All posts by Procurious HQ

Evergreen Wisdom for a Changing Profession

When was the last time you reached out to a Procurement Guru? Although the battleground is changing, those among us with scars have a lot of relevant insights to share.

We knew we’d be in for a treat when we locked in an interview with ISM board member Ann Oka. Ann is the former senior VP of supply management (CPO) for Sodexo, Inc. in North America where she was responsible for a whopping US$5.5 billion spend.

While working, Ann believed in contributing beyond her formal role, and served on the board of trustees for the A.T. Kearney Center for Strategic Supply Leadership at ISM, the board of the Sodexo Stop Hunger Foundation, and was a member of the executive committee of the GS1 Foodservice Initiative.  She retired in June of 2014, and other than the ISM board, now occupies her time with family and leisure.

Of course, she has a wealth of knowledge to draw from thanks to decades of procurement experience but, interestingly, she’s objective about its value to the next generation of procurement professionals. “Some things don’t change over time; motivating and leading people, looking at evolving tech and enlarging the sources of value. But, whilst there might be a lot of insights those of us with scars can give, the battleground is changing.”

The battleground may well be changing but surely that means Ann’s insights, as a seasoned pro, are all the more significant? As such, we were fascinated to learn how she has seen the profession develop over time and what she believes the future holds.

The evolution of procurement

Ann explains how drastically procurement’s role has changed over the years, both in terms of job responsibilities and external perceptions of the profession. “Where people were once identified as buyers or negotiators, they became category managers as the implementation of strategic sourcing evolved. These developments redefined the role of the average procurement person – they became professionals; their strategic impact increased and they had a broader scope.”

It’s a tricky and lengthy transition to lead any team through. “There’s a big task in the up-skilling of your people, particularly when you want to bring as many of them along with you as you can.”

Of course, some things don’t change. “The major evolution of procurement that we’re currently experiencing is comparable, in many ways, to what happened twenty years ago” Ann begins. “It was in the mid-90s when I first realised the importance of systems, technology and data. There was a tremendous amount of data available to procurement and category management, but harnessing it and getting it into the hands of the supply professionals was the challenge.”

What does the future hold?

Ann believes that the most competent procurement professionals will take the onslaught of Artificial Intelligence entirely in their stride. As she puts it, in a message to “The Change Resistant”:

“The train has come to the station. You have the choice of getting on it – and we’ll help you with the ticket – or you can be run over.”

The bottom line, she says, is that “people may well have been successful in the past, but the world is changing and you need to change with it, or it will pass you by.”

As far as procurement roles being totally displaced by AI, Ann is sceptical at best. “I don’t think the advent of new technology really changes a procurement role. Those with an ability to look at the long-term picture will be able to incorporate that into their strategies. Look at how the future is evolving and the possibilities it presents and work out how you’re going to work with the firm and with your supply base to extract the maximum value.”

Permission To Fail, Please!

It’s apparent that Ann rates a good procurement leader as much as, if not more than, someone who’s AI-ready.  “The harder thing for many organisations is having a management team that allows employees room to stretch and fail, that lets them try new things without instilling a fear of repercussions. There is such a thing as a successful failure. People are loath to say a project they’ve run hasn’t worked  out, fearing they will be judged on its success or failure. But occasionally  encountering a failure is a part of the journey to improvement.”

Procurement leaders can effectively work as safety nets for their teams. They should allow enough flexibility but know when to pull the plug to avoid too much fallout.

“I was in my position at Sodexo for 11 years. It allowed us to do things like put in some industry-leading systems, change the way we worked with suppliers, and harvest a culture of continuous improvement. In this time the continuous improvement team came up with several far-fetched ideas and used the leadership  team as a sounding board. It’s useful to invite new ideas and to have an off-the-wall ways of looking at things.”

Of course, not everyone thinks in this way. The key is finding people who have strategic vision. “Leaders should be on the look out for hires who have an intellectual curiosity and the courage to tickle the edges of things that are scary.  Embracing functional diversity is important in achieving this – perhaps your next star will come from legal, or IT, or straight out of college?”

Once a CPO, always a CPO

She might be retired, but its clear to see Ann still lives and breathes procurement. “I have people from past roles who, surprisingly, come back and approach me for our old heart-to-hearts”. She holds­­ board positions and still mentors younger professionals.  Safe to say there’s a spot for her on our board any day!

We concluded the interview with a final piece of advice from Ann; “If you’re a CPO, think about how you best position your company for tomorrow. Keep an eye on emerging technologies and bring the conversation to the table.” In other words, don’t miss the train!­­

 

Don’t Be Afraid To Kick A Colleague When Negotiating

In a major negotiation, procurement needs to deal not only with the supplier representative on the other side of the table, but with the internal stakeholder sitting next to you. If that person deviates from the script – as they so often do – then don’t be afraid to kick them in the shins. It’s your job!  

Procurious was invited to attend a Negotiation Roundtable organised by CABL (Conti Advanced Business Learning) and facilitated by its Founder, Giuseppe Conti.

Conti introduced the subject by pointing out that in many negotiations, it isn’t enough to negotiate with the suppliers. Usually, there’s a minefield of internal negotiation to get through first.

Don’t enter the maze without a map

Håkan Rubin refers to his company (IKEA) as a “matrix organisation”, and therefore sees stakeholder mapping and management as crucial before any sourcing activity. In his role as Supply Chain Operations Leader (Group Sustainability Innovations), Rubin says that identifying who the key players are internally isn’t always that obvious. “We try to get everyone on board, to make sure that resources are available and that everyone feels they are involved.”

Paul André, Emerging Products & Commercial Supply Director at JTI, built upon Rubin’s point: “I find that even though you’ve carried out your stakeholder mapping and have a joint meeting with key people involved, a lot of discussion happens outside of that meeting. What happens between the meetings is often more important, where people agree on things in one-to-one discussions.”

Overcoming resistance

Kemira’s Senior VP of Global Sourcing, Thierry Blomet, examined some of the typical resistance that procurement faces from internal stakeholders. “They have restrictive time constraints, heavy specifications, and often want to select suppliers based on past history and how comfortable they are with using them. It’s often challenging for procurement to convince stakeholders that there’s a better option against so much resistance, especially in a conservative industry not willing to take on the adventure of new technology or new suppliers.”

Xinjian Carlier (Strategic Sourcing Commodity Manager -Honeywell) shared an example of how she overcame resistance to a request for extra resources to deal with a major issue with significant financial impacts. “The reaction was ‘we don’t have time – I can’t give you the resource.’ I explained that the reason I came to them was that the company including both procurement and engineering would suffer an impact of hundreds of million in sales. Basically, I converted the issue into facts and put both of us in the same boat. This helped the senior leader in engineering understand, and reprioritise his resources.”

Resolving conflicting objectives

Laurence Pérot, Head of Global Supply Chain & Procurement at Logitech, comments that particularly in larger organisations, it’s procurement’s responsibility (and challenge) to juggle differing objectives and agendas from varied teams. “When you’re dealing with different functions, it sometimes isn’t clear what the company actually wants out of the negotiation. It means we [procurement] are unsure what we’re going to ask for. I had an experience where we had to make the decision on our own about the objectives on behalf of the rest of the community, because we couldn’t get alignment between the functions.”

Procter and Gamble’s Global Capability Purchasing Leader, Tamara Taubert, adds that procurement owns the discipline to be able to turn around complex, multiparty negotiation effectively. “To do that, our stakeholders need to get educated on what a negotiation is, the do’s and don’ts, and their role in the negotiation itself. The procurement representative might be the only person sitting at the table across from the supplier, but there are others involved in the negotiation, whether they like it or not. Procurement can lead by connecting all parties together and help them come to a value agreement.”

Staying in control

Blomet has found that engineers are generally happy to be guided by procurement as they’re often less experienced in negotiations and sourcing events. But when senior business stakeholders step in, it’s often more challenging for procurement to keep control of the process. “Business stakeholders are more likely to say that they know how the negotiation should be handled. Procurement may be tempted to back off at this point, but my advice is don’t back off. It’s even more important to help set the scene, do the roleplay, and keep them under control both during the preparation phase and during the meeting itself. And yes, this means it might be necessary to kick someone under the table if they deviate from the script.”

Alessandra Silvano, Global Category Director Capex and MRO at Carlsberg Group, says this has happened to her. “I had to ask someone who was not keeping to the script to leave the room. This person was becoming emotional and I could see we would be left in a bad position. I called a time-out, we took a break, left the room, and the supplier stayed behind. Eventually, we went back into the meeting and said we’d like to continue in a smaller group – leaving out the person who was not playing according to the script.”

Francesco Lucchetta, Director of Strategic Supply at Pentair, noted that although emotion can cause people to leave the script, it’s part of the negotiator’s toolset. “There’s a difference between playing with emotions and keeping negotiations under control. In a supplier negotiation, you’re the customer, so you can be much more emotional than they are. In an internal negotiation, you’re more likely to change a stakeholder’s mind by pointing out the emotional/risk side of the issue, rather than presenting facts around savings.”

Interested in attending a CABL Negotiation workshop? Visit http://www.cabl.ch/ to find out more. The founder, Giuseppe Conti, has over 20 years of Procurement experience with leading multinationals and over 10 years of negotiation teaching experience at leading Business Schools (including Oxford, HEC Paris, IMD and ESADE).

The Brexit Horror Show: It’s Going To Be Rocky!

We all like to watch a good horror show.. but UK customs trying to manually process our imports? Entertainment it is not!

Are you ready to watch the Brexit horror show unfold?

The National Audit Office (NAO) pubilished a report last Thursday reviewing HM Revenue & Customs’ development of the new Customs Declaration Service (CDS).  The system is being developed in an attempt to manage the predicted 255 million UK customs declarations per year (an increase from 55 million)  once the UK leaves the EU.

But, with a significant amount of work still to be completed before March  2019,  many are concerned about what chaos might ensue.

Amyas Morse,  head of the NAO, did little to disguise his own concerns when he briefed the media on the report this week. He warned of a potential “horror show” at customs if the transition to CDS is not made by January 2019.

He said “What we don’t want to find is that, at the first tap, this falls apart like a chocolate orange.”  (Yep, we were confused by this too – it’s well known that Terry’s Chocolate Oranges are not known for their fragility; hence the marketing slogan “Don’t tap it, whack it!”.)

“It needs to be coming through as uniform, a little bit more like a cricket ball” he continued.

What Is The Customs Declarations Service?

The CDS is a new system, which will be installed to manage all imports and exports post-Brexit, replacing existing system, Customs Handling of Import and Export Freight (CHIEF).

CHIEF can currently process only 100 million declarations per year.  This leaves no question that a new system is needed given that HMRC are estimating an increase to 255 million once new trade and customs agreements are made during Brexit.

Completion of the installation is forecasted for January 2019 which doesn’t allow much room for error or delay given that the UK will officially leave the EU in March 2019. Indeed, the report confirms that there is still a “significant” amount of work to complete and a number of vacancies to fill, which means there’s a pretty good chance that the full functionality of CDS won’t be ready in time.

Ironically, in 2016, the UK came fifth out of 160 countries in the World Bank’s ranking of the efficiency of the border clearance process, including customs. Time will tell if this can be maintained post-Brexit!

Why Should Businesses Be Concerned?

The National Audit Office believes the government is only just starting to realise how difficult Brexit will be.  In a worst-case scenario it would become impossible for customs to collect the £34bn of duty, excise, and VAT taken at the border every year.

Customs officials might have to manually process imports and exports if the new electronic system is not in place, which would of course be a nightmarish scenario for businesses and their supply chains.

Mike Cherry, chairman of the Federation of Small Businesses, said “It’s extremely concerning that the UK’s new customs system may not be ready in time for Brexit, potentially resulting in massive delays to trade and leaving thousands of businesses in the lurch.” And hat’s not to mention a lack of confidence businesses will feel in the UK if their flow of goods is disrupted.

“Can government actually step up in these very difficult circumstances and deliver a unified response?” Morse asked. “I’m not seeing it yet.”

The report, and the alarming comments made by Amyas Morse will no doubt increase the pressure on the prime minister to re-evaluate Brexit progress and policy, but will it be in time to stop a customs horror show?

Let us know your thoughts on the NAO report in the comments section below. 

In other procurement and supply-chain news this week….

Bangladesh Factory Blast

  • Major European buyers of apparel supplied by a Bangladesh garment plant have started investigations after a boiler explosion in the plant killed 13 people and injured dozens
  • The explosion occurred during maintenance work at the factory, whose top buyers include Finnish fashion chain Lindex, which is part of Stockmann
  • Stockmann communications manager Anna Bjarland confirmed to SM that the factory supplied garments to both Stockmann and Lindex saying that the company was investigating

Read more on Supply Management

Hazardous chemicals in Tesco’s clothing supply chain

  • Tesco has joined a growing list of major high street retailers in beginning to remove chemicals thought to be hazardous from the supply chain of its clothing brand
  • Greenpeace said Tesco will immediately begin the process of eliminating 11 groups of hazardous substances from its F&F brand, including phthalates, brominated and chlorinated flame retardants, chlorinated solvents and heavy metals
  • Alan Wragg, technical director for clothing at Tesco, said: “This commitment is part of our goal to protect the environment by sourcing products sustainably and responsibly for our customers.”

Read more on Business Reporter 

Could China lead the way with AI?

  • In the battle of technological innovation between East and West, artificial intelligence (AI) is on the front line. And China’s influence is growing
  • China has invested massively in AI research since 2013, and these efforts are yielding incredible results. China’s AI pioneers are already making great strides in core AI fields
  • It is becoming clear that belief in U.S. dominance of the tech world is flagging. As it stands, China is in the driver’s seat

Read more on Venturebeat

Blockchain Is Real. It’s Here Now And It’s Coming To Transform the World

Why are organisations so keen to bury their heads in the sand and pretend blockchain isn’t happening – it all starts with a severe case of NIH syndrome…

There are certain market analysts who would have you believe that the benefits of Blockchain technology are “Hype” and the real benefits are still 10-20 years away. There are several reasons for this:

Ignorance

Although many believe such firms to be thorough and knowledgeable about every leading edge technology, they are not. This is evident in a lack of participation in key consortiums and conferences and a lack of good research leading them to a parochial view of Blockchain’s Global impact which they put in print.

NIHS (Not Invented Here Syndrome)

“Coin the Term and Own the Market” has always been the mantra of some these firms.  “If we don’t say it is so – then it ain’t so.” There has been at least one attempt to rename the Blockchain market “Metacoin”- “Meta” meaning “about or referring to itself.” This shows a clear misunderstanding of the market.

It’s not “about the Coin”…

…whether Bitcoin, Ether, Zcash, or any others. Again, this is a very narrow view of what Blockchain is all about. What are most important are the underlying capabilities of Blockchain technology that enable those cryptocurrencies, but also enable many other unrelated and far reaching benefits.

Blockchain is not synonymous with Fintech or Bitcoin

Currently, Financial institutions arguably stand to gain the most by adopting Blockchain technology and stand to lose the most if they don’t. The major global financial institutions, especially those in the U.S. also face the biggest challenges in getting their objectives achieved.

Blockchain technology can resolve many inefficiencies inherent in the trade settlement process that cost them and customers time and estimated $20 billion per year. There are three major prohibitive factors in achieving this:

1.   Existing Technology infrastructure

Understandably financial institutions don’t want to start over redesigning their systems from the ground up so they are trying to select bits and pieces of Blockchain and integrate it with existing technology. History has shown this approach has never worked very well and could take years to accomplish if they are ever successful. This is one area where market or analyst skepticism is derived from. On this they are correct.

2.   Current Legislation

Mandating human intervention and oversight in settlement processes that Blockchain can negate the need for has hamstrung efforts even more than the technology issues.

3.   Ownership & Control of the processes and technology

Financial institutions want to own and control these processes via “private Blockchains” so they can make the rules and control the economy. “Public Blockchains” are like the Internet and are not controlled by anyone. We know how well “private internets” worked – remember “intranets”?

Ironically the public gave that “trusted intermediary” role to financial institutions years ago and they have abused it time after time. It was the Global Financial Crisis of 2007-2008 which motivated Satoshi Nakamoto to invent Blockchain to enable technology to do what we could not blindly trust banks to do for us. In spite of Dodd-Frank oversight legislation, the recent Wells Fargo debacle has shown that not much has changed.

With all of these challenges for Financial Institutions to adopt Blockchain technology, one might say, “Ok, now I understand why Blockchain is more hype than reality – lots of discussions, lots of promise, and a handful of promising but limited test-scenarios. Lots of investment, but not much to show.” Yes. One could clearly have that view if :

1.   You didn’t look beyond the Financial Industry,

2.   You thought Blockchain was the same as Bitcoin,

3.   You didn’t look beyond the borders of the United States, and

4.   If you ignored or were unaware of the implications of Blockchain security, record immutability, Smart Contracts, micro-units, micro-payments, and digital identification already implemented and working in many other countries in hundreds of applications across every industry sector.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn.

24 Series 9: India Plants 66 Million Trees

The following events occur in real time: India takes on the monumental challenge of planting 66 million trees in just 24 hours. And they didn’t even need Jack Bauer’s help…

The world reeled when, last month, President Trump made the decision to withdraw from the Paris Agreement. Many regarded this as the most devastating decision of his presidency so far and he has faced critisicm for his short-termism, isolationism and rejection of science.

Todd Stern, writing for The Atlantic shortly before Trump made the announcment expressed the concern of many that “the Paris regime cannot work in the long run if the world’s indispensable power has left the table.”

“The Trump administration is about to throw down the gauntlet.” He continued. “If it does, we’ll need to take up the challenge.”

If this week’s evidence is anything to go by…the challenge is very much accepted!

There are 66 million new trees in India…

An astonishing 1.5 million volunteers pledged to “Make India Green Again” as they planted 66 million trees in less than 24 hours.

Volunteers of all ages assembled along the Narmada River in Madhya Pradesh, Central India,  to plant 20 varieties of tree as part of a new Guiness World Record attempt. India holds the previous world record for planting 49.3 million trees in 24 hours last year in Uttar Pradesh. This year, they’ve gone several steps (16.7 million trees!) further and done it in just 12 hours.

India has  promised to increase forest coverage to 95 million hectares by 2030 as part of it’s role in the Paris Agreement. The Indian governement has forecasted a spend of $6.2 billion for creating new forests.

Madhya Pradesh’s government spearheaded this particualr campaign and were understandably thrilled with its success.

Shivraj Singh Chouhan, state chief minister for the region, tweeted after the event: “Thank people of Jabalpur for making tree plantation a huge success. You are not only saving Narmada, but also [the] planet.”

“We cannot be too selfish. We have to spare something for upcoming generations,” he continued.

Is planting with drones the future of sustainability?

Australia’s answer to deforestation is a little more technical than the enlisting of 1.5 million volunteers!

Dr. Susan Graham, an Australian engineer, is developing a drone that could eventually result in the planting of an additional 1 bilion trees per year, and there’s no time to waste! NASA predicts that if current deforestation levels proceed, the world’s rainforests may be completely in as little as 100 years.

The world has lost nearly half its forests for agriculture, development or resource extraction. An estimated 18 million acres are lost each year and deforestation and forest degradation are responsible for 17 per cent of all carbon emissions. The value of the benefits that standing forests provide is immense.

The planet loses 15 billion trees every year so “although we plant about 9 billion trees every year, that leaves a net loss of 6 billion trees,” Dr Graham said. “The rate of replanting is just too slow.”

The drones that Dr Graham is developing could not only plant at ten times the rate of hand planting and at 20 per cent of the cost; they can also access, and plant, in previously inacessible areas , such as mountainsides or steep hills.

The drone technology is currently being tested around the world so watch this space!

What are your views on sustainability and deforestation? What can, and should,  organisations be doing to help? Let us know in the comments section below. 

In other procurement news this week….

Japan & EU Trade Deal Snubs Trump

  • Japan took on the mantle of the global rules-based trading system, as it sidestepped a failing trade agreement with the United States to forge a historic new pact with the European Union
  • The trade deal that will cover nearly 30 percent of the global economy, 10 percent of the world’s population and 40 percent of global trade
  • The deal would lower trade barriers for a sweeping array of products, including pork, wine, cheese and automobiles. The pact would be a heavy blow to American producers of these goods/

Read more on The Washington Post

How Will Northern Ireland’s ££ Be Spent?

  • Northern Ireland is set to receive an extra £1bn over the next two years as part of a deal with the Democratic Unionist Party (DUP) to keep Theresa May’s minority government in power
  • Arlene Foster, leader of the DUP, said the deal would boost the economy and allow investment in new infrastructure, health and education
  • There are around 1.8m people in Northern Island and the headline deal equates to an extra £550 per head

Read more on Supply Management

Amazon’s latest venture is wine!

  • Amazon’s continuing quest to make and sell everything in the world has led to it branching out into a new area: overseeing the production of a new range of wines
  • Unusually for Amazon, this new brand isn’t aimed at undercutting the competition with bargain-basement prices, as with its Amazon Basics line
  • Amazon Wine’s Nick Loeffler added: “We’re thrilled to connect wineries, like King Estate, with millions of customers and give them an innovative format to launch new brands”

Read more on The Guardian 

Infographic: Want To Get Ahead In The Gig Economy?

By 2020 43 per cent of workers are expected to be freelancers, embracing the gig economy  – How can you be sure to make it work for you?

There is a lot of upside to being your own boss, and more and more people are finding this out by taking the plunge. Today 34 per cent of workers in the U.S. are freelancers, and this figure is projected to reach 43 per cent by 2020.

What’s making this lifestyle so attractive? When you are your own boss you can choose which projects to work on and reject any projects you don’t want to do. You can choose what hours to work, where to work, and how to work. You can even take your work with you to the beach and enjoy a vacation without getting too far behind.

But there are some drawbacks- you are responsible for getting clients, paying taxes, and health insurance and retirement. In order to keep ahead:

  • Market yourself like a company
  • Keep your portfolio up to date
  • Maintain your website and social media presence
  • Network with previous clients so you can get repeat business and referrals.

Brian Wallace,Infogrpahic Expert, is the founder of NowSourcing, the U.S.’s premier infographic design agency.  This infographic was originally published on JobVine and LinkedIn

The Elephant in the Room: Aligning the Executive Team for Change

“You cannot swim for new horizons until you have courage to lose sight of the shore.” ― William Faulkner. Lora Cecere considers how to align the executive team for change.

Take a hard look at this lonely elephant. In my travels, in most corporations, this is the picture I see. My goal for this blog is to connect with you. We have an insular thinking problem in supply chain. What do I mean? Let me explain.

Each week, I travel and visit companies and speak at conferences to talk about the future of supply chain management. When I speak, my definition of supply chain is the process of aligning process flows from the customer’s customer to the supplier’s supplier. Many companies define supply chain more narrowly as a silo within operations focused on logistics or customer service. This limited view is a mistake.

There is also a false belief that efficient organizational silos make effective supply chains. In the automation of business processes, over the last decade, we automated the vertical silos of sales, marketing, customer service, logistics, manufacturing and procurement, but have not aligned to serve the customer. (The deployment of Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Advanced Planning (APS), Supplier Relationship (SRM), Warehouse Management (WMS), and Transportation Management (TMS) created efficient silos, but not effective cross-functional flows.)

Efficient silos are a barrier to driving value. As a result, only 10 per cent of manufacturing companies are making progress on a balanced portfolio of metrics including growth, operating margin, inventory turns and Return on Invested Capital. Why? Many business executives have a functional business leader mindset. The use of new technologies to build outside-in, and cross-functional processes requires the redefinition of business processes and architectures. It is more than a project or a single change management initiative. It also requires process innovation. This is difficult because most companies are on a forced march for Information Technology (IT) and process standardization. In this traditional journey, there is no room for process innovation.

Some Background

Last week, I spoke four times. The first was at a S&P 500 company contemplating a digital transformation. The second was at a cognitive computing conference. The third stop was a network design conference, and the fourth presentation was at an industry consortia. At each session, when I finished my speech, I asked for questions. The common question was, “I hear your message. I agree and believe that my organization is stuck in driving improvement and defining a balanced portfolio. How do I educate the executive team on the basics of supply chain and gain leadership support on defining a vision for the future of supply chain?”

This is a great question, but the answer is not simple. My recommendation is to take five steps

1. Force a Discussion on a Balanced Metrics Portfolio Against a Strategy.

Define the mission of the supply chain as a balanced portfolio based on balance sheet and income statement metrics. In the process, avoid supply chain speak. (Throw away your three and four letter acronyms and speak the language of business.)

2. Politely Question the Status Quo. If Only 10 Per Cent of Companies Are Making Progress, Do We Have Best Practices?

I like the quote by Faulkner at the start of this blog. “We cannot swim to new horizons if we hug the shore.” Self-fund process innovation to test new technologies and drive process innovation. This break through thinking happens with small and scrappy teams in the business. (These are groups of diverse people aligned to question the current state and improve an outcome against a business goal.) When you drive break through thinking, market the achievements using language of the balance sheet. By self-funding these initiatives, do not limit the boundaries of the testing by a fixed ROI. Test when you do not know the ROI.

3. Educate

Use network design technologies and discrete event simulation tools to help executives visualize the supply chain as a complex system with finite trade-offs. Through these discussions help them to understand what is possible and feasible.

4. Benchmark and Align the Goals to Business Potential

I often see teams set unrealistic goals. Use our recent Supply Chains to Admire report to understand what is possible by industry and use this to benchmark your current capabilities. Use the data to set realistic goals.

5. Build a Guiding Coalition for Change

In your efforts, of education, sharing and testing, build a guiding coalition for change. As shown in Figure 1, the issues of executive understanding and change management are large gaps when companies with supply chains working well are compared to those that struggle

 

Figure 1. Difference in Capabilities of Companies with Supply Chains Working Well and Those with Room for Improvement

The market is full of consultants today touting easy answers. This is not easy work. Side-step the hype and focus on driving business results. Address the elephant in the room and give him a name. His name is insular thinking. In doing this, help your executive team to swim towards new horizons. Feel free to share your stories with others in the comment section of this blog.

This article was written by Lora Cecere, Founder and CEO of Supply Chain Insights and was orginally published on 21st June 2017 on LinkedIn.

7 Ways IoT Is Already Changing the World

From connected healthcare to retail and water management, the IoT will revolutionise the way we live. It’s already having some pretty major impacts…

This article was written by Gauri Bapat.

The wave of connectivity had extended beyond phones, laptops, and tablets and is permeating into our daily lives. With an explosion of connected devices in the market and a healthy adoption rate, we can safely assume that we are taking confident strides into the ‘connected life’ made possible by the IoT.

A report by Gartner suggests that by the year 2020, the number of connected devices across technologies will touch 2.6 billion. As we move towards an increasingly automated world, this technology will be used to improve the productivity and quality of life and industries alike. The IoT is poised to grow from a technological phenomenon to one with a more global and social impact…and the cogs are already turning in that direction. Things that we once saw only in sci-fi movies and Steven Spielberg specials are a reality today.

Let’s take a look at how the IoT is already changing the world we live in.

Manufacturing

IoT in manufacturing is ushering in the fourth Industrial revolution (Industry 4.0) that aims to make manufacturing smarter. Smart manufacturing involves the use of sensors that are retrofitted on existing manufacturing equipment to improve efficiency and performance. Siemens ‘ PLC manufacturing plant in Amberg, Germany, has implemented the principles of Industry 4.0 and has completely automated the production of their automation systems. Post this implementation, they witnessed a 99.99885 per cent “perfect” production quality rate. Now that’s impressive!

Airlines

The airline industry has seen massive adoption of the IoT in order to increase operational efficiency and drive the age of ‘connected aviation’. Virgin Atlantic has every single component of its Boeing 787 attached to a wireless airplane network. These incredibly connected airplanes use IoT data to evaluate everything right from the airplane’s performance to issue identification.

So, if a Virgin Atlantic jet reveals low-performance mid-flight, this information is related to the ground staff real-time. Thus, when the flight lands, the airport engineers are ready to solve the problem. Other airlines such as KLM, Qantas, Lufthansa, and Delta are also using IoT to improve aircraft performance, discover new business insights, and maintain greater efficiency.

Airports such as Miami airport, London City airport, Helsinki Airport, amongst otherS, use IoT to track passengers, prevent bottlenecks and queues, offer personalised services to the customers, track assets and also deliver location-based services to the travellers.

Water Management

One of the areas where IoT has made a tangible difference is in water management. Proper use and management of water have been a problem that many cities across the globe have been battling. IoT has been put to work in cities such as California and Bangalore in India to not only identify the cause of water shortage but also to identify avenues as to how water management can be optimised. The Bangalore Water Supply and Sewage Board (BWSSB) employed an IoT monitor to manage the complex water distribution system by creating an operational dashboard using IoT. They realised that almost 45 per cent of the water supplied by BWSSB is unaccounted. San Francisco employed smart meters to measure water consumption and notify their customers when their water consumption exceeds the specified limit or if, for example, the water is left running continuously for 24 hours.

Retail

The retail industry has witnessed a huge adoption of IoT. IoT implementation in retail has been done to not only improve the supply chain or to create more engaging and tailored marketing campaigns, but also to make shopping a more interesting experience. Retailer Rebecca Minkoff created the ‘connected store’ using RIFD tags on each piece of clothing and used smart mirrors in the dressing rooms. The customers could try on the product, and also take a look at other looks, available colors and sizes without even leaving the dressing room!

Target has been using beacons across 50 stores to provide personalised offers and present their customers with hyperlocal content to make shopping more exciting for their shoppers. Ralph Lauren’s Polo Tech apparel, which is a smart workout shirt, monitors vital activities of the user on a real-time basis and enables ongoing health monitoring.

Connected Energy

2016 saw us looking towards connected energy solutions to help us save energy. IoT products such as Google Nest, ecobee3 thermostat, the heating system Hive by British Gas have seen huge adoption to track and measure energy consumption. 46 per cent of technology enthusiasts in Germany and 42 per cent in the US already own a connected energy solution and save almost 72 per cent on their monthly utility bills – that amounts to a USD $80 reduction in the monthly bill.

Lighting Control

Moving beyond the smart lights of a connected smart home, smart lighting control can generate huge financial savings by controlling street lights. Mayflower CMS successfully employed IoT to control and monitor an excess of 180,000 street lights, bollards and signs in the UK and Ireland with its largest installation in Hampshire that has over 90,000 nodes. The Hampshire City Council has been able to reduce energy consumption by 21GW/hr per annum which is a reduction of 40 per cent and has successfully reduced carbon emissions by approximately 4000 tons per year.

Connected Healthcare

The global IoT healthcare market is expected to touch USD 160 billion by 2020. The last few years healthcare has witnessed wellness sensors to surgical robots to improve efficiencies and better patient outcomes. Ingestible sensors help measure if patients are taking their pills on time and helps medical practitioners manage their patients remotely. Barton Health, a 62-bed health system in rural Lake Tahoe, California, is one of the first users of the ingestible sensor by Proteus Discover, a Digital Medicine to help patients suffering from diseases of the central nervous center such as schizophrenia and place the patient in the driver’s seat regarding their health management with the help of technology.

“When wireless is perfectly applied, the whole earth will be converted to a huge brain, which in fact it is, all things being particles of a real and rhythmic whole. We shall be able to communicate with one another instantly, irrespective of the distance.”– Nikolai Tesla

This famous statement by Nikolai Tesla predicts the invention of the smartphone at a time when the mere thought of such an advanced device was nothing but unimaginable. Take a closer look at the statement and you can see that Tesla foresaw the impact of the Internet of Things (IoT)… a world that becomes so connected that it becomes one ‘huge brain’.

What Tesla spoke of decades ago, we are experiencing today

Gauri Bapat is Director, Strategic Business at Inteliment. This article was orginially published on LinkedIn.

China’s TIP Demotion: Productive ot Provocative?

2017’s Trafficking in Persons report highlights China as one of the worst global offenders of human trafficking. How does this impact your supply chain decisions? 

The U.S.  government revealed details of its annual Trafficking in Persons (TIP) report last week. The report is the government’s principal diplomatic tool to engage foreign governments on human trafficking.  Rex W. Tillerson, Secretary of State said this year’s report “highlights the successes achieved and the remaining challenges before us on this important global issue.”

The U.S department of state assigns each country to one of three tiers (Tier 1 being the best and Tier 3, the worst) based on their government’s efforts to acknowledge, combat and prosecute instances of human trafficking. Countries must consistently demonstrate improvement in these areas to maintain the highest ranking and avoid demotion.

Myanmar, for example, was one of the countries to be upgraded to Tier 2, following its efforts to reduce child recruitment for the military.

But the most controversial decision this year was China’s demotion to Tier 3, where it will join the likes of Iran, North Korea, Russia and Venezuela.

“China was downgraded to Tier 3 status in this year’s report in part because it has not taken serious steps to end its own complicity in trafficking, including forced laborers from North Korea that are located in China,” Tillerson said as he presented the report.

The demotion marks the first time that  the Trump administration has publicly criticised Beijing’s human rights record, and it prompted an unsurpringly frosty response from the Chinese, “The government’s determination in fighting human trafficking is unwavering and outcomes are there for all to see,” spokesman Lu Kang said. “China firmly opposes the US’ irresponsible remarks on other countries’ fight against human trafficking, based on its domestic laws.”

How Will This Impact China And Global Supply Chains?

There are a number of things to consider if your global supply chain extends to China or other countries ranked in Tier 3.

  • The U.S may consider imposing sanctions that limit access to US and international aid. Congressman Chris Smith said  “Hopefully, the new tier ranking coupled with robust diplomacy—including the imposition of sanctions authorised under Tier 3—will lead to systemic reforms that will save women and children’s lives and ensure that Chinese exports are not made with slave labor.”  Whilst such sanctions have often been waived in the past, it would come as no surprise if Trump decided to break with tradition. Indeed, given his vocal criticism of Chinese trade, he will be under some pressure to impose consequences.  It has been reported this week that Trump is considering trade actions against Beijing including tariffs on steel imports.
  • Suppliers operating in newly placed tier 3 countries will, appropriately, be under increased preasure to audit their supply chains. If you’re sourcing in China, it’s entirely plausible that you’re complicit in trafficking or forced labour.  With supply chains facing extra scruntiny, it would be prudent for organisations sourcing in China to have accurate information at their fingertips. Make sure you know who you are sourcing from, what’s going on behind the scenes of your product and make detailed lists of every farm, vessel or facility to which you are connected.
  • China’s demotion might prompt organisations to stop sourcing in China altogether. Will  “Made in China” labels deter consumers who want to avoid supporting slave labour and traffcking? Changing suppliers, particularly when it’s to a new country,  is time-consuming and expensive. This will be the greatest concern for procurement and supply chain pros.

You can download the TIP Report in full here

What do you think about China’s demotion in this year’s Trafficking in Persons Report? Productive or provocative? Should President Trump impose sanctions on China? Let us know what you think in the comments below. 

In other procurement news this week….

Will Supermarkets Go Uber On Us?

  • Britain’s major supermarkets are testing ‘peak time’ pricing allowing grocers to raise or cut items based on demand
  • Tesco, Morrisons and Mark & Spencer are running trials of electronic labels which allow them to change prices at the click of a button
  • Retail experts say this could spell the end of fixed prices for consumer goods and services within five years, to be replaced by an Uber-style pricing revolution
  • Morrisons said its trial was in the “early stages” and it had not yet decided whether to roll it out across the country

Read more on International Business Times.

Apple Is Moving Its Supply Chain Towards Green Energy

  • Two years ago, Apple embarked on an ambitious plan to help its biggest suppliers switch to clean power sources. As of early June, the tech giant has managed to get eight partners on board
  • According to the tech giant’s latest update on its progress toward environmental goals, integrated circuit packaging maker Ibiden will be the first partner in Japan to power its Apple-related operations completely with renewable energy
  • Apple’s $1.5 billion green bond issued in February 2016 is still the largest issued by any U.S. technology company

Read more on Green Biz.

AI that can read minds 

  • CMU scientists have been working on is a system that can apparently read complex thoughts based on brain scans, possibly even interpreting complete sentences
  • Using a smart algorithm, the team could discern what was being thought about at any given time — and even the order of a particular sentence
  • After training the algorithm on 239 of the 240 sentences and their corresponding brain scans, the researchers were able to predict the final sentence based only on the brain data

Read more on Digital Trends 

 

B2B Is Dead. B4B Is Born

B2B or B4B? Does it really matter? After all, what’s in a title? Perhaps everything….

This article was written by Magendar Rajasekaran. 

Isn’t that a bold idea?

What’s in a title? Maybe everything.

Something that is very personal and possibly deep. A worldview that can shift our thinking and inspires us to do few things totally different.

Nah. How can that be? How is it possible?

How can you change a word, a preposition, ‘to‘ and replace it with ‘for‘ and call it a game changer?

We have seen it all. Haven’t we all been in business far too long to be moved by play of words. A small change from ‘To‘ to ‘For‘ means nothing.

Well, I don’t think so. And I’ll tell you why in a moment.

Let’s dive deep inside and explore the nuances that can help shape the idea.

Defining Business to Business (B2B) 

Business to business, also called B-to-B or B2B, is a type of transaction that exists between businesses, not consumers. This term got popular around the 1998 dot com era when the internet phenomenon was at its peak.

It was an acronym used to communicate how commerce flowed between two business entities. This term became so popular that it prefixed everything that connoted a transaction between two businesses.

B2B procurement, B2B buyer, B2B marketing, B2B sales, B2B market place, B2B e-commerce, B2B market research, B2B Software, B2B Offering and many more.

The idea caught on. It flourished. It also spawned into other variants. Say B2B2C or even B2B2G (where G is Government).

It was going well. Until now.

So why do I think that this terminology should die?

Simple reason. The word ‘to‘ in B2B is no longer relevant. To explore why this is not relevant we will need help of a dictionary.

Here is the English dictionary meaning for the preposition ‘to‘:

expressing motion or direction toward a point, person, place, or thing approached and reached, as opposed to from”.

In line with this meaning, so far businesses have marketed to, sold to, pitched to, offered services and products to and provided support to other businesses.

This was very much needed as businesses needed to take their products, services and support to other business. It metaphorically meant the direction was from left to right. Just like this arrow mark ‘—->’. One was the seller and the other was the buyer.

The word ‘to‘ is so ingrained in our psyche, like the arrow, the stress was more on ‘motion or direction‘. Our entire organisation structures were built to make, sell and service our customers. Along with it came top-down command and control, various functions/departments, centralised structures, and standardised routines.

To‘ was programmed deep in the business model. Resulting in a path dependency.

We are all perfectly ‘ locked in‘ by behaviours that connote – motion and direction from left to right.

Now, let’s use another lens to see the world.

The new world order – Business For Business (B4B) 

Before we explore this new terminology, let’s understand the meaning of the preposition ‘for‘ from English dictionary.

with the object or purpose of “

“suiting the purposes or needs of”

In the digitally connected era, as Nilofer Merchant points out in her book “11 Rules for creating value in the Social Era“, successful businesses like Uber, AirBnB, Tesla, GE Digital, Alibaba, Etsy, KickStarter create value through a different paradigm – networks, collaboration, community, social purpose and openness.

They are businesses built FOR businesses and consumers.

They are businesses built suiting the purpose and needs of their customers. There can be many sellers and buyers across a community.

Quoting General Electric, a 124 year old company, was once a seller of products to customers. Now it is a digital platform company with many buyers and sellers. It has now transitioned to a B4B company.

When you do something FOR somebody you do care for the other business or person. Not just for yourself. The preposition ‘forhumanises the act.

Suddenly you shift from providing ‘action and directionto a business and think about what can you do for another business. You can even ask, ‘Can I exist for my client’s success?“. This right away injects empathy into your business.

Business For Business. B4B. Injects empathy in the language.

In doing so, you will allow yourself to ask fundamental questions that can shift your thinking and behaviours:

  • What should be our business model that allows our customers be successful?
  • How can I structure my organisation for my customer’s success?
  • How can I create products, solutions and services for my clients to be successful?
  • How do I create a Go to Market model for my customers to engage, experience and buy?
  • How do I create experiences for my customer so that I can partner for an extended life time value?

B4B shifts thinking from you to your customer. It brings purpose and empathy in everything you say and do.

Over a period of time it perhaps will bring your business closer to the customer. Isn’t that we all want?

It all starts with one change in preposition – substitute ‘to‘ with ‘for’.

Magendar Rajasekaran is People Success Evangelist at Agility Nexus This article was orginally publishd on LinkedIn.