business models. But, as Alex notes, whenever there is a great challenge, there’s also great opportunities. As such there is a need to embrace these changes, but to do so, procurement needs to rethink its entire approach.

Crucially procurement (as a function) is in a prime position to take advantage, it needs to strike while the iron’s hot as no-one else has really stepped up to the challenge (yet).

What can procurement learn from Uber?

In order to successfully innovate we need to recognise that procurement is becoming embedded in other parts of our organisations – and in doing so, it is also playing a more strategic role.

Here Alex pinpoints four areas where we can add value:

  • Product innovation
  • Market expansion
  • Working capital management
  • CSR/Regulatory compliance

With all these in mind, what do we need to enable procurement innovation?

People: people need to want to develop. Here we are provided with the example of people not willing to use social media at work, while they are more than happy at home (in personal time). It’s this shift in attitudes that needs to be addressed and adjusted in order to progress.

Automation: the automation of processes will enable you to free your capacity to concentrate on other things.

Connections: in order to drive innovation you are going to be talking to a lot of suppliers (but you need to be talking to the WORLD). Expand your connections by whatever means necessary.

Business networks: Business networks are simplifying business collaboration and delivering benefits across all network participants. In this example procurement isn’t the only function that wins, benefits will be felt across the entire organisation when you open up the communication channels.

Wrapping up a very packed session, Alex reminded us that innovators are already starting to reap the rewards. For instance, Staples has reduced its processing costs and Cisco is making savings across its services. Along with the aforementioned Uber and Amazon, innovation is starting to drive key changes across the world’s stage… The question is what are you doing to follow suit? Isn’t it about time you caught the innovation bug too?