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What’s the real impact of the UK 2015 budget on procurement?

Last Thursday, UK Chancellor George Osborne outlined his fifth and final budget for the current parliament. Many analysts viewed this budget as pivotal as it helps to highlight the state of the economy in the run up to the General Election in May.

worapun.ch/Shutterstock.com

For many others, however, the pre-election budget amounts to no more than political positioning and posturing – a chance to take a free swing at opposition policy. The policies are subject to the outcome of the election and many are never implemented.

However, taking the Budget at face value and assuming that some of these policies will be implemented, what does it mean for procurement and supply chains? Procurious aims to talk you through some of the detail here.

The Budget – Key Points

First we need to summarise a selection of the key announcements. For a more detailed run-down, click here.

  • UK economy grew 2.6 per cent in 2014, faster than any other advanced economy
  • Record employment in the UK, with jobless rate to fall to 5.3 per cent this year
  • Trade deficit figures “the best for 15 years”
  • Inflation projected to fall to 0.2 per cent in 2015
  • Borrowing set to fall from £97.5bn to £12.8bn in 2017-8
  • Beer and cider duty cut; spirits and petrol duty both frozen
  • The tax-free personal allowance to rise to £11,000 in 2017-8

From a business point of view, the news somewhat mixed.

  • Tax on “diverted profits” to come into effect next month
  • Annual bank levy to rise to 0.21 per cent, raising an extra £900m
  • Supplementary charge on North Sea oil producers to be cut from 30 per cent to 20 per cent while petroleum revenue tax to fall from 50 per cent to 35 per cent.
  • New tax allowance to encourage investment in North Sea
  • Review of business rates but no details

Behind the Figures

Experts were largely positive in response. James Sproule, Chief Economist at the Institute of Directors, stated that although the economic recovery was taking longer than anticipated, “the immediate news was encouraging with employment rising to record levels”.

Also, despite concerns about the UK’s debt position, Sproule said, “the degree to which government and businesses are beginning to pay down their debt is an encouraging trend”.

However, it would be naïve to assume that it was all good news for the UK. Despite a more positive outlook and plans to end the public spending ‘squeeze’ a year earlier than planned, an additional £30bn in savings still needs to be found over the course of the next parliament. This means austerity measures and spending cuts will have to continue.

From a business point of view, this mean less business in the private sector, tighter budgets and the requirement to look further afield for new opportunities.

George Osborne pointed towards this when highlighting China as a major export market in the coming years. With an export target of £1 trillion by 2020, an increase in funding to the UKTI is a good start. But Allie Renison, Head of EU and Trade Policy at IoD, argues that a focus on one economy is not necessarily a good idea.

“Focusing the extra funds on China raises questions about the wisdom of prioritising one geographical market over another. The Chinese economy is changing, and consumer preferences are shifting with it. We have not yet seen the expected boom in demand for services materialise, at least not in the financial and associated business services sector.”

Impact on Procurement and Supply Chains

What does this all mean for procurement and supply chain in the long run?

Mentions of procurement were mostly limited to the public sector and increasing efficiency requirements. Without any details provided, there was talk of cuts to NHS procurement, something that is currently under examination by Lord Carter, the chair of the NHS procurement and efficiency board.

The long-term future may also hold more autonomy on spend in public sector procurement. Councils in Greater Manchester are being given more administrative power over income, with many seeing this as a test case for more regional powers.

The freeze on fuel duty will provide relief for logistics organisations too, as well as removing cost from many supply chains. This should provide more opportunity for supply chains to focus on increasing efficiency and diversity, assessing appropriate routes for both import and export, as well as where further improvements can be made.

The government has been challenged to help supply chains more when it comes to identification of these opportunities. Allie Renison argues “much more emphasis is needed on specific sector supply chains, to help identify where gaps exist, both in terms of research and practical support.”

In the coming weeks, we will return to this debate as policy announcements are made by the leading political parties. Procurious will look to assess these policies, their impact on procurement and what the overall impact of the General Election will be.

In the meantime, here are some of the other major procurement stories making the news this week.

Supply chain changes could cut food waste

  • Changes to the supply chain could save millions in food waste by increasing the life of products, according to a study. WRAP estimated an increase of one day on product life across a range of foods could prevent around 250,000 tonnes of food waste each year.
  • The study, Reducing food waste by extending product life, examines how ‘use-by’ and ‘best before’ dates are set by food manufacturers, brands and retailers, for foods that typically have a high level of waste. They included sliced ham, potatoes, apples, minced beef, juice, chilled pizza/chilled ready meals, bread, chicken breasts, bagged salad and milk.
  • It estimated the potential overall tonnage and financial savings by scaling-up data from these products to all food groceries.
  • It also urged manufacturers and retailers to challenge the safety quality ‘buffers’ to find opportunities to extend product life. It calls for a standardised approach to ‘open life’ guidance – the time food is deemed safe or retains its best quality once opened – and that it should be used only for food safety rather than quality.

Read more at Supply Management

OPEC won’t take fall for low oil prices

  • Oil producers outside OPEC must cooperate to boost falling crude prices as the cartel refuses to take responsibility alone, the Saudi oil minister has said. “We refuse to take responsibility alone because (OPEC) produces 30 per cent of market output and 70 per cent comes from outside,” Ali al-Naimi said in remarks carried Monday by the Saudi Press Agency (SPA).
  • Crude prices slumped by about 60 per cent between June and February, weighed down by a glut of global supplies and concerns about stalling demand. The slide was exacerbated in November when Organization of the Petroleum Exporting Countries (OPEC) refused to cut production to rescue falling prices, saying it wanted to maintain its market share.
  • The 12-member group, led by top producer Saudi Arabia, pumps around a third of the world’s oil but other major producers, such as Russia, are not tied by its decisions. Asked whether OPEC would be willing to work with non-members, Naimi pointed to the crash of 1998 when the cartel cooperated with other producers to cut output and support oil prices.

Read more at Industry Week

PC supply chain has weak order visibility

  • With Intel having recently lowered its revenue forecast for the first quarter, sources from the upstream supply chain have pointed out that channel demand remains weak and order visibility until the third quarter is still unclear. Despite the fact that Microsoft is planning to release Windows 10 in August and offer free upgrades, the sources are concerned that the move may not boost PC sales much in the third quarter.
  • Demand for PCs has been weak in the first quarter as related players have not been able to come up with attractive new features for their products, causing a slow digestion of channel inventory and forcing Intel to reduce its financial forecasts.
  • Although PC players are expected to reduce their inventories to safe levels by the second quarter, weak demand from the channel, especially in Europe is expected to continue impacting PC sales in the quarter

Read more at Digitimes

UK government publishes details of new public sector procurement apprenticeship

  • The UK government has published details of a new public sector procurement apprenticeship. The two-year apprenticeship standard covers “all three aspects of the commercial life cycle: pre-procurement, sourcing and contract management”, with an assessment at the end and a requirement to achieve the CIPS Level 4 Diploma in Procurement and Supply.
  • The apprenticeship covers early market engagement, sourcing, contract agreements, supplier management and category management. A description of the role of “public sector commercial professional” said: “In the public sector a commercial professional’s role is to support the transformation of the way that the best quality public services are delivered, while securing value for taxpayers’ money. Experience will be gained working on high-profile, high-value, high-risk projects that affect millions of people and are worth billions of pounds each year.”
  • The government said the standard was not yet ready to use but will replace current apprenticeship frameworks by 2017/18.Read more at Supply Management

How do you define trust in the supply chain?

Following on from our examination into the Siemens bribery scandal,  we’ve compiled some of the excellent community discussion on the subject of trust in the supply chain.

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How do you define trust in the supply chain?

Trust is a major factor when choosing suppliers, as well as staying with them for years. In a prior discussion on Procurious, trust, follow through and understanding of your industry were some of the top factors you all shared choosing and staying with your suppliers. 

So how do you define trust? And what components of trust are most important when it comes to setting up your supply chain?

Thanks to Hannah Broaddus for this question, following up on one previously asked (and wrapped) on Procurious. Trust as a concept is hard to define, can take months or years to build up within relationships, and can be destroyed by one stray comment or action.

As seen in the recent situation in Australia with Nanna’s Frozen Berries, consumer trust can be lost through issues in a supply chain and will take time to be earned back.

The idea that trust had to be earned on both sides was cited more than once. Trust is built through interactions and discussions over a period of time. At the beginning, there needs to be the belief that both parties are working towards the same goals and that the other party has your company’s or customers’ interests in mind.

Trust is built by being open and honest. Companies that are good at generating trust will share information freely. This can be sales and operations data, forecasts or critical data that will ultimately benefit both sides.

One answer highlighted Mari Sako, professor at the University of Oxford. Sako states that there are three types of trust that we must all go through & earn from the other party.

  • Contractual Trust – prove you can do what you say you can (we both look for failure here)
  • Competence Trust – when I believe that you can do what you say you will
  • Goodwill Trust – we both do things for the good of the relationship

Finally, we’d like to leave you with the immortal words of Ernest Hemingway, “The best way to find out if you can trust somebody is to trust them.”

Wise words to live by, even if this is perhaps easier said than done in business.

Here’s something else the community has discussing at length:

Is your company’s procurement department strategic, or purely operational?

What is the best way to add value and make your Management aware of its strategic importance?

The question of whether procurement has a seat at the executive table is often asked. What is less apparent is whether procurement departments are conducting purely operational work in organisations. This question from Pedro Semprine asks just that.

A widely held belief is that most senior executives spend less than 3 per cent of their time on strategic tasks. One answer in this discussion highlighted an 80/20 split in time – where procurement leaders spend 80 per cent of their time on strategic matters and 20 per cent on the daily tasks, while juniors were the opposite.

A common thought was that procurement, depending on the task, had to be both strategic and tactical. Day-to-day materials would require a tactical approach, whereas critical or bottleneck items would require a more strategic focus. Tactical procurement activities contribute towards the overall strategic goals of both the procurement department and the organisation.

There was also the idea that all activities might be viewed as operational, unless procurement was seen as a strategic advisor in the organisation. One option to counter this was to be proactive, writing strategy documents and quantifying examples with data, for example cost savings or production times, so management would be able to see the value added.

Procurement could utilise a results oriented approach, publicising successes where value had been generated for the organisation. Organisation impacting activities, such as core product changes, cost reduction and process improvement could be laid out with future plans in order to show continuing value generation.

The tips were nicely summed up into three points:

  1. Speak to influencers and key senior management figures – ask them what are their pains are
  2. Conduct a group presentation to all of them to demonstrate how your plans can help meet their goals
  3. Leave the emotive categories alone for now. These include stationery, car leases and most of all, travel.

Coca-Cola announces new CPO

There is movement at the top of the Coca-Cola procurement organisation.

The company announced earlier this week that Darlene Nicosia will take over the role of CPO of the Coca-Cola Company from Ronald Lewis who is moving into a new role as the senior vice president of Coca-Cola Enterprises (a subsidiary of the Coca-Cola Company). The changes will take effect on April 1st.

Speaking on the appointment of Nicosia, Ed Hays, who was recently named Coke’s next chief technical and innovation officer said:

“Darlene brings a deep understanding and appreciation of procurement strategy and execution within our Company and across our system. In her most recent role, Darlene was responsible for leading the procurement COE with a focus on capability development and execution of Global Sustainable Procurement’s Collaborative Procurement Model, and the implementation of Procure To Pay in collaboration with GBS.”

Ronald Lewis re-joins Coca-Cola enterprises having previously held roles as the organisation’s CPO and vice president of North American supply chain.

John Brock, CEO of Coca-Cola Enterprises, said: “Ron has an excellent track record of delivering results, extensive experience in the Coca-Cola bottling system, and an intimate understanding of the complexities of leading large supply chain operations in Europe and globally.”

How do you go about transforming a bribery-entrenched culture?

Procurious has been in Cardiff attending Procurement Week 2015. We heard from Simone Davina General Counsel & Company Secretary at Siemens Netherlands, on the challenges of rooting out bribery and rebuilding trust.

Inspired by Simone’s words, we set about charting Siemens’ course on its road to recovery. Read on to see how it reversed the damage done.

Siemens on transforming a bribery-entrenched culture

We don’t want to teach you how to suck eggs, so there’s no need to school you on on the big ‘C’ – Corruption. Suffice to say that this threat is a scourge for all mankind, and has devastating effects on even the world’s strongest economies.

Fined in 2008 to a tune of $1.6bn – this record legal settlement served as a (highly-costly, overtly public) wake-up call to the German conglomerate.

US authorities charged eight former executives in connection with a $100m (ú64m) foreign bribery scheme. The bribes related to a $1bn contract to produce national identity cards in Argentina.

This was not the first time Siemens’ was thrust into the bribery spotlight. Allegations around deals between Siemens AG and Greek government officials during the 2004 Summer Olympic Games in Athens regarding security systems and purchases by OTE in the 1990s.

…As a result Siemens set about building a self-cleaning initiative.

How do you turn around a company like this?

If Siemens’ was going to get a second chance it would require an almighty effort. Collaboration with investigators, compensation for damages, guarantees that the situation won’t happen again – achieve all that and you’re just scraping the surface…

Challenges to scale this work across countries. Not so much of a problem in the Netherlands, but harder when it comes to China, the Americas etc. But if a company of such a size as Siemens can’t do it, then who can? That was the question Siemens’ CEO Peter Löscher was posed.

Peter Solmssen – Siemens general counsel, also believed that global cooperation was key. “If we, the major companies and, really, anyone in private industry, link arms, we can drive corruption out of our markets. I call it the Cartel of the Good. If we cooperate, then there is no bribery.”

In years before, Siemens’ operated in 190 countries across the world (with these distilled further into 70 clusters). Löscher reorganised this sprawling cluster system by condensing down to 20, and creating a steering committee to manage on a quarterly basis.

Out with the old – a seismic change in culture

In senior management 80 per cent were moved outside of Siemens. The old boys network had to be disbanded. In order to break the cycle, the peer-pressure, the whole culture needed a shake-up. Reinvigoration.

This was just the beginning – you could say that “bribery was Siemens’ business model”. An investigator from around the time of the scandal pointed out that internally Siemens referred to bribes as “nützliche Aufwendungen,” – a German accounting euphemism that meant “useful money”. But we must remember that until 1999, the act of turning a bribe was considered legal practice in Germany. German corporations were freely allowed to deduct bribes from taxable income. However, this was a new millennium and corruption was still very much at the core. Löscher realised in order to successfully weed-out the detritus he would need help from the very individuals with dirt on their hands.

The Guardian reported: Löscher offered his workers a deal: He promised that anyone who came forward to admit their involvement in bribery would get full amnesty. Not only wouldn’t they be fired, but the company promised to help with any legal problems stemming from these admissions. On the other hand, those employees who didn’t come forward, but were later found guilty of bribery, would be fired. Solmssen estimates that “about 130” employees came forward to admit their role in bribery and to explain where the money had gone.

In an interview with Harvard Business Review (Nov 2012) Löscher would later muse: “The scandal created a sense of urgency without which change would have been much more difficult to achieve, regardless of who was CEO. Siemens is a very proud company with a history of innovation and success. In the absence of a catalyst like this, people would have asked themselves, ‘Why alter anything?'”

In the period between the offence (2008) and that HBR interview, Siemens would invest in a 500-strong compliance team, instill a former Interpol official to head-up the newly-created investigations unit and put the company-wide compliance programs into place. An online portal would also be used to begin integrity dialogs, allowing staff to evaluate risk when starting tenders with companies. Siemens wanted to be in a position to end agreements if it suspected non-compliance – even going as far as carrying out audits at desks.

This welcomed in a new era of transparency for Siemens – for the first time it was placing itself very much in full view, demonstrating its meteoric changes to a quiet, questioning public.

By 2008 almost half of its 400,000 staff had undertaken training in anti-corruption issues.

Is the electronic market the answer to procurement headaches?

Maglara/Shutterstock.com

Procurious is in Cardiff for Procurement Week 2015.

Answering our call of ‘what are other countries doing to innovate in procurement?’ We were given the opportunity to hear from Michal Ohrabio from Anasoft.  In Slovakia procurers are looking towards the Slovak Electronic Market (or the ‘Gov eBay’ as it’s more commonly referred to ). This online portal functions as an alternative buying hub, and encourages procurers to think about the buying process in an innovative and refreshing way.

How can we make the processes more efficient and automate them?

The challenge this project tries to address is the procuring of common goods and services below the threshold, while maintaining good prices. Authorities and state institutions (ministries, state-run business, local governments) can bid at this portal for the purchase of smaller goods and services and construction work.

So what we’ve got is a catalog of subject matters: simplified procedure, anonymous CA, and suppliers during the tender. After closing the contract everything is made public and process is published.

The new portal will reduce the procurement process from 3 to 4 months to one week. Furthermore, it is an important anti-corruption instrument due to the fact that national and local governmental organisations will be purchasing live and online.  It is hoped that this will help to improve the fairness to suppliers as well as government purchasers.

For state procurers, the value range of available goods and services is from 1,000 EUR to 134,000 EUR; for other procurers, the range is from 1,000 EUR to 207,000 EUR. The upper limit for construction work is 5,186,000 EUR. Registered companies can offer their goods, services and construction work.

The pilot was launched in September 2014, and roll-out began in earnest in Feb 2015. To-date the portal has signed-up 6500 suppliers.

Innovation in the public sector: the rise of the smart, super connected city

How are we innovating in the public sector?

Procurious is here at Procurement Week 2015 in Cardiff. We have heard from Jim Smart – Head of Digital Cardiff, on the challenges that public procurement is facing in order to lay down the infrastructure that leads to innovation.

Cardiff is a city primed for growth, and it’s certainly no stranger to innovation – it’s a city that’s prospered not just economically, but socially and culturally over the last few decades.

By procuring broadband and bringing WiFi to the streets of the largest city in Wales, Cardiff will become a real smart city. The welcoming of this first class digital infrastructure will mean Cardiff benefits from the best penetration of superfast broadband throughout the UK Core Cities. It will also offer free to access WiFi on buses across the city and public buildings.

Joined-up procurement is healthy procurement

In this modern age, broadband access and a working Internet connection is taken for granted. But we often forget about the complexities required to get us online in the first place. It’s not just a case of plugging in to connect.

A number of pre-requisites are required to make Cardiff’s wireless dream a reality. The ingredients you will need: an Internet Exchange in the city centre, and a new highly secure Data Centre development. The Exchange itself is worthy of note, it not only represents an important £3.5m investment but it’s one of only four Internet Exchanges in the UK.

Such a monumental piece of work means a joined-up approach is needed in the city. You can’t have one procurement team not talking to the other, every party is required to pull together and champion transparency throughout the tendering processes. Superfast broadband is an enabler for innovation – the procurement itself should champion the super connected ethos, the one infrastructure, that will be borne out of this work.

At this stage it is also one of the first projects that will come in on time and under budget. Music to the ears of anyone involved in the initiative – procurement professional or otherwise!

Once the work is complete, the emphasis will be put back on the infrastructure. BT, Virgin, and Sky (to name but a few) all stand to benefit from the innovation Cardiff is being injected with.

cardiffbay

Cardiff – the ‘One City Planet’

Outside of the work that Jim and his team are involved in, thirty councils have been selected to carry out feasibility studies for something called the ‘Future Cities Demonstrator Programme’- and of those is Cardiff.

Cardiff, like many cities around the world, is facing challenges managing its growth in a sustainable and prosperous way. The project will see the development of a virtual 3D city model to collect and manipulate data in order to monitor and control vital city functions such as, energy, transport, health, water, waste etc, in a holistic manner and develop a full understanding of how they interconnect and inter-depend.

The project will focus in particular on the role of Cardiff City centre as the heart of a rapidly growing city and as the retail, leisure, commercial and transport hub for city-region of 1.4m people. It will work with businesses, universities, third sector and citizens to ensure the delivery of a vibrant, prosperous, low carbon, healthy and happy city, and will form the platform upon which Cardiff can achieve its ambition of becoming a ‘One City Planet’ by 2050.

How can we procure in a smarter way?

The need for smarter procurement

Procurious is in Cardiff for Procurement Week 2015. We sat in on the 4th FAPPE (Faster Adoption of Public Procurement in Europe) Meeting where the group discussed  pertinent issues that need addressing when deciding on a roadmap for smarter procurement.

We’ve taken these concerns and have chosen to present them to you in the form of an infographic.

Smarter procurement infographic
Smarter procurement infographic

FAPPE is the brainchild of Rui Patricio – the Managing Director (Procurement & Innovation Management Consulting) of Digitalflow. Digitalflow is a Portuguese boutique consulting firm that offers a full range of services to support the implementation of business-to-government processes making use of electronic platforms.

Internet retailer Amazon on putting people first

File of a box from Amazon.com is pictured on the porch of a house in Golden, Colorado

Work hard, have fun, make history

Procurious is at Procurement Week 2015 in Cardiff – ahead of our exclusive interview with Amazon’s Gary Elsey – Operations Manager for Amazon.co.uk, we present some bite-size tidbits into Amazon’s people-centric philosophy.

Amazon in 1995 – started life an online bookstore (VHS, DVDs, CDs etc. came later), but at that time there was no discernible way of searching through the product listings. A far cry to the behemoth that stands before us today.

Amazon on customers

Amazon’s vision is simple – no matter what it’s doing, what products it’s launching – the customer is always the end goal.

As a company Amazon has always strived to work backwards from the customer. ‘What can we do differently, how can we distinguish ourselves and innovate?’ These are all essential touch-points that the Seattle-born retailer has obsessed over since day one.

For an example of Amazon’s customer-centricity, look no further than the release of Microsoft’s Windows 7 operating system. When it went on sale, as soon as Amazon sold through all its original allocation, it made the ballsy move to direct customers to competitors websites. No ‘out of stock’, or ‘awaiting stock’ messages here… Amazon is an altogether different beast.

With seperate online properties operating in United States, United Kingdom & Ireland, France, Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico, ultimately logistically problems do arise… But here is where Amazon plays its trump card, as the retailer offers almost-instantaneous conflict resolution. If you choose not to opt for online chat or a response by email, an Amazon representative will offer to phone you back.

In Amazon’s history there have even been examples of purchases being personally delivered when the situation dictates…

…On passing back savings

Unlike most, Amazon employees don’t carry business cards. Why? They’re an unjustifiable spend. Amazon always asks, ‘does the customer need this?’ If the answer is no, then the outcome is quite clear (no business cards…) It shouldn’t surprise you to learn that every decision is examined in this way. Amazon always seeks to maintain low operating costs, so it can pass the savings back to the customer.

…On hiring

Amazon’s ethos is very much: ‘I’d rather interview 50 people and not hire anyone than hire the wrong person’

…On inspirational leadership

‘My own view is that every company requires a long-term view’ – Jeff Bezos. It is worthy to note that making a profit is not one of Amazon’s goals. Instead it employs elements of Simon Sinek’s Golden Circle Theory: ‘What, how, why’.

It is said that Amazon’s CEO – Jeff Bezos, spends a couple of days every year on the service desks to field customer feedback. Even better than that, send him an email and he’ll personally see to it that someone from Amazon responds to your query.

Nurturing new talent – the lure of the graduate

Procurious is in Cardiff for Procurement Week. Are you attending?Come and join our #PW2015 group!

Today we’ve heard from Chris Nye of Axiom. Axiom is a service-driven business, specialising in the medical, industrial, and military fields.

In just a couple of years Axiom has doubled its workforce and trebled its turnover – and as any organisation knows
keeping this momentum is paramount to the success of the business.

And of course there are always challenges – for Axiom, number one was the realisation that its recruitment strategy needed a little help.

Axiom woke up to the idea that graduates can fill the skills gap.

What improvements can be made?

Axiom previously had trainees come and go, it was classically recruiting the wrong individuals. What it needed was a blank
canvas (with the right skill-set), and saw determined graduate trainees to be the best fit.

Graduates represent young, intelligent, questioning minds, and more importantly a lack of baggage. By hiring graduates
you can allow them to find their own skills and own career fit. Give them the opportunity to find themselves within the
business, to see what sticks and what interests them.

Axiom’s approach is not overly prescriptive – an entrenched view falls prey to shortsightedness, and errors can be locked into a vicious cycle. Instead you shouldn’t dictate the graduate’s path, encourage independence and let them find their own way. It is important that after the training period ends, graduates are deployed into only what they enjoy and
excel at – the fields they have chosen to specialise in and want to develop these skills further. The path should be continuously monitored and adapted as necessary to ensure the graduate is shaping the role.By adopting this approach it is possible to maintain the graduate’s youthful enthusiasm throughout the development plan.

The new power generation

By training (and inevitably employing) graduates you will often find this exercise opens-up new opportunities, and  you’ll be able to fill newly-created roles. What’s more graduates can be thought of as thought-provoking and questioning assets to any team. By mixing up your team and employing new blood, it encourages an honesty when it comes to looking for solutions. It’s all about balance – the graduates provide the business with a different view. Sometimes all it takes is fresh eyes…

Axiom put this into practice a couple of years ago – now, 2 years on it has welcomed 5 graduates through its doors.

By looking towards graduates you’ll be furnished with bright, young minds who possess an unquenchable thirst to continuously improve. The graduate solution is indeed a brave new world, the only constant being change…

How to Achieve Award Winning Procurement – Learn from the Experts

Procurement and Supply Chain Management Professional of the Year – Fabienne Lesbros, CPO, Britvic Soft Drinks

fabienne

Fabienne Lesbros started her procurement career in 1991 on the Channel Tunnel project. Since then she has worked across a number of sectors and industries, procuring for well-known companies such as Future Electronics and GlaxoSmithKline, before being appointed CPO for Britvic Soft Drinks in 2010.

Britvic has an annual global spend in excess of £1.1 billion, with suppliers in over 40 countries. Since 2010, Fabienne’s team has achieved great success in both savings and value creation, but has also led the way in sustainability, innovation and education.

In 2014, Fabienne was awarded the CIPS ‘Procurement and Supply Chain Management Professional of the Year’. Of her career she says, “My passion for the profession is stronger than ever, fuelled by a changing world focussed on sustainability, responsibility, innovation and the digital age.”

Fabienne talks to Procurious about her continuing journey and where she sees procurement in the future.

How did you get started in procurement?

Like a lot of my peers, I ‘fell’ into procurement at the start of my career. I had finished my studies and procurement was the first role I got. Again, like many of my peers, I didn’t really understand what procurement was or what the job entailed.

I started as an analyst in the procurement department as part of the channel tunnel project for Eurotunnel and I loved it from day one. I’ve always thought that procurement was a fascinating profession to be part of. You work with one of the few functions where you have contact with all parts of the business. You can touch so many things – the scope for procurement is immense.

What is your proudest achievement in procurement so far?

About a year ago, our CEO (Simon Litherland) spoke to the city about Britvic and how procurement was one of the key pillars to deliver the company’s strategy going forward.

This was a big achievement as it showed how much the procurement team was valued by the business. In many organisations, procurement simply doesn’t have that level of focus, although this is changing as more and more organisations realise that procurement is one of the most powerful tools at their disposal.

Similarly, getting the award from CIPS has to be right up there as one of my proudest achievements, both from a personal perspective but equally from a team perspective. I see this award as just as big an achievement for them.

What prompted you to submit a nomination for the CIPS award?

I hadn’t intended to submit a nomination for the award at all. However, a friend of mine from the CIPS Fellows said that I should and kept asking me until I applied!

The way it works is as follows: you write the submission yourself, but a lot of documentation comes from peers about your work, line manager testimonies and recommendations from colleagues and people you have worked with throughout your career.

After you have submitted the paperwork, a pre-selection takes place and people are informed if they get through to the next stage. If you are selected, you are given a month to prepare a presentation to be delivered to a panel of industry experts.

The key success factor in this part of the process was the ability to communicate, specifically being able to consolidate your message into something clear, concise and pitched at a business level. Of course getting it right first time is essential! This was a challenging exercise preparing 6-7 slides to cover a 20 year career to date.

However, this is no different to everyday procurement activity – one of the main areas I look to develop my team in is the ability to avoid procurement jargon and get their message across by tapping into business issues through the language of the wider organisation

What does the award mean to you and your team?

What the award gives to the team is a great external benchmark and recognition, which then leads to more gravitas internally and the ability to influence the business agenda at pace. People start to understand procurement’s role in more depth and realise that they can reach and surpass their own business objectives by collaboration with us.

Procurement can unlock the potential of the supply base to directly deliver the needs of the business rather than getting lost in the complex world of third party supply chains, which if handled incorrectly can have serious detrimental impact to an organisation.

Quality leads to recognition, which in turn leads to trust and building this trust means our business partners rely on and want to work with procurement for a quality output.

It of course works externally too, as suppliers clamour to work with an award winning team.

What is the most challenging aspect of being the CPO in an organisation the size of Britvic? And the best thing?

The most challenging aspect is the high number of initiatives that the organisation has running at any one time – we are an ambitious organisation and that means there is lots to do!

As commodity experts there is always a lot of pressure on procurement to avoid volatility and equally the cost consciousness agenda that runs through the organisation means our Indirect Procurement team is at the forefront of this – challenging but that’s the way we like it!

The advantage is the size of the company – we are not a behemoth and the closeness to the product that procurement has means we can act with pace. You can see the immediate impact on the bottom line that your decisions are making.

It’s also easier to get round all the business partners and you are able to do more of that face-to-face.

One of the best things about being CPO is being in charge of the coaching and development of the team. I find it very rewarding to develop the team and to see individuals achieve things that they didn’t previously think would be possible – we are nothing without a team that has development opportunity, ambition and talent.

What are your key aims for 2015?

Professionally, I am trying to get the team to develop greater engagement with the commercial and sales teams. The engagement often stops with the marketing or operations teams, but I believe that there is a lot to get from engaging on the commercial side.

They understand the competitive edge, trends and where future products might be heading. I’m pushing the team to work in this area, which will be a big change in terms of engagement, as it doesn’t really happen at the moment. I think you need to do things in a collaborative way and work very cross-functionally.

After all, sales can help procurement on getting into the mind of a seller and vice versa – it’s a trick many organisations miss, which could really strengthen supplier and customer negotiations and relationships.

How can procurement become more strategically involved in organisations?

For me, it’s all about understanding the business needs, adding value and not doing procurement in a silo. This goes back to the engagement with other parts of the business.

The procurement team doesn’t speak in procurement terms to other teams; they try to speak their language. You engage the business better by speaking in IT, marketing or operations terms to those other teams and understanding what their key drivers are

You constantly need to understand what the business’ needs are. You fulfil a need from the business, but finding a need that the business never knew it required in the first is far more powerful: this is how procurement adds value to the business.

Procurement can be seen as part of the team and can bring so much functionality into the business. It’s the only team that can touch everything internally and externally every day.

What do you see in procurement’s future and how can social media play a role?

You can look at this from two angles, the first being the impact from social media on the supply and demand for goods and services. We live in a world of multiple social media streams, which has completely changed the way we interact with our consumers.

This is at the forefront of our marketing strategies which ultimately impacts us all – for procurement reacting to customer preferences and rapid changes in trends means we have to be quicker than ever in dealing with the supply base and sourcing innovation to match our needs. We have more information at our finger tips to inform us of supplier performance/preferences and this will only accelerate over the next 5 years.

Secondly, I look at social media from a perspective of developing the profession. Procurement is not a profession that is really on people’s radar, you don’t see procurement anywhere in terms of being a career. Kids don’t come home from school and tell their parents that they want to be a buyer!

We need to establish procurement as a profession in the same way as law and accountancy, and make people in schools and universities aware that there are careers in procurement out there.

Social media can help this happen. Engaging with schools, showing them what procurement is and how to qualify, what careers are available and what you can do in procurement – all of this can be shown on social media.

How can we engage with the next generation of procurement professionals?

As with the previous question, we need to show procurement as a profession. There should be programmes in schools about it, have universities linked up with CIPS to offer information and qualifications and courses in procurement and then for companies to create graduate programmes where they can.

The profession needs people. At the moment, we don’t have enough people with the right skill sets. Procurement should be a profession for which there should be a degree/professional accreditation, the same as being a lawyer or an accountant.

It’s vital for procurement to become a recognisable profession. It’s becoming too critical to organisations not to have people coming naturally from a professional stream.