All posts by Procurious HQ

Big Ideas Summit 2017: Be Bold But Nice

The role of procurement is changing and evolving. Professionals have more influence than ever before and Deb Stanton wants them to use their position to be bold but nice!

At the Big Ideas Summit 2017, we once again challenged our thought leaders to share their Big Ideas for the future of procurement.

Our attendees spoke about everything from creativity to politics, from cognitive technology to workplace agility, current affairs, economics and the future. Whatever your industry and wherever you are in the world, there are some top tips to takeaway!

Procurement has elevated within organisations

Deb Stanton, Executive Managing Director at CAPS Research, believes that the procurement function has really elevated within our organisatons.  Data collected by CAPS research shows that 82 per cent of CPOs now report directly to their CEO or one level down.

Under these new circumstances, professionals will have to work differently with their business partners and in their procurement teams.

This is why, Deb believes,  being Bold But Nice, is a valuable mantra. Procurement needs to ask the challenging questions, go in search of new solutions and embrace ideas. Of course, professionals  need their organisation to to work with them, which is why it’s important to be amenable whilst driving new value to our companies. .

Want to find out more about Big Ideas 2017? Join the group on Procurious.

You’ll find all of the Big Ideas Summit 2017 videos in the learning section on Procurious. If you enjoyed this Big Idea  join Procurious for free today ( if you haven’t done so already).  Get connected with over 20,000 like-minded procurement professionals from across the world. 

SpaceX, Red Cross Millennials Amongst 30 Under 30 Rising Supply Chain Stars

Procurement and supply leaders as young as 24 are impacting major companies including SpaceX, A.T. Kearney, Cisco Systems and the American Red Cross. 

ISM and THOMASNET.com today announced the 2016-17 winners of the 30 Under 30 Rising Supply Chain Stars award, presenting the profession with an inspirational batch of role-models who are sure to attract more Millennials to supply management.

Tom Derry, CEO of ISM, says the quality of this year’s crop of stars is inspiring. “Younger generations in the workforce are stepping into leadership roles earlier than their predecessors. This year’s winners are leading the charge, and show that our future is in capable hands.”

“Capable” is an understatement when you look at the achievements of some of these professionals. Andrew Paulsen is a Senior Buyer at SpaceX, one of the highest-profile and most sought-after companies to work for in the U.S. There, he has helped transform the castings commodity into a strategic organisation focused on the reduction of risk and the amplification of innovative designs and production processes.

Amanda DeCook of A.T. Kearney spent nearly a month in Tanzania leading a supply chain diagnostic on life-saving commodities (such as antibiotics) for the remote Sengereme District near Lake Victoria. She was able to make recommendations that would help reduce the likelihood of stock outs in the future, resulting in more lives saved.

Subhash Segireddy, Supply Chain Program Manager at Cisco Systems, led a team which developed a strategy for a manufacturing project which enables resiliency in the supply chain, reduces greenhouse gas emissions and drives millions in cost savings with a vertically aligned supply chain.

In a rapidly changing supply and demand environment, Jaime Todd has created innovative projects for the Red Cross, including a first-ever toolkit for category managers, along with supplier risk frameworks, policies and procedures.

There’s a common thread in the careers of these four Rising Stars, in that they’re all contributing to a wider cause beyond immediate business goals. Whether it’s reducing greenhouse gases, ensuring the supply of life-saving blood, assisting a remote African community or even helping humanity reach Mars, each role taps into the social aspect that has been identified as a major draw-card for Millennial talent.

Three winning characteristics of 30 Under 30 Stars:

According to THOMASNET.com’s Donna Cicale, the judges looked for three main characteristics in this year’s batch of Rising Supply Chain Stars. The 30 winners are:

  • Multi-talented: “We look for people who demonstrate and excel at a wide range of skills beyond business acumen. We’re searching for fast learners, effective communicators, quick thinkers and natural leaders.”
  • Influencers: “Supply chain stars must be ‘movers and shakers’ in their organisations. They need to be skilled in getting others engaged, bringing colleagues on-board, and working towards common goals.”
  • Trailblazers: “We look for individuals with ‘firsts’, or accomplishments not previously realised by their organisation. A ‘first’ can relate to timing, budget, initialisation, integration or adoption.”

Each winner will receive a one-year membership to ISM; complimentary admittance to ISM2017 annual conference in Orlando, Florida (May 21-24); and a THOMASNET.com Team Training Lunch and Learn session for them and their colleagues.

Visit www.thomasnet.com/30under30 for the full list of 30 Under 30 winners.

Digitalisation – Making Procurement 4.0 a Reality

Procurement is dead, long live Procurement 4.0! Digitalisation represents a fundamental, but inevitable shift for the profession.

Download your copy of ‘Procurement 4.0 – The Digitalisation of Procurement’ on the Fraunhofer IML website.

Throughout this series of articles, we have discussed the evolution of Procurement to Procurement 4.0. From trying to establish a single definition, to outlining the challenges the profession faces, the journey promises to be difficult.

However, the benefits and advantages that at the end make this particular journey worthwhile. Using the findings in BME’s survey, we’ll look at how digitalisation will help to shape the profession.

Digitalisation of Procurement

According to BME, the digitalisation of procurement is key for the profession to maximise the value it delivers to the organisation. Procurement needs to digitise all its manual processes and focus on the strategic ones.

Big Data plays a major role in this, and procurement can use existing knowledge to drive activities in this area. However, to fully realise this, organisations need to understand the role their staff will play. This is not only in how their roles will look, but also how they will need to be trained to carry them out.

“Existing fears based on the changes expected seem to be resulting in a passive approach. Even the very consideration of the immense changes that we may face as a result of Industry 4.0 is creating a sense of paralysis.”

Management of the cultural change, and setting of a concrete roadmap will help these activities. And once this is complete, procurement’s work can begin in earnest.

Digital Procurement Portfolio

The digitalisation of the procurement portfolio will have a key impact on the value the profession brings. The changes to the portfolio will be impacted both by digital technology, and changes to the supply chain in Industry 4.0.

New raw materials, assets such as 3D Printers, and new tools will all fall into a much-changed procurement portfolio. This will require both newly adapted process, and new skills for the professionals running them.

  • Respondents to the BME survey highlighted the following areas as key in Procurement 4.0:
  • Procurement will need to improve internal (vertical) networking with other departments.
  • Procurement will then use external (horizontal) networking with suppliers in order to source the correct products.
  • Further qualifications are essential to build knowledge of products and technology. This will enable procurement to act as an equal in vertical and horizontal networking.
  • An expanding supplier portfolio will make horizontal networking more critical than ever.
  • Procurement need to source innovation from suppliers. This will reduce time to market, access state-of-the-art technology, and overcome any missing skills in-house.

Developing Organisation 4.0?

In order for all of this to succeed, organisations as a whole must recognise the need to change. Functional working and silos will stand in the way of development and knowledge sharing, both fundamental to successful working in Industry 4.0.

Digitalisation is only possible if procurement can then forge strong, lasting relationships with internal and external stakeholders. People are critical to this, and organisations must provide up-skilling opportunities in line with this.

“The successful implementation of Procurement 4.0 stands and falls with its employees. Employees must be involved in times of upheaval and appropriately qualified. If this is ignored, it can be assumed that the company will fail.”

While this may take time to come to full fruition, there’s little argument among experts that this is necessary. The future lies before procurement, but it’s down to the people in the profession to help it walk this path.

The Association Supply Chain Management, Procurement and Logistics (BME), founded in 1954, is the leading professional association for supply chain managers, buyers and logisticians in Germany and Central Europe.

Fraunhofer IML, founded in 1981, is a global expert on all fields of internal and external logistics. The Institute also currently heads up the largest logistics research centre in Europe.

To download your copy of the report, visit the Fraunhofer IML website.

NEC to build world-first information platform for Global Pandemic Supply Chain

When a disease outbreak hits, even the slightest inefficiency in supply chains can lead to a catastrophic loss of human life. A joint initiative of The United Nations World Food Programme and NEC Corporation will greatly improve the supply chain response to the next pandemic. 

The 2013-2016 West Africa Ebola outbreak began in countries of Guinea, Liberia, and Sierra Leone, with smaller outbreaks occurring in Nigeria, Mali and Senegal. Imported cases led to infections being reported in the UK, Spain, Sardinia and U.S. before the outbreak was declared in June 2016. By this point, the World Health Organisation reported a total of 28,616 cases and 11,310 deaths.

According to the UN World Food Programme (WFP), the need for a streamlined and coordinated supply chain response was highlighted through the many challenges encountered during the West Africa Ebola outbreak. They included:

  • Severe warehousing and distributing capacity constraints
  • Limited visibility of the overall supply and demand of critical items
  • Access constraints caused by border closures
  • A lack of public-private sector coordination resulting in duplicate efforts and an inefficient response

Protective clothing (pictured above) is an example of a critical item that must get through to healthcare workers in outbreak areas. A full set of protective clothing includes a suit, goggles, a mask, sock, boots and an apron. Healthcare workers change garments frequently, discarding gear that has barely been used to minimise exposure to the virus. By October of 2014, Ebola suit makers including DuPont and Kimberly-Clark had tripled production to try to cope with demand as health workers used an average of seven suits per bed, per day. The World Health Organisation estimated that three million protective suits were needed over the course of the outbreak. Tragically, healthcare workers represented nearly 10 percent of cases and fatalities due to ebola.

New supply chain platform will save lives when the next pandemic comes

Supply chain logistics are a critical part of any emergency intervention. Inadequate logistics can lead to critical delays, cost lives and waste precious resources. NEC’s announcement of a new information platform, which will be part of the Global Pandemic Supply Chain Network, is expected to improve response times, find cost efficiencies and aid in continuous improvement.

The technology has been described as a “logistics visualization system that will enable end-to-end tracking of pandemic response items” – such as protective clothing – within a country facing an outbreak, helping to ensure quick and appropriate delivery of supplies to people in need. Other key functions of the system include reporting, analysis of supply chain inefficiencies, data integration with existing logistics systems and in-country warehouse management.

“It is widely recognised that the global health architecture could be reinforced with an improved supply chain platform to enable better preparation and faster response time for pandemics”, said a spokesperson for the Japanese Government, which committed US$1 million to the development of the new technology.

 Public/private collaboration driving results

Perhaps the most encouraging aspect of this announcement is the demonstration of how effective public and private collaboration can be in solving enormous challenges such as a global pandemic response. Aside from the key collaboration between the WFP and NEC Corporation, a framework for future pandemic response has been developed through an “unprecedented” level of cooperation between public organisations including the UN, WHO, UNICEF, the World Bank; and private sector companies including Johnson & Johnson, UPS Foundation, Becton, Dickinson & Co., and NEC.

 In other procurement news this week…

 White House trade advisor reaffirms administration’s trade goals

  • The U.S. is seeking more reciprocal trade arrangements with key countries to boost growth, reduce the trade deficit and reclaim American production capacity, according to Peter Navarro, director of the White House National Trade Council.
  • Speaking in Washington last week, Navarro singled out nations that have contributed to the current deficit problem, including Ireland, Vietnam, China, South Korea, Taiwan and Switzerland.
  • According to Navarro, the U.S. plan to reduce the trade deficit “is not based on higher tariffs, but rather getting our partners to lower theirs.”

Watch Navarro’s speech here.

Canadian federal procurement processes flagged for an overhaul

  • Addressing an event hosted by the Information Technology Association of Canada last week, Canada’s Public Services and Procurement Minister Judy Foote stressed the need for an overhaul of federal procurement processes to improve accessibility for SMEs.
  • At present, unreasonably complex processes and requirements are resulting in 8000-page responses to RFPs, which small businesses simply do not have the resources to undertake.
  • Ms Foote said that government procurement processes “have the ability to shift markets … (and) launch businesses.”

Read more at Ottawa Business Journal

 

Big Ideas Summit 2017: Pay Your Bills

It’s not about the money, money, money… except that it kinda is. Barclays Chairman, John McFarlane, reminds us that we need to pay our supplier bills on time!

At the Big Ideas Summit 2017, we once again challenged our thought leaders to share their Big Ideas for the future of procurement.

Our attendees spoke about everything from creativity to politics, from cognitive technology to workplace agility, current affairs, economics and the future. Whatever your industry and wherever you are in the world, there are some top tips to takeaway!

If You’ve Got Bills You Gotta Pay – Pay Them!

Barclays Chairman, John McFarlane, has a simple but utterly  fundamental Big Idea to share for 2017:  Procurement pros must pay their bills on time!

John acknowledges that  it’s a  great time for people working within procurement. There are now global marketplaces, the online arena continues to grow exponentially and power has transferred into the hands of consumers. This is a truly unparalleled period for the function.

But despite all the changes  that are occurring, John was keen to remind procurement professionals that suppliers really matter and the importance of paying bills on time should never be underestimated. If you don’t pay  when you should,  you’re accountable for endangering a perfectly good customer.

Looking after your  long-term interests and nurturing your relationships is more valuable than always thinking in the short-term.

Want to find out more about Big Ideas 2017? Join the group on Procurious.

You’ll find all of the Big Ideas Summit 2017 videos in the learning section on Procurious. If you enjoyed this Big Idea  join Procurious for free today ( if you haven’t done so already).  Get connected with over 20,000 like-minded procurement professionals from across the world. 

Not just about Trump’s Tower: Procurement in Azerbaijan, the Land of Fire

Azerbaijan has hit the headlines today with allegations that a Trump Tower hotel project in Baku involved a deal between the Trump family and a “notoriously corrupt” Azerbaijani oligarch with ties to Iran’s Revolutionary Guard. 

Trump, towers, and corruption aside,  Procurious recently interviewed one of our own community members, Fidan Amirbekova, about working in procurement in Azerbaijan – a tiny Caucasus state that has suddenly found itself in the international spotlight. 

With its unique cultural heritage, ancient origins and shared border with Iran, the history of the former Soviet state of Azerbaijan makes for fascinating reading. But what’s it like to work in Procurement there? Procurious member Fidan Amirbekova shares why the most important asset in Azerbaijani business is your personal network.

Welcome to the Procurious community, Fidan! Can you tell us a little about your country?

I live and work in Baku, the capital of Azerbaijan and a thriving city on the coast of the Caspian Sea. The town’s origins go back to Roman times, with the earliest written evidence of its existence dating from 84AD. Today, it’s an incredible mixture of ancient buildings and modern skyscrapers. The town’s most recognisable buildings these days are the iconic “flame towers” (pictured).

Azerbaijan, also known as the Land of Fire, is the largest of the three South Caucasus states and is bordered by Russia to the north, Georgia to the north-west, Armenia to the west, Turkey to the south-west, Iran to the south, and the Caspian Sea to the east. Our culture has been defined by our location at the cross-roads of Russia and Persia (later Iran), and Azerbaijan has been a part of both empires at different times in its history.

Although the country has a Shiite Muslim majority, Azerbaijan doesn’t have an official religion, and all the major political forces in the country are secularist. The official language is Azerbaijani, although many of us speak Russian and English as well.

What kind of organisation do you work for?

I work in procurement for Bakcell, the leading mobile phone operator in Azerbaijan. The telecommunications sector is one of the biggest and most innovative in the country, and the role of procurement is significant. I’ve worked at Bakcell for almost 13 years now, with six of them in the procurement department. Specifically, I’m responsible for Marketing and Sales procurement and specialise in services purchasing.

As a profession, procurement in Azerbaijan is quite new, but it’s growing rapidly. Most of the large companies (especially the international ones) require procurement specialists in their teams. There is no developed manufacturing chain in the country, so we need to import almost everything.

Are there any challenges involved with moving goods across borders?

Yes, there are sometimes difficulties with moving goods across borders, but experienced professionals can always find a way. Doing business here is about who you know – personal relationships play a very important role in every field in Azerbaijan. You will succeed if you have a large network – it doesn’t matter if your connections are business-related or personal. In my experience, a wide circle of friends and acquaintances solves everything. That includes online social and business networks like LinkedIn – and Procurious!

Do you source anything from Iran? 

There is some trade over the shared border between Azerbaijan and Iran. Personally, I haven’t yet had to source anything from Iran. The two countries have a shared history and there are many Azerbaijanis living in Iran, and vice-versa. We have stronger business and personal relationships with Turkey. Our languages are similar, and Turkish students come to Azerbaijan to study. We import a lot from Turkey, and there are many Turkish companies here, both small and large.

What pathways are offered to get into procurement in Baku and the region?

As I said earlier, procurement is relatively new here, although it’s growing fast. At present, none of our higher education institutions offer courses in procurement. There is, however, a small consulting company which represents CIPS in Azerbaijan and offers training courses and CIPS qualifications. Many procurement professionals here are actively seeking new opportunities and professional development, so having the CIPS qualification is becoming increasingly popular.

Overall, I think procurement has a great future in modern Azerbaijan. Businesses here understand that we can make a great contribution.

Procurious may be an English-language business network, but our community members come from all over the globe. We’re looking for more stories to build a picture of the unique challenges faced by procurement professionals internationally. If you’re interested in sharing your story, please leave a comment below.

The Unpalatable Update On Thinking The Unthinkable

It’s all too easy to avoid thinking the unthinkable when the unthinkables concerned are so unpalatable. 

Nik Gowing, BBC Broadcaster and Visiting Professor at King’s College spoke with Philip Ideson as part of Procurious’ Even Bigger Ideas, a 5-part podcast series sponsored by State of Flux. You can access the series exclusively on Procurious.

Nik Gowing introduced Procurious to the concept of thinking the unthinkable at last year’s Big Ideas Summit. Unthinkables are critical events that are not being considered or prepared for by organisations or by our governments around the world.

From Brexit to the election of President Trump;  from Putin’s invasion of Crimea to the upcoming European elections, unthinkables have been occurring frequently over the last few years.

Unthinkables such as these disrupt everything that we presume to be stable and constant, they create an unthinkable environment and, unfortunately, they’re not letting up in 2017.

Nik Gowing returned to Procurious this year to speak in our podcast series, Even Bigger Ideas, and to give us an update on the current state of affairs. Why is the world struggling  to prepare for unthinkables and what can be done to change that?

The New Normal

In recent years we’ve endured one unthinkable after another and, more often than not, several at once. Nik firmly believes that this is to be the new normal. Leaders, whether they admit it or not, are worried about what’s coming next and what the future holds for their organisations.

“If  organisations don’t handle or recognise [unthinkables] then it could lead to them going out of business very quickly. Consumers and customers feel alienated by what a lot of companies are doing; what a lot of governments are doing.

A lot of the next generation, the millennials, don’t like what they see in companies or governments and of course this means that they don’t want to go into those companies. Therefore, there’s a succession problem as well.

We haven’t seen anything yet with AI and the internet of things coming down the track. What many thought would be unthinkable in twenty years, will probably be unthinkable in twenty months.”

Why are we failing at thinking the unthinkable?

Executive leaders are often  overwhelmed, under pressure and unable to think about unthinkables.

The latest Thinking The Unthinkable Report reveals nine conclusions as to why leaders have, so far, struggled to respond to unthinkables. Nine key words and conclusions were mentioned repeatedly by survey participants.

“One of [these conclusions] is denial, and another one is willful dissidence. There’s a hope that, ‘Well, this is only a blip. It isn’t going be like this indefinitely.’

Those who have made it to the top whether it be C-suite, CPOs or as chief risk officers are constrained in their way of thinking. As Nik points out “the conformity, which gets you the promotion and gets you to the top, in many ways, disqualifies you from understanding the enormity of the changes that are taking place.”

“In reality,  leaders must use every kind of idea that’s out there; coming from inside the company, outside the company, in order to actually understand, appreciate, mitigate and confront head on the enormity of changes coming”

It’s Time to Start Thinking the Unpalatable

Nik asserts that unthinkable events are often apparent but we choose to ignore the available evidence because it is so unsavoury.

“Thinking the Unthinkable is the title, but actually it should be thinking the unpalatable. In almost every aspect, there is  clear evidence out there [of what’s to come].”

“Before the migration crisis in Europe there was two years of warnings from the UN and the International Organisation of Migration. But companies, and certainly governments, did not want to listen to it or take notice.

“The unpalatable is this stuff that’s out there.  Organisations say to themselves ‘Surely, that’s not going to affect us. Surely, it’s not going to be that bad. Surely, we can ignore it.’ And, actually, they should be saying, ‘We’ve got to embrace this.’ ”

What can be done?

“Chief risk officers and procurement officers have got to think far more broadly. There’s probably an unpalatable, small incident or issue out there that is going to turn into something much bigger. We are too often seeing the attitude of ‘We’ll rule that out. We don’t want to know about that.’ Instead, unpalatables should be right at the top of the risk registry. ”

“Events that were once viewed as outlandish unthinkables would not even been considered as likely in the risk registry. It’s a bit like dealing with alcoholics. No one wans to admit they’ve got an alcohol problem until they get in the same room with a lot of people suffering from the very same problem. At this point they’ll say ‘My goodness, that’s me. We’ve got to do something about it.’ ”

“So what we’re in the process of doing at the moment is creating a community of leaders in government and corporates around the world who’re saying we’ve now got to change the way we do business. It’s about changing culture, mindset, and behavior. It’s not about spending money. It’s changing what’s in the human software up there.”

Procurious Even Bigger Ideas is a 5-part podcast series available exclusively to Big Ideas Digital Delegates. Sponsored by State of Flux, this series features interviews with five of the most intriguing power players at this year’s Big Ideas Summit in London.

“I’m Just Not Very Creative!” Three Ways To Unleash Creative Potential

According to Creative Change Agent James Bannerman, there’s no such thing as a lost cause when it comes to unharnessing creativity.

Bannerman spoke with Philip Ideson as part of Procurious Even Bigger Ideas, a 5-part podcast series sponsored by State of Flux. You can access the series exclusively on Procurious.

The stifling of creativity is a slow but inexorable process. Evidence suggests that humans are incredibly creative as children.  By the time we reach adulthood, however, we have often lost the ability to connect with our innate creativity due to a combination of upbringing, education, fear of criticism, the need for conformity and the boundaries of the corporate environment.

The good news is that innovation is now firmly on the agenda for businesses worldwide. Managers are pushing their teams to be more creative which,  for some individuals,  can be quite daunting, especially when you believe you’re simply “not a creative type”.

According to Bannerman, though, everyone has innate creativity. It’s simply a matter of re-educating ourselves and learning some tips and tricks to unlock your creative potential. “Our minds become so full of ‘you can’t do this’ and ‘you can’t do that’, and ‘that won’t work’, and ‘that’s been done before’, that a lot of our innate creativity gets squashed and stifled.”

Here are three tips on unleashing creativity from Bannermann’s interview with Philip Ideson. 

  1. Stop labelling yourself

There’s no such thing as a lost cause. Bannerman has worked across multiple sectors, unleashing creativity in teams including Aston Martin, Rolls Royce, and some space agencies. But you don’t have to work in a “creative” profession to be creative. “It doesn’t matter if people are nuclear physicists,  or accountants, or if they work in the world of marketing. The point is that creativity can manifest itself in many different ways.”

“I haven’t yet seen a completely lost cause. In fact, some of the best ideas I’ve ever come across have been from the people working in professions where you’d least expect to see creativity. The TV companies and the advertising agencies aren’t always the most innovative and creative because often they’re just regurgitating what they’ve done before. It’s in other groups, like accountants, where people generate ideas that make you think: ‘Wow’.”

  1. Stop trying too hard

“Trying to be creative is like trying to go to sleep. If you’re too busy focusing on going to sleep, you’ll stay awake because there’s all sorts of brainwave activity linked to beta waves that will keep you from falling asleep.”

Bannerman explains that there’s a sweet-spot that allows creativity to flourish. “We tend to be most creative when we’re focused but not over-focused, and relaxed but not too relaxed. You’re more likely to think creatively when you step away from your desk, and do something like go for a run, or go for a drive, or simply look out the window. If you say to yourself ‘I must come up with the best procurement idea ever right now’, chances are that you’ll become stressed and nothing will come to mind. It’s about finding that optimum state.”

  1. Make room to be creative

Bannerman has observed that creativity is often hamstrung by legislation, regulations and an atmosphere unconducive to lateral thinking. “There has to be wriggle room in a team’s dynamic. If people are too afraid of getting things wrong, or if they continually feel that everything has to be 100 per cent perfect straight away, then they’ll fall into a practical mindset. They’ll only do what they know will work, what has been done before, and will endlessly repeat old patterns rather than contemplating new patterns.”

“Any part of an organisation can be creative by looking at how it can improve itself, solve problems and imagine where it wants to be in two to five years’ time. Creativity can manifest itself in many different ways, depending on the context – it could just be about improving processes, systems or structures. It doesn’t have to be about inventing the next iPhone.”

Procurious Even Bigger Ideas is a 5-part podcast series available exclusively to Big Ideas Digital Delegates. Sponsored by State of Flux, this series features interviews with five of the most intriguing power players at this year’s Big Ideas Summit in London.

The Flaw At The Heart Of Trump’s America First policy

5.6 million U.S. manufacturing jobs didn’t move to China and Mexico – they simply disappeared with the march of technology. And that’s the flaw in America First! 

Trump’s stunning election win has been linked to his successful portrayal as both a friend of Corporate America and a champion of the working class. His business-friendly policies include large-scale deregulation, slashing tax rates and a huge infrastructure spend, which (in theory) are designed to boost jobs through trickle-down economics.

But the support of Corporate America isn’t enough to remain in power. In order to retain the presidency for another four years after the 2020 election, Trump will have to deliver on the key promise that won the support of the disillusioned working class – bringing industry home and reviving jobs in America’s once-thriving industrial rust belt.

However, there’s a miscalculation at the heart of the rhetoric around bringing jobs back from overseas factories.

Robots, not overseas workers, have taken 85% of manufacturing jobs

A recent study from the Centre for Business and Economic Research at Ball State University found that:

  • Employment in the manufacturing sector fell by 5.6 million between 2000 and 2010.
  • Productivity growth (automation) accounted for more than 85% of jobs lost in manufacturing in this period.
  • Only 13% of the overall job loss resulted from trade (including Chinese imports).
  • Meanwhile, U.S. manufacturing output has risen steadily, growing 17.6% between 2006 and 2013.

Simply put, American factories – and factories worldwide – are producing more goods with fewer people. Automation is rendering millions of low-skilled jobs redundant, yet Trump’s key policy aim to “bring back jobs” seems to be mistakenly focused on increasing trade protectionism.

Protectionism could backfire by further accelerating automation

ABC’s business editor Ian Verrender writes that even if Trump “slaps massive import duties on Chinese goods and forces his country to start producing everything at home via the magic of ‘America First’”, it risks leading to a domino effect where business will be forced to find efficiencies in order to survive.

  1. The loss of access to low-cost labour would drive up the cost of consumer goods, meaning Americans would find themselves unable to afford the goods to which they’ve become accustomed.
  2. This lack of affordability would spark demands for wage rises.
  3. Firms would respond by pushing even further into automation, using robotics and AI to cut costs.

Verrender comments: “Where once corporations scoured the globe for low-cost labour, and duly shifted their operations, they [would] now seek ways to eliminate labour altogether, particularly in manufacturing.”

Accelerating automation is inevitable

The loss of jobs to robots is only expected to broaden and accelerate. A report from two Oxford researchers found that an incredible 45% of U.S. jobs, across all sectors and professionals, are vulnerable to being automated within the next 20 years.

For example, self-driving technology alone could lead to the unemployment of 1,000,000 truck drivers in the U.S., along with approximately 160,000 Uber drivers, 230,000 taxi drivers and over 600,000 bus drivers.

Some of the big names to comment on the coming social disruption include Stephen Hawking, who wrote last year: “The automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.”

In February, Elon Musk asked the audience at the World Government Summit in Dubai: “What to do about mass unemployment? This is going to be a massive social challenge. There will be fewer and fewer jobs that a robot cannot do better [than a human]. These are not things that I wish will happen. These are simply things that I think probably will happen.”

Bill Gates commented: “You cross the threshold of job-replacement of certain activities all at once. Warehouse work, driving, room clean-up – there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, [will go away].”

What’s the answer?

Marc Benioff, chief executive of Salesforce.com, warned the World Economic Forum in Davos of the “digital refugees” that would be created by AI. “This is the moment … when we have the highest level of anxiety because we can see advances in AI that are beyond what we had expected,” he said. “It’s happening at a rate and a capability that we are worrying about how it will impact the everyman, the broad range of workers around the world . . . There is no clear path forward”.

One hopeful sign is that a public discourse on the disruptive effects of automation has begun. Thought-leaders have already put forward some solutions, although they may seem politically unpalatable at present. Elon Musk recommends that the U.S. adopts a universal basic income (such as that being trialled in Finland) to keep the economy going and guarantee a standard of living for the millions of workers expected to be displaced by automation. Bill Gates has suggested taxing robotic workers to recapture some of the money displaced workers would have paid as income tax. Education, too, will need to transform to equip future generations with the skills needed to find work in a highly-automated future.

Although Trump appears to be currently focused on the wrong job-stealing “villain” (China), there is hope that leaders will listen to the likes of Bill Gates and Elon Musk and start planning ahead for the social upheaval of what has been dubbed the fourth industrial revolution.

In other news this week:

France passes “duty of vigilance” supply chain law

  • Last week, France passed a law that pushes for accountability for multinational companies sourcing from global supply chains.
  • The “duty of vigilance” law requires companies to establish safeguards designed to ensure that labour rights and other human rights are respected in the production sites they source from.
  • The law requires large companies based in France to create a document that sets out their procedures for evaluating suppliers and mitigate human rights abuses. Violating the “duty of vigilance” law can lead to a penalty of up to €10 million.

Read more at Supply Chain Dive

Trump seeks historic increase in military spending

  • President Trump’s first budget seeks to boost military spending by $US54 billion. The US currently spends about $US584 billion annually on defence.
  • If passed by Congress, the 9% increase will be funded by cuts to non-defence spending, including environmental programs, diplomacy and foreign aid.
  • Last year, the rest of the world combined spent a total of $US317 billion on defence. The highest-spending countries under the US were China ($US146 billion), Saudi Arabia ($US82 billion), Russia ($US66 billion) and the UK ($US56 billion).

Read more at ABC News

Big Ideas Summit 2017: Understand Your World

Every procurement pro needs somebody to tell them the world weather forecast so they can figure out when they’re going to need an umbrella! 

At the Big Ideas Summit 2017, we once again challenged our thought leaders to share their Big Ideas for the future of procurement.

Our attendees spoke about everything from creativity to politics, from cognitive technology to workplace agility, current affairs, economics and the future. Whatever your industry and wherever you are in the world, there are some top tips to takeaway!

Be Sure To Understand Your World Weather Forecast

Justin Crump, CEO at Sibylline thinks that procurement organisations need to become more worldly wise in order to better manage future risk.

At present, larger organisations might be competent at managing risk but often this is very much in silos. This makes it very hard to fully understand what they are facing as a result of global events.

Given the rate at which technology is evolving and how global events are impacting the world, it is increasingly difficult for companies to keep up without considering risk in real-time.

Intelligence about the world we live in drives business operations and the better informed we are the easier it is to drive progress.

Justin urges us to gain a clear view of the world to measure against so the we can focus  our resources on what world means to us.

Want to find out more about Big Ideas 2017? Join the group on Procurious.

You’ll find all of the Big Ideas Summit 2017 videos in the learning section on Procurious. If you enjoy this Big Idea  join Procurious for free today( if you haven’t done so already).  Get connected with over 20,000 like-minded procurement professionals from across the world.