All posts by Procurious HQ

Construction Supply Chain Skills Shortage at Breaking Point

An acute skills shortage in the construction supply chain is impacting both budgets and the quality of projects. 

A new survey from the Scape Group has highlighted the impact of the skills shortage in the UK construction industry.

The ‘Sustainability in the Supply Chain’ report surveyed over 150 contractors, subcontractors and senior managers at public sector organisations. It also examined supply chain stability, the tendering process and reliance on the public sector.

The report suggests that the skills shortage has impacted quality and budgeting of projects across the UK.

Skills Shortage at “Breaking Point”

One of the key concerns raised in the report was in the quality of the workmanship being seen projects. 58 per cent of contractors and suppliers cited a negative impact on quality.

However, when assessed in the public sector, a staggering 85 per cent of managers said they had seen a drop in quality in their projects.

Beyond quality, many respondents also saw the skills shortage as having a negative impact on budgets. Both public sector (80 per cent) and contractors (40 per cent) highlighted the difficulty of keeping within budget. The shortage of skilled workers has led to many bricklayers earning up to £1,000 per week.

Mark Robinson, Chief Executive at Scape Group, commented that although the impacts of the skills shortage were clear, there were basic steps that could be put in place to mitigate it. This could include the introduction of apprenticeships schemes, something that many contractors in the construction industry still do not have.  

The Private/Public Juxtaposition

The report also highlighted the huge division between public and private sector definitions of a “healthy” supply chain. Private sector organisations stated that long-term operational stability was their core aim (72 per cent), as well as with minimising waste and recycling (63 per cent) and supporting local economies (58 per cent).

However, only 63 per cent cited stable employment patterns as key to having a healthy supply chain.

This is in stark contrast to public sector organisations, where 70 per cent felt that long-term benefits for the local economy needed to be the highest priority. Furthermore, 67 per cent believed that local skills and suppliers were core to a healthy supply chain too.

Another key finding in the report was the challenge of communication between the public and private sectors. Both sides (75 per cent of suppliers; 80 per cent of public sector managers) believed that the public sector needed to do more to engage with its supply chain.

This included giving greater visibility of upcoming projects, and enabling contractors to start bidding up to 18 months in advance of contracts starting. SMEs in particular felt they needed to be more informed about projects. It was felt that this could be addressed by using digital platforms, and setting up regular forums for communication.

Report Recommendations

The report concluded by making some recommendations on what needed to be done in the construction supply chain.

1. Addressing the Skills Shortage

The skills shortage was seen by the vast majority of respondents as the most serious barrier to growth and efficiency within the industry. While there has been a drive to increase apprenticeships, it was agreed that more needs to be done.

Diversity and the gender gap was also highlighted as a barrier. Many felt that more needed to be done to ensure that more opportunities were made available to young men and women, from a range of backgrounds. These could be communicated via education programmes, support by social media.

2. Forward Visibility of Projects

SMEs face a challenging environment in the construction industry. It was felt that this could be helped by making tenders public more than 18 months in advance. This would allow SMEs to plan ahead, form relationships, and would ultimately allow for more stable employment patterns.

3. Greater Collaboration

Greater public sector engagement with suppliers, especially SMEs, will create a stronger supply chain and support efficient delivery. However, there is a mismatch between what the public sector believes to be important, and what the industry believes is necessary.

Consistent and forward looking digital communications, driven by government, would make it easier for the public sector to engage with SMEs. It would also help to make information about opportunities more accessible.

4. Local Spend & Social Value 

The public sector, by its very nature, must deliver greater social value through its supply chain. This is balanced alongside the increasing pressure to deliver savings and achieve more with less.

The supply chain is the vehicle through which the public sector can deliver this extra value, and there are greater opportunities for those who understand this key aspiration.

Do you work in the UK construction industry? What needs to be done to alleviate the skills shortage? Let us know in the comments below.

Need a conversation starter for Monday’s tea break? Here are the top headlines from procurement and supply chain this week.

Californian Wildfire Cuts Off Key Freight Corridors
  • A fast-moving wildfire has engulfed 30,000 acres in a single day across the state of California.
  • The “Blue Cut” fire has closed the main highway connecting Los Angeles and Las Vegas, and shut key freight rail routes.
  • Road and rail shippers moving goods through the area have experienced disruptions and forced detours, with delays of 36 to 48 hours.
  • More than 80,000 people have been ordered to evacuate the region, and 34,000 homes are threatened by the fire.

Read more at JOC.com

Spotlight on the Seafood Industry
  • A study of seafood served across 700 stores and restaurants in the US has found that one out of three fish are mislabelled, with unethical suppliers substituting lower-cost fish for pricier ones.
  • Once filleted, it is extremely difficult to tell different species of fish apart, meaning customers can easily be misled.
  • Federal regulators in the US have launched the Seafood Compliance and Labelling Enforcement program in response, using a genetic database to test imported fish.
  • The seafood supply chain is acknowledged to be one of the most complex and opaque supply chains in the world, with very little visibility of illegal fishing, country of origin or even species of fish.

Read more at The Daily Meal 

Nike Alliance Purchases Apparel Suppliers
  • Nike Inc. has formed a supply-chain partnership with private-equity firm Apollo Global Management.
  • The partnership comes in response to ongoing logistics issues that have seen product delays for Nike.
  • The alliance has purchased existing Nike apparel suppliers operating in the USA and Central America to create more “vertical integration” in the supply chain.
  • Last year Nike opened a distribution centre in Memphis, and the new alliance has purchased the warehousing and logistics business ArtFX.  

Read more at Market Watch 

Patagonia Rebuilds Wool Supply Chain
  • Apparel company Patagonia is rebuilding its supply chain to ensure the highest animal welfare standards.
  • The company has spent a year with suppliers and experts writing its own supply chain standards, in order to ensure that suppliers follow them.
  • Meeting with farmers and suppliers helped to ensure that the standards were both robust, but relevant too.
  • The company is expecting to ensure both quality and welfare standards in light of increasing public scrutiny of supply chains.

Read more at The Wall Street Journal

Big Ideas Summit 2016: Big Idea #10 – Procurement as a Change Catalyst

Dirk Van De Putte argues that procurement should embrace its role as a change catalyst in organisations, helping to break down organisational silos.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Procurement – A Change Catalyst

Global CPO, Dirk Van De Putte’s Big Idea discussed how procurement could act as a catalyst for change in organisations, due to its unique position at the crossroads of internal and external stakeholders.

Dirk gave his thoughts on how to successfully achieve this, with procurement breaking down organisational silos, as well as building a diverse function.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 16,000 like-minded procurement professionals from across the world.

What Procurement Needs to Know About Robotic Process Automation

Just what is Robotic Process Automation? And what should procurement know about it before putting anything in place?

Robotic Process Automation (RPA) vendors emphasise their product’s capacity to replace human operators, using phrases like “digital workforce.” In simple terms, RPA is a software application that runs on an end user’s computer, laptop or other device, emulating tasks executed by human operators.

Its purpose is to integrate or automate the execution of repetitive, rule-based tasks or activities. RPA does not require development of code, nor does it necessitate direct access to the code or database of the applications.

Current Robotic Process Automation Use

Most current RPA implementations are in industry-specific processes such as claims processing in insurance, and risk management in financial services. These processes, and their associated tasks, are usually high-volume, structured, repetitive and implemented on old technology.

Normally, the processes are extremely stable. There is no technology migration or modernisation roadmap involved, and IT-led integration would be difficult and expensive.

At present, the leading non-industry-specific RPA application is the financial close and consolidation process. According to our purchase-to-pay research, 23 per cent of companies are at the earliest stages of adoption, i.e., either in a pilot or with the technology partially rolled out (Fig. 1).

Robotic Process Automation
Fig. 1 – Robotic Process Automation Trends in Purchase-to-Pay

The remaining 77 per cent have no immediate plans for Robotic Process Automation adoption. Despite the low take-up level today, 45 per cent of purchase-to-pay organisations believe RPA will be one of the areas with the greatest impact on the way their work gets done in the next decade.

The Best Processes for RPA

It is not the type of business process that makes for a good candidate for RPA, but rather the characteristics of the process, such as the need for data extraction, enrichment and validation.

Activities requiring integration of multiple screens, as well as self-service inquiry resolution, are also ripe for RPA. The key is that RPA is best deployed in a stable environment where no changes to the systems are on the horizon.

Other possible choices include processes requiring multiple software applications to execute different, but repeatable, activities and tasks.

RPA Pricing Trends

The pricing model for RPA is still evolving. Today, vendors are pricing RPA based on the cost of the full time equivalent (FTE) staff member it is replacing. For example, an RPA vendor may quote a price per robot that is one-third the cost of an offshore resource doing the work.

Onshore FTE pricing is being quoted closer to one-ninth, or 11 per cent, of the cost. This pricing model, developed to compare the cost of outsourcing a process versus automating it with RPA, essentially positions Robotic Process Automation as a service, not a software solution.

In our view, this model is inconsistent with industry standards governing the way software is typically priced. Therefore, we encourage buyers to seek an alternative gainsharing model where possible. This will both mitigate the risks of early adoption, and provide a strong incentive to the supplier to deliver results.

Patrick Connaughton is the Senior Research Director, Procurement Executive Advisory Programme at the Hackett Group. He has published groundbreaking research in areas like spend analysis, contract life cycle management, supplier risk assessments and services procurement. You can contact him via email or on Procurious.

You can also learn more about Hackett’s Procurement Executive Advisory Program here.

Throwback Thursday – Eat the Frog…and 6 More Tips for Boosting Personal Effectiveness

How have you found your personal effectiveness in 2016? Why eating the frog might be able to help revolutionise your daily routine.

We all struggle sometime with our personal effectiveness. We start the week with grand plans for our time, but by Monday lunchtime, the plans are in disarray.

If you’re still struggling with your personal effectiveness (or want to boost it after the summer holidays!), we have the Throwback Thursday article for you, from our own Lisa Malone.

Start Right, End Right

You’ve survived your first day back in the office! You’ve cleared your inbox, written an alarmingly long To-Do list and even written your name and phone number (neatly) in a brand new Moleskin notebook. You’re practically smug with a sense of organisation and readiness.

Fast-forward one week: 213 unread emails, endless meetings, doing ‘real work’ after 5pm, and back to scribbling on loose-leaf.

Many years ago, I sat next to the Executive Assistant for the Chief Marketing Officer at a very large bank. To me, a person calm in the face of 1,352 unread emails, Ali was something of a mystery. Alarmingly organised, a spreadsheet navigator-extraordinaire, and always ready with colour-coded sticky notes, Ali’s idea of heaven was a Scandinavian Container Store.

Although I can’t pretend that proximity to Ali transformed me into a Type-A Goddess, she did share some great, practical tips for increasing personal effectiveness. I now bequeath these to all fellow Type Bs today.

Eat the Frog

Most of us have a limited amount of willpower that decreases steadily throughout the day. Anyone who has ever planned to go to the gym after work, only to never actually get there, will be able to attest!

For this reason, professional coaches like Brian Tracy recommend getting the hardest, most important task done first.

According to Tracy, your ‘frog’ should be the most difficult item on your to-do list; that ugly, distasteful, difficult job that you’re most likely to procrastinate about.

Rather than delaying, dreading and allowing your frog to sit there, staring at you while you do other less important things, eat it up first and feel energised for the rest of the day.

You probably already know what your frog is, but if you are in any doubt, look through your list of tasks and rate each one according to:

  1. Things you don’t want to do, and actually don’t need to do.
  2. Things you don’t want to do, but actually need to do.
  3. Things you want to do and actually need to do.
  4. Things you want to do, but actually don’t need to do.

Your frog will fall into Category 2. The best way to ensure it doesn’t fall victim to procrastination is to subordinate it to habit.

Eating your frog at the start of the day is just such a habit and will leave you free to do things you’ll actually enjoy.

Meeting 101: Spend less time in Meetings

Getting out and meeting stakeholders and suppliers is a critical part of any procurement professional’s job. But what about the myriad meetings that go round in circles, without any clear outcomes, sucking energy and time from your day?

In this world of instant messaging tools (we have a fondness for Slack at Procurious) that make file-sharing, getting answers quickly, and making introductions easier, it should be possible to cut back on a lot of those meetings.

Where only a meeting will suffice, here are some hints for improving their effectiveness:

  • Only accept meetings where the organiser has sent through a clear agenda. Even then, think about halving the allotted time to create a sense of urgency.
  • With 10 minutes of the meeting to go, review the objectives and clearly agree what action items have come out of the meeting and who will be responsible for completing these. Set a clear date for completion of next steps.
  • If appropriate, try scheduling a walking meeting. A change of scenery and the action of moving in the fresh air can help clear the head, stimulate creativity and can be particularly effective when having conversations that you don’t want to.

Don’t Skip Lunch

The 80s might be long gone, but Gordon Gekko’s “Lunch is for wimps!” philosophy still is alive and well in some firms.

While its possible to mistake ‘busy-ness’ for importance, evidence shows there are significant cognitive benefits of allowing our fatigued brains regular downtime.

So what’s the perfect work/rest ratio?

DeskTime App monitored employees’ computer use and found that the most productive 10 per cent of employees tend to work hard for 52 minutes, then take a break for 17. If this seems short, it is – our brains can in fact focus for up to 90 minutes, but then need roughly 20 minutes rest.

Strategic breaks equal more efficient work. Don’t make the mistake of thinking your 17 minutes should be spent online shopping – there are a multitude of more valuable (and less costly!) things you can do to refresh and reset:

  • Most gyms offer express classes at lunchtime. Consider taking a 45-minute yoga class to reset your brain and energise you for the afternoon.
  • Watch a 2-minute eLearning video or stretch your mind with a Big Ideas video or Ted Talk.
  • Prepare a list of easy 2-minute tasks. These are things that won’t stress your grey matter but need to get done, and you can tick off in your down time.
  • Embrace a creative pursuit. Stimulate your brain by doing small creative exercise daily. This might be a little sketch, writing a blog, or making a video. Share your habit daily on Twitter or Instagram – it builds accountability. Check out #yearofcreativehabits for inspiration!

Silence

Silence!!

The constant stream of chimes, pings, flashes and emails, Whatsapp and Facebook alerts is impossible to ignore – it’s designed to be that way!

Schedule at least 3 x 30 minute sessions into your day where you close Outlook, shut all your browser tabs and turn off your mobile phone.

It might sound scary at first, but it will help you power through those difficult tasks without interruption and at the end of the day, you’ll feel real satisfaction knowing what you’ve completed.

Harness the Power of Habit

We know that social media can eat up hours in the day. How often have you kicked off with a valid Google search, but end up aimlessly clicking through old school-friends’ baby photos, or reading click-bait articles like 21 Life-Changing Lessons From The Dalai Lama’s Twitter Account”. 

At Procurious, we talk about establishing a ‘social media daily habit’. This isn’t only to limit the time you spend online, but to ensure you spend it wisely.

We suggest you dedicate approximately 20 minutes every day to ticking off value-adding tasks:

  1. Build your network: Expand your global contact network by connecting with stakeholders or peers you’ve met at conferences. Or find colleagues who look after similar categories in other geographies or industries.
  2. Scan the news: Using Google Alerts or Twitter hashtags, find out if your company, your category, your suppliers, or even your competitors, have been in the headlines. Login to Procurious and check out what’s happening.
  3. Share the intelligence: If you find something interesting, chances are someone else will too. Share the URL on Twitter, Procurious and/or LinkedIn.
  4. Ask a question: Scan the Discussion Board on Procurious and share your knowledge. If you’ve got a burning question, post it and make the most of this global brains trust!
  5. Learn something: Brush up on your skills and challenge your thinking by watching a 5-minute eLearning video, or listening to a Podcast,

And Before You Go…

Rather than working frantically right up until the last minute of the day, slamming your laptop shut and dashing for the train, stop working 30 min before you need to leave.

Use your last half an hour to review your day’s plan, transferring items that are still relevant, and adding any new priorities that have emerged during the day.

Categorise these tasks according to the Eat the Frog principles so that your first task tomorrow is ready and waiting to go.

And, unless you’re fortunate enough to have a Personal Assistant, review your calendar and print out any documents that you may need to review ahead of meetings. Spending the first 30 minutes of your morning fighting with a printer is not the way to productivity!

Social Enterprise Creating Oases in Food Deserts

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

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

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

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

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

Measuring Food Deserts

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

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

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

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

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

Access Only Part of Problem

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

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

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

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

Social Enterprise Solutions

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

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

Fresh Range

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

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

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

Fare & Square

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

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

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

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

Time for Action

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

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

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

Brexit Presents Export Opportunities for UK Business

Could an increase in export opportunities be a silver lining among the Brexit clouds for UK businesses?

Much of the reporting in the business world on the Brexit has focused on the potential negative impacts. However, there could be benefits for British businesses, including SMEs, in an increase in exports opportunities.

The weakening of the pound is believed to be a contributing factor to this growth. This has made British products and services cheaper overseas. As a result it’s provided British manufacturing with an opportunity to compete in foreign markets.

UK “Needs to Improve” in Export Market

The Flash UK Purchase Managers Index (PMI) has revealed export business rose for the second straight month, and to the greatest extent in two years.

Additionally, a recent survey by the Federation of Small Businesses suggested that the number of small businesses exporting could double, due to the drop in sterling value. This could potentially help to cushion the economy from the uncertainty of leaving the EU.

However, it’s not all positive. Despite the potential boost for exports from the drop in the value of sterling, Britain is still significantly behind the government target of £1 trillion of exports by 2020.

The recently appointed Trade and Investment Minister, Lord Price CVO, stressed: “The UK punches well below its weight in the export market and badly needs to improve.”

Increasing Overseas Tenders

Procurious caught up with Stuart Brocklehurst, CEO of Applegate, to ask him what the key factors are in export decisions. Since the result of the EU referendum, Applegate PRO, has experienced a 20 percent increase in overseas tender requests.

Brocklehurst commented, “With concerns over domestic demand, exports offer a great diversification of revenue for UK businesses. The decline in sterling means our goods and services are around a tenth cheaper for overseas buyers. This presents a significant opportunity for UK businesses.”

It’s worth looking at the situation from 2 sides when it comes to procurement – UK and non-UK based. For non-UK based procurement, the UK has become a lower-cost manufacturing option. There is a significant opportunity to make savings, as the goods and services in the UK are now 10 per cent cheaper.

Inside the UK, however, it’s a different story for procurement. As the prices fall in the UK, many procurement organisations will be faced with a tricky decision. Should they re-shore their supply chain or not. For example, manufacturing businesses currently planning to make capital investment priced in US dollars have seen the real-cost price increase by 10 per cent.

There’s also a question of currency stability. The pound may drop further in the coming months, so what can procurement do? Brocklehurst stated, “Companies can either mitigate this risk by purchasing derivatives, or purchase locally in order to avoid the volatility altogether.”

SMEs Uncertain on Exports

One interesting point that Stuart Brocklehurst makes comes in contrast to the positive note sounded by the Federation of Small Businesses. Brocklehurst argues that, although there has been a strong increase in overseas orders and export opportunities, many SMEs still don’t want to get involved in exports.

“When it comes to SMEs and exports, nothing is guaranteed. Some SMEs don’t want to get involved in exports, particularly where there are concerns about red tape. They’re hesitant to proceed where there are administration overheads, as they’re worried about getting it wrong,” says Brocklehurst.

Brocklehurst also believes that if there is a UK slowdown, this will be a benefit for businesses exploring export opportunities. Nevertheless, it shouldn’t be taken as a certainty that exports will completely offset the effect of falling currencies on purchases, and a potential economic slowdown.

In 2008, at the height of the Global Financial Crisis, many believed that the export market would help the UK economy. However, due to recessions in many other countries, demand for UK exports actually weakened, and the recovery took longer than expected.

Realising the Opportunities

Whatever the UK economy looks like in the coming months, it’s clear that the Brexit isn’t all bad. It’s also undeniable that it has presented clear export opportunities for UK businesses.

However, many companies remain uninterested in exporting, even with the potential revenue and business growth opportunities. It’s down to business leaders to help drive this strategy through.

Equally, for procurement, it’s time to decide how sourcing will look in the coming months, and ultimately when the UK leaves the EU.

Applegate PRO is the UK’s foremost sourcing database, helping to link buyers and suppliers, and streamline the eProcurement process.

The platform is being utilised by a wide range of companies across the world, including Airbus, SpaceX, General Dynamics, NATO headquarters and The White House.

US Intelligence to Aid Supply Chains Against Cyber Attacks

A new US Intelligence campaign is set to help supply chains defend themselves against cyber attacks.

supimol kumying/Shutterstock.com

As businesses and supply chains grow increasingly more global, inevitably risk increases at the same rate. One of the most high profile risks for supply chains currently is are cyber attacks and hacking.

With each passing year, the cyber attacks get bigger. In June, the Democratic National Committee was breached by Russian hackers, and 20,000 e-mails, linked to Hillary Clinton’s Presidential campaign, were posted online.

In March, the Bangladesh Federal Reserve lost $100 million to hackers, with only $20 million recovered so far. Over 4,700 cyber attacks have been reported in the US alone since 2005, impacting hundreds of millions of people.

However, organisations with cross-border supply chains are about to get a helping hand in the fight against cyber attacks.

Cyber Attacks & Vulnerable Supply Chains

The National Counterintelligence and Security Centre will provide sensitive information, including classified threat reports, to companies about the risks of hacking in their supply chains.

The move is part of an effort to increase responsibility and education for organisations for supply chain security. It has previously been highlighted that there is a lack of understanding in US companies that having international suppliers makes supply chains vulnerable to cyber attacks.

“The supply chain threat is one that’s the least talked about but is the easiest to manipulate for all aspects of our daily lives,” said NCSC Director, William Evanina.

Domestic & Foreign Threats

The NCSC campaign will initially focus on supply chains linked to both China and Russia, the alleged sources of previous hacks. However, it will also be aimed at domestic hackers, criminal enterprises, and even disaffected former employees.

The campaign will prioritise telecommunications, energy and financial services corporations first. This is in part due to the nature of the business, but also their strategic importance to US national security.

And as well as cyber attacks, the NSCS will also be providing information and advice on so-called “hands on” crimes, such as stealing of classified information, or destruction of sensitive equipment.

Procurement Must “Play Full Part”

As part of the efforts to reduce cyber attacks, the key role of procurement has been highlighted. Evanina emphasised that procurement need to be fully integrated with other areas of the organisation to help mitigate risk.

He highlighted the role of ongoing due diligence to support initial investment in cyber security software and programmes. This would be carried out by procurement, but in partnership with the other areas of the business.

Evanina expands on the role of procurement in this video. He states that research into suppliers, and their own supply chains is critical in mitigating the risk.

Wider World

Although the work to be carried out as part of the campaign is primarily aimed at US companies, the applicability is there for all global supply chains.

Many US-based companies will purchase goods from overseas suppliers, and at the same time there will be companies purchasing from US suppliers. The inter-connected nature of the supply chain, as well as increased connectivity across technological platforms, increases the risk to organisations.

Carrying out due diligence on suppliers, knowing the full supply chain, and, perhaps most importantly, ensuring procurement plays a full part in organisational security, is a way to help mitigate this risk.

Will your organisation be taking advantage of the advice from the NCSC? Will you be impacted by any changes that take place? Let us know in the comments below.

Want to know what’s happening in the world of procurement and supply chain? Well, we’ve picked out the key headlines from the past week to keep you up to date…

Verisk Maplecroft Releases Modern Slavery Index
  • Global Risk Analysts, Verisk Maplecroft, have released their latest supply chain modern slavery index.
  • According to the Index, modern slavery constitutes a ‘high’ or ‘extreme risk’ in 115 countries worldwide.
  • Major exporters China and India fall again into the extreme risk category. The UK is one of only four countries seen as ‘low risk’
  • The report notes that most countries have some form of anti-slavery legislation or framework in place, but lack the resources to enforce these laws.

Read more at Forbes

African Countries Ban Secondhand Clothing Imports
  • A ban on imports of secondhand clothing is to be implemented by the Governments of the East African Community.
  • The group, including Kenya, Tanzania, and Uganda, proposed the ban in order to stimulate the apparel industry in their countries.
  • It is hoped that the measure will also create jobs and bolster the countries’ economies.
  • The rise of ‘fast fashion’ has led to a dramatic increase in the region’s secondhand clothing imports over the past decade.

Read more at Sustainable Brands

Scotland Launches Brexit Stimulus Fund
  • The Scottish Government has announced plans to create a stimulus fund following the UK’s decision to leave the EU.
  • The fund will add an additional £100 million to capital spending to support Scottish businesses.
  • Funds will be allocated to projects based on jobs creation and impact on the overall supply chain.
  • The Government also announced the creation of Business Information Service to support businesses affected by vote.

Read more at Supply Management

Shipping Industry Struggles Continue
  • As the results for the first half of 2016 are released, the struggles in the shipping industry look set to continue.
  • Hapag-Lloyd and Orient Overseas have both reported first half losses for 2016, with Maersk expected to do likewise this week.
  • Decreasing freight rates and over capacity have been blamed for the current plight in the industry.
  • Hapag-Lloyd plans on acquiring United Arab Shopping Co., a deal that could deliver $400 million in savings annually.

Read more at the Wall Street Journal

Procurement Turns to Supplier Relationships for Innovation

As procurement seeks to increased its involvement in innovation, it’s turning to its supplier relationships to drive change.

This article was written by Daniel Ball, Director at Wax Digital.

Wax Digital’s Procurement Innovation Pathway research is based on 100 interviews with the UK’s senior procurement professionals, to canvass their opinions of the key topics in the profession.

Previously, we highlighted that procurement wants to be more involved in innovation. However it is the risk averse nature of procurement that appears to be holding it back.

In this article, we assess the importance of good supplier relationships.

Mutually Beneficial Relationships

Achieving effective, mutually beneficial relationships with suppliers can be a great way for procurement to drive positive change. That’s just one reason, according to new research, why procurement professionals are prioritising suppliers in their quest to innovate.

In fact, Wax Digital’s research showed that procurement’s top two innovation areas relate to working with suppliers.

In first place, 57 per cent cited supplier relationship management as an area that can aid innovation. Sourcing suppliers for product innovation came in second, with 49 per cent. Reducing supply-chain risks also scored highly.

Turning to Supplier Relationships

Compared to lower scoring areas, like automating processes to save time/resource, and improving spend management by empowering people, the supplier is clearly where procurement is turning its attention to innovate.

New ways of engaging with suppliers, through self-service portals for instance, and ensuring supplier compliance through automated contract management, are key priorities.

But it’s equally about what suppliers can do for procurement. There’s a desire to find partners who can be a catalyst for innovation at the core of the organisation’s products and delivery.

Technological Investment

These priorities remain the focus into 2017 too. This means the future could see an even more supplier-focused innovation mind-set in the procurement function.

Adding weight to this, the two most commonly used procurement technologies are also heavily supplier-focused. 51 per cent of organisations favour supplier information management, while 49 er cent are looking to contract management systems.

And the most common technology investment planned for the coming 12 months is supplier relationship management (SRM) tools. Procurement is clearly doing more than talking the talk on supplier innovation.

Challenge of Involvement

The future looks promising in this regard but there are challenges ahead. Procurement sees the value of supplier focused innovation but it is not always in control of it.

84 per cent of respondents said they were currently involved in innovations around supply chain collaboration. However, less than half of these, 40 per cent, said that they were leading it. Although this figure rises to 50 per cent in the future, there’s still some way to go before procurement fully takes the reins of innovation.

Now that many procurement professionals have already achieved some of the more transactional and process based quick wins, it’s natural that we see more and more looking to strategic supplier management as the next frontier to conquer.

Building better relationships with the right suppliers, whether existing or new, is clearly uppermost in their thinking.

The Innovation 2016 research was conducted by Morar Consulting. The research involved 100 interviews to canvass the opinions of UK senior procurement professionals, working in small to large UK enterprises.

You can find out more about the research, and download the report, by visiting the Wax Digital website.

Big Ideas Summit 2016: Big Idea #9 – Help Inspire Millennials

Lucy Harding has called on procurement leaders to help inspire Millennials by inviting them to thought leadership events.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Help Inspire Millennials

Lucy Harding, Partner and Global Head of Practice, Procurement and Supply Chain at Odgers Berndtson, challenged CPOs to open up access to events, such as the Big Ideas Summit, to the Millennials in their organisations.

Lucy argues that such events can inspire Millennials. By accessing thought leadership and innovative events, it can encourage them to sell key message to their generation in their organisations.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 16,000 like-minded procurement professionals from across the world.

7 Key Objectives for Procurement Success

Global procurement professionals are attempting to find new ways to create cost savings, as well as create value. Help is at hand with these 7 key objectives for success.

ProcureCon Europe is back for it’s 17th consecutive year, answering your challenges in procurement and the future direction of the industry.

As businesses emerge from the recent recession into a fragmented ecosystem, a normal approach to creating value through cost saving is no longer relevant.

Instead, businesses are tasking procurement to effect enterprise-wide change, including implementing process improvement, and operating beyond the contract with suppliers to co-create value, and exploring payment innovation.

ProcureCon Europe has put together seven key procurement objectives you can’t afford to ignore, in order to create an efficient, cost saving and interactive procurement department.

#7: Talent Development

Talent development obtained the least amount of votes in our survey. However, there are few procurement executives who would argue against the importance of having a plan in place to develop the procurement leaders of the future.

#6: Responsible Sourcing

How is this made, and where does it come from? These are important questions on the lips of both procurement professionals and the general public.

Although perhaps less in the spotlight than it was 18 months ago, especially in the public sector, responsible sourcing remains a central pillar for Indirect Procurement.

#5: Taking Advantage of Digitisation

Organisations are rapidly digitising across the board. Procurement is attempting to make the most of the operational advantages implicit in this change.

The move to digitise in many cases means completely overhauling established business processes. This presents a significant opportunity for improvement, and is an essential element of a successful future for Indirect Procurement.

#4: Innovation in Services

Procurement seeks to lead innovation in the way that an organisation uses services, from HR, to IT, Marketing and beyond.

This is an area in which Procurement has the potential to add real value. The fresh availability of external services can mean easy, and comparatively cheap, solutions with minimal risk, which is great for growing companies.

#3: Operational Efficiency

While driving down costs can be done by negotiating better deals, there is also some considerable importance placed on increasing operational efficiency. Doing so means making better use of available resources and ultimately saving money.

#2: Value Delivery

Just like beauty, value is often in the eye of the beholder. That being said, those with a progressive approach to indirect procurement increasingly look to consistently add tangible value to the categories in which they work, and actively measure themselves on their ability to do so.

#1: Cost Leadership

Perhaps unsurprisingly the number one area of importance for Indirect Procurement is in the area of cost leadership. A strong stance on cost leadership can help to drive significant improvement to the bottom line. This is key when Indirect Procurement is expected to demonstrate its ability to drive meaningful savings.

Agility and Technology

These 7 key procurement objectives provides companies with guidance, in order to have an effective procurement department.

However, procurement must stay agile. Factors such as innovation and digitisation are constantly changing. Procurement professionals, particularly those in growing companies, should be taking advantage of available technology to further their reach.

The ProcureCon event series brings together a unique blend of Procurement, Purchasing and Supply Chain experts from across all industries to share their experiences and knowledge with a team of people who truly embrace the strategically important field of Procurement.

Find out more about how ProcureCon Europe is helping procurement professionals to solve their main challenges at on the event website. You can also follow ProcureCon Europe on LinkedIn and Twitter.