All posts by Procurious HQ

Procurious Big Idea #46 – Shift Perceptions Of Contractors

Samantha Coombs, Consultant at Procuri, talks about why procurement managers should change their perceptions of contractors.

Samantha argues that by communicating better with these workers, managers can stop them being a transient workforce and start to benefit from their knowledge.

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Halloween – A (Trick or) Treat for Supply Chains

It’s that time of year again. No, not Christmas (yet…), but Halloween.

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The ghoulish ‘holiday’ has, in the past, only truly been embraced by our compatriots across the Atlantic. However, in recent years it has gained a strong foothold in the hearts, minds and, importantly for retailers, wallets of the Brits.

In America, an estimated 157 million people will celebrate Halloween in some way this year, with spending set to total $6.9 billion. An increasing number of ‘pop-up’ stores focusing on Halloween is just one reason behind this level of spend.

Creating a Monster Spend

In 2014, total spend related to Halloween in the UK was estimated at £443 million, made up of the following spend:

  • £148 million on clothing and costumes
  • £132 million on Halloween themed food
  • £92 million on decorations
  • £70 million on entertainment and stationery

If you think that is scary, then further research has also found that in 2015:

  • 29 per cent of UK consumers plan on purchasing some form of Halloween related goods
  • Just 23 per cent of males will purchase something, but will spend an average of £48 each (£20 more than females)
  • 40 per cent of parents will spend on Halloween goods
  • 55 per cent of buyers will be purchasing clothing
  • 52 per cent of shoppers will purchase food and drink

Jack ‘No’ Lantern

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However, despite it being part of the traditional Halloween offering, only 45 per cent of people plan on buying a pumpkin this year.

The news gets worse for any amateur pumpkin carvers out there, as a wet August and less than ideal growing conditions has led to a shortage of pumpkins this year, with yields down to 50 per cent.

Nightmare on Supply Chain Street?

Supply chains will be well prepared for Halloween far in advance of actually getting products into the shops. But the variety of goods on offer could spook many organisations.

Going crazy with seasonal products can put a huge strain on supply chains, cost organisations considerable sums of money, but ultimately not provide a return should the product fail.

From a Logistics point of view, goods need to be delivered at just the right time to stop competitors ghosting in, but not going so early that consumers are trying to carve mouldy pumpkins.

Take into account planning this around Thanksgiving, Black Friday, Cyber Monday and Christmas and it could suck your resources dry.

Trick or Treat

As these holidays continue to get bigger, it provides both manufacturers and retailers with some tough choices. Don’t get involved enough and you might miss out on that sales bump, make too much and you may end up discounting products you can’t use for another 365 days.

The most successful will asses the situation and work out the best way to be involved, while the consumers will just enjoy the ever-expanding list of products they can get their hands on.

But, if Halloween isn’t your thing, just think, it’s only 53 shopping days until Christmas…

Sharp announce Dave Dwyer as New Supply Chain Head

Sharp Imaging and Information Company of America (SIICA), a division of Sharp Electronics Corporation (SEC) has announced that Dave Dwyer will be promoted to the role of Vice President of Supply Chain and Operations. Dave Dwyer

Mr Dwyer brings more than 20 years of logistics and supply chain experience to his new role, having previously held management positions with Nabisco Biscuit Company and Kraft Foods before taking the moving to Sharp in 2002 as the Director of Supply Chain Planning.

Mike Marusic the Senior Vice President, SIICA Marketing and Operations made the following remarks on Mr Dwyer’s appointment, “Dave has done an outstanding job in his previous role running the SEC Logistics Group, through his efforts in working with all of the SEC business areas, he developed strong relationships across the organisation and with third-party partners in driving improvements to the logistics process.”

Dwyer will hold responsibility for the end-to-end supply chain management at Sharp. A direct focus will be given to enhancing alliances with the firms supply chain partners in support of the Sharp Consumer and Business Products companies. As part of an efficiency drive within the firms supply chain, Dwyer will lead a consolidated team comprised of members from various functional departments.

Speaking on his new appointed, Mr Dwyer was quoted saying, “I am extremely excited to join a great team in SIICA, with their support, I look forward to enhancing the supply chain and operations processes across the organisation to achieve a more unified and efficient operation.”

Can Good Procurement Lead to a Successful IPO?

IndiGo, a budget Indian airline, may well have procurement to thank for a successful IPO launch today.

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It has been suggested that a frugal business strategy, including a strict focus on reducing costs has primed the airline for success in the hugely competitive Indian aviation market.

India’s aviation market is growing at roughly 18% a year and offers huge opportunities for investors looking to cash in on this demand spike.

Despite this boom in demand, high operating costs and taxes have hindered the progress of many airlines operating in the subcontinent. A debt-racked Kingfisher airline was recently grounded and Spicejet, another Indian carrier, is facing similar issues.

Cost Conscious Culture Drives IPO Interest

Aviation experts point to IndiGo’s cost conscious culture as the leading reason as to why the business is performing so well. IndiGo’s procurement strategy is simple – they buy just one type of plane from one supplier (the company’s recent order with Airbus was the largest single order in the manufacturers history). This simplicity allows the firm to save time and money on maintenance, and reduces the amount of effort that needs to be allocated to supplier management.

IndiGo also has an enviable record when it comes to punctuality. This has not only encouraged more passengers to fly with them, but has improved the airline’s forecasting and reduced fuel costs, ultimately contributing to a more profitable operation.

Interest Domestically and from Abroad

The IPO is has been seen by investors as a huge opportunity to capitalise on growth of IndiGo. The firm’s market share has increased from 12.5 per cent five years ago to 34 per cent at the end of March. The funds raised in the IPO are earmarked for the purchase of new planes that are expected to further spur the growth of the firm.

Interest from both foreign and Indian firms (including Goldman Sachs and Singapore Sovereign Wealth Fund) in the IndiGo IPO has already been strong. The IPO will be launched today.

Disruptors and Global Networks in Procurement

Last week, Procurious founder Tania Seary was the special guest on a webinar hosted by Procurify, speaking on the subject of ‘Disruptors and Global Networks in Procurement’.

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If you weren’t able to join the webinar on the day, then worry not. Catch up with the full webinar below.

During the discussion, Tania highlighted some of the key facts and figures around several major forces having an impact on procurement professionals, including markets, ethics, transparency, and optionality.

She went on to explain why global networks, like Procurious, and social media are key to CPOs and procurement professionals understanding these issues and best mitigating the risks associated with them.

 

If you have any thoughts on these topics, or would like to engage Procurious to help you get your social media activities moving, get in touch with one of the team, or send us a message at info@procurious.com

Is the UK’s position as a global innovation leader at risk?

New research shows that a majority of UK organisations suffer from “innovation inertia” or a lack of consensus in where to invest their resources. Does the UK need to re-focus its efforts so as not to be left behind?

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The research from Hitachi Data Systems found that 75 per cent of organisations are being hampered in their investment decisions by a lack of clarity and access to business data. Additionally, a staggering 90 per cent of IT leaders believed their organisation was not in a position to respond to rapid change in it industry.

Although there is a much-increased volume of data available to business leaders, it appears that many are not being able to leverage this effectively. From a long-term point of view, this leaves British organisations potentially lagging behind their global competitors.

Lack of Investment

Alongside the “inertia” caused by a lack of organisational investment appears to be a significant decrease in investment in innovation at a national level.

The Confederation of British Industry (CBI) has revealed that the UK spent the least on innovation and science of any of the G8 nations in the past year, with only 0.49 per cent of GDP invested back in these areas.

The CBI also argued that more Governmental support was required in order to make innovation more attractive for businesses, a stronger framework and a re-thinking of business rates two of its key suggestions.

Industry leaders have also warned that innovation could be harmed should the Department for Business, Innovation and Skills change innovation and R&D grants from the UK Government, to loans.

Representatives of the aerospace, automotive and pharmaceutical industries have warned that this could lead to fewer R&D projects in the UK, and organisations shifting new R&D projects abroad.

Falling Behind?

Although there is much talk about the UK falling behind, the situation is perhaps less perilous that it seems.

The 2015 Global Innovation Index (GII) places the UK as one of the world’s top five most-innovative nations, both from a volume and quality point of view. This ranks the UK alongside economic peers such as Sweden and the USA, as well as being ahead of Germany and growth economies such as China and Brazil.

It could be argued, based on the comments from the CBI, that an increase in investment in innovation is required to keep the UK in its current position, rather than have the country play catch up with its global peers.

Ambition is Key

Yet, the UK and UK-based organisations need to continue to innovate and create in order to maintain its position. How best, though, to kick-start more innovation projects?

Richard Jones, pro-vice chancellor for research and innovation at the University of Sheffield, believes that universities will play a major role in rebuilding the UK’s innovation programmes.

In a speech to the Association for University Research and Industry Links’ annual conference, Professor Jones argued that universities needed to see what they could contribute to wider society and be more “ambitious” to achieve their goals.

Lead by Example

In the past 12 months, two of the UK’s most famous innovators, James Dyson and Richard Branson, have both invested in programmes to help boost innovative and entrepreneurial activities in the country.

Having figureheads leading by example, as well as investing time and money into this, could potentially give the UK the lift it needs in the coming years to keep its place at the top of the tree.

Do you think the UK needs to be more innovative? Is the country at risk of falling behind, or are the reports over-stated? Start the discussion on Procurious!

Stuck for a conversation in the coffee queue this morning? Procurious has gathered all the big headlines in procurement and supply chain for you…

Talk Talk Boss Warns of ‘Arms Race’

  • Talk Talk Chief Executive, Dido Harding, has warned that all UK companies are under threat of a “cyber security arms race”
  • The hack on the telecommunications company happened last Wednesday and has affected millions of customers, although no losses have been directly attributed to the hack as yet
  • Harding warned that any company in the UK could be vulnerable to a cyber attack
  • She went on to say, “This is happening to a huge number of organisations all the time. The awful truth is that every company, every organisation in the UK needs to spend more money and put more focus on cyber security – it’s the crime of our era.”

Read more at BT.com

London Mayor Contradicted on Garden Bridge Procurement

  • Claims that the procurement process behind the Garden Bridge was ‘robust’ made by London mayor Boris Johnson have been directly contradicted by TfL’s director of internal audit
  • Clive Walker, the man who oversaw mayoral body Transport for London’s internal investigation, conceded that the process was neither ‘open’ nor ‘objective’
  • Critics have suggested that TfL made attempts to ‘water down’ the audit and introduce elements which reflected well on its performance

Read more at Architect’s Journal

Technology Means Traffic Jams Could Be ‘Thing of the Past’

  • Motoring and technology engineers are hard work on the next generation of connected vehicles, which could completely transform British roads.
  • The concept revolves around cars talking to the city and guiding drivers through the busy streets with minimal delay
  • Siemens and NXP are in the process of designing the in-car chips and infrastructure to build ‘intelligent road systems’, allowing drivers to be kept up to date with conditions in real time
  • The technology giants believe the systems will be ready to go in the UK by 2020

Read more at The Express

Hyperloop Test to Start within ‘Weeks’

  • Hyperloop Transportation Technologies (HTT) has announced it will start work on the $6bn Hyperloop test track within the next two to three weeks
  • The Hyperloop system, originally the concept of Elon Musk, has had to overcome a number of issues to get to this stage, aims to create super-fast, cheap transportation between major cities
  • The system, which will be solar powered, could transport over ten million passengers during testing

Procurious Big Idea #45 – Procurement Raising Its Voice

Cath Hill, Group Marketing and Membership Director for CIPS, talks about her idea to get procurement to raise its voice as a profession.

Procurement has long been the unsung hero in the organisation, but now it’s time to make both internal and external people aware of the great work the profession does.

See more Big Ideas from our 40+ influencers.

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Future Technology That May Change The World

As Artificial Intelligence and Digital Currencies (like Bitcoin) seek to transform our lives, what effects will these new advances have on commerce and the world’s supply chains?

Future technology that will change supply chains

There’s a change happening on factory floors the world over, as robots and automation increasingly replace the manual (human) workforce of old.

With the recent innovations in artificial intelligence, will the supply chains of tomorrow be at the mercy of robotic overlords? If so, do we have anything to fear?

Elon Musk has previously aired his own warnings while giving a talk to students from Massachusetts Institute of Technology (MIT), saying:

“I think we should be very careful about artificial intelligence. If I had to guess at what our biggest existential threat is, it’s probably that. So we need to be very careful… I’m increasingly inclined to think that there should be some regulatory oversight, maybe at the national and international level, just to make sure that we don’t do something very foolish.”

Of course it’s perfectly natural to fear change. We must also be mindful that artificial intelligence is still very much evolving, and at this stage it’s an unknown quantity. There are some camps that fear the worst, that AI represents the destruction of mankind, with robots and humans embroiled in a bitter battle for survival. Flesh vs. circuits, the human condition vs. sentience…

Future Shocks

Not so according to Mustafa Suleyman – Head of Applied AI at Google DeepMind, who instead believes that this modern intelligence will help tackle some of the biggest problems facing the world today (think access to clean water, financial inequality and stock market risks). Indeed, the work of DeepMind was something Wired Editor David Rowan touched on at Procurement Leaders’ London gathering earlier this year.

David told us how DeepMind had created a “generalised artificial intelligence” – the earliest example of which was able to not only play Space Invaders, but master it to become the best player in the world. While this demonstration is certainly impressive, how can it translate to real-world scenarios?

The answer lies in Big Data as DeepMind observed: “We have global information overload from overwhelming systems complexity – they’re so complex and interlinked it’s possible that the US financial crash in 2008-9 caused the Egyptian revolution” [a time of widespread corruption and a stagnant economy that led to a national bread shortage].

If all of this (Big) Data is just sitting around, waiting for consumption, then why shouldn’t we make it available to robots for analysis and dissemination?

A Calculated Risk

Indeed, the significance of Big Data has not gone unnoticed by procurement’s leading lights…

A 2010 paper entitled ‘Artificial intelligence in supply chain management: theory and applications’ reviewed the past record of success in AI applications to SCM and identifies the most fruitful areas of SCM in which to apply AI.

Similarly, author of Supply Chain Visability.com -Jonah Saint McIntire, observed: “In time, as new generations of the AI are deployed, something truly game changing will occur. This is because machine learning will cross human learning capabilities fairly slowly. Remember that intelligence is modular and, as a result, machines may exceed humans in some forms of learning while lagging in others. The real breakthrough occurs when all necessary forms of learning are dominated by AI rather than human intelligence.”

If AI can help us realise that we have a problem, why then should we be fearful of this new technological dawn?

John McAfee – infamous programmer and creator of the world’s first antivirus software, has long insisted “that if you are a ‘routine cognitive worker’ following instructions or doing a structured mental task,” then it is your job that’s most at risk from the inevitable rise of the machines…

Payments Are Going Digital Too…

Bitcoin is an online payment system that is perhaps more widely recognised as the first decentralised digital currency.

Supported by open source technology, Bitcoin is not owned or operated by one individual or organisation. It is free to use (apart from an optional transaction fee) and can reduce the costs of transactions for merchants compared to credit cards.

The technology behind it is referred to as ‘blockchain’. The blockchain records all the transactions in a publicly available ledger. The ledger keeps track of what users are spending, provides authentication and keeps track of where the currency is.

Safety In (Digital) Numbers

New electronic payment systems and virtual currencies are expected to make paper currency the horse and buggy of the 21st century.

In a report commissioned by HP, the Ponemon Institute has made a number of interesting finds. Its “Security & Compliance Trends in Innovative Electronic Payments” paper reveals that support for digital currencies and new electronic payment systems are perhaps stronger than originally thought. And while 79 per cent of the US organisations that took part in the research plan to adopt digital currencies, a key barrier to the adoption of innovative electronic payments remains. Namely: the issue of security.

While new payment models are evolving, the same security fundamentals for maximum protection in the underlying payment process are still needed. The most critical are one-time passwords or tokens, federated identity and authentication systems and multi-factor authentication.

There is also the perception that the pressure to quickly migrate to the use of innovative electronic payments is making it difficult to address the security and privacy issues.

Digital wallets (or e-wallets) are used to hold virtual currency – and high profile names in technology like Google and Apple already have solutions in place to drive the adaption rate.

In-fact belief is so strong that almost half (46 per cent) of respondents predict that virtual currencies will overtake paper currencies within the next five years.

Perhaps there’s some truth in this… we are increasingly looking to financial institutions and credit card companies to make the inroads needed to take such practices to the next level.

They’ll be the ones to create new approaches to the security and privacy of the electronic payment platform. These organisations are closer to the consumer experience with electronic payment systems and might have a greater incentive to innovate and improve both security and privacy.

Transparency In The Digital Age

Is it such a leap to suggest that Bitcoin technology has the ability to transform the future of digital payments and aid supply chain transparency?

We already know that it’s possible to adapt Blockchains to keep track of what is going into a product, who has handled it etc. Using an app or website, an individual could stand in a shop holding a piece of clothing and be able to trace it all the way back to the farm that supplied the cotton. The information could be used to highlight working practices on the farm, use of pesticides, Fairtrade considerations and more, leading to far greater transparency.

Tracing the supply chain through the use of a ‘product passport’, showing the change of ownership of items through the supply chain and highlighting each step in the process would ultimately help to facilitate an understanding of the transactions from end to end.

What do you make of this brave new world: is more time needed to fully realise the benefits (and drawbacks) of such innovations?

Is there a crisis on the horizon for Asian economies?

The old saying used to be “If America sneezes, the world catches a cold”. Times are changing and now it seems that China has caught a cold, and the rest of the Asian economies may be coming down with something worse.

chinamarket_091815 In 1997, Asia was hit by an economic crisis, sparked by, amongst other things, a series of currency devaluations. When the Thai Government took the decision to unpeg the Baht against the US Dollar, it had a knock-on effect across the rest of the region, with falling stock markets and reduced imports.

 

Back in the current day, similar issues with slow economic growth and currency valuations in the region have many investors worried that a new crisis may be on the horizon. While many economists and experts may disagree with this, there are parallels being drawn between the situation today, and the one nearly 20 years ago.

Market Instability

Asian economies have just experienced their worst collective quarter since the Global Financial Crisis. Not even the Chinese powerhouse is immune to the slump, with its main stock market posting its worst quarterly results since 2008 and growth slowing to 6.9 per cent.

Currency valuations are down too. The Malaysian Ringgit has fallen a massive 26 per cent this year; the Thai Baht has hit a five-year low; Singapore’s central bank is about to undertake its second easing of monetary policy of 2015; Japan is facing another recession.

With export markets weakening, less money available to spend on imports, and China, long since the key customer for many Asian countries, unable to help due to its own perilous situation, there are concerns that it’s only a matter of time before there is a knock-on effect around the world.

Sales Slump

Last week alone saw five major global organisations report a sharp decline in sales, tied to poor sales in Asia, which have lead to falling profits and revisions of growth forecasts.

  • A 4 per cent fall in the sales of Barbie Dolls has hit Mattel profits (down to $223.8m from $331.8m last year), as a strong US Dollar impacts overseas markets
  • Shares in Hugo Boss dropped 10 per cent, with the organisation blaming the deteriorating Asian market; it went on to cut its growth forecast for sales and core profits to 3-5 per cent
  • Shares in Burberry dropped 8 per cent on Thursday last week, with its investors focusing on a dip in Chinese sales as the primary cause
  • Casino and hotel operator, Wynn Resorts, reported a 60 per cent drop in earnings in the three months to September. Its Macau operations, traditionally a major money earner, saw a 37.9 per cent decrease in net revenues for the same period
  • Nestle, still recovering from the Maggi Noodles safety scare, cut its growth outlook to 4.5 per cent, citing slower than expected growth in China

Global Uncertainty

As the situation in Asia develops, investors around the world are nervous about what might be coming next. Decreasing export revenues, in particular to the Chinese market, are set to have an impact on growing economies like Brazil and Turkey.

There are concerns in Europe too, where exports to Asia are big business, as slow European markets aren’t able to pick up the slack in sales. Even in the USA, where growth is much healthier, long-term instability may ultimately cause problems.

Winter of Discontent?

Where does this leave procurement and supply chain? As professionals, we need to be aware of the developing situation, both from the point of view of sales and exports, but also for risk exposure for organisations.

While some organisations may be able to take advantage of the situation by sourcing cheaper products and materials, we need also to be aware of the potential risks of making changes to suppliers and across supply chains.

Where the markets go from here remains to be seen. Investors and economists will both be hoping that the coming quarter brings more stability and wards off any further talk of a second crisis.

Do you work in Asia, or have part of your organisation in Asia? What are your thoughts on the current situation? Get in touch, or leave your comments below.

Meanwhile, Procurious has scoured the web for the top headlines in procurement and supply chain this week…

New Job Creation in UK Automotive Industry

  • Up to 28,000 jobs could be created in the UK automotive industry supply chain over the next five years
  • A report from the Society of Motor Manufacturers and Traders (SMMT) estimates British car production is set to reach a record two million vehicles annually by 2020
  • This boost in output will require an additional 9,500 employees at vehicle manufacturers in the UK, along with a subsequent increase across UK-based supply chains
  • The report comes in the wake of huge investment by car-makers and supply chain companies throughout the UK

Read more at The Birmingham Post

Uber App ‘Does Not Break UK Law’

  • A ruling by the UK High Court has decreed that the Uber app does not break the law
  • The court had been asked to decide whether the company’s smartphones were considered meters, which are outlawed for private hire vehicles
  • The Licensed Taxi Drivers’ Association (LTDA), which represents many of the 25,000 licensed taxi drivers in London, asked the judge to rule it was a meter and ban its use
  • The LTDA now plans to appeal

Read more on the BBC

Nespresso updates on ‘The Positive Cup’

  • CEO of Nestlé Nespresso, Jean-Marc Duvoisin, gave an update on the progress of ‘The Positive Cup’, Nespressos 2020 sustainability strategy
  • Marking one-year since its launch, Duvoisin announced that significant progress had been made towards improving the lives of thousands of coffee farmers, as part of the company’s AAA Sustainable Quality™ Program
  • Over the past two years Nespresso has been working with its partner TechnoServe to help re-build the coffee sector in South Sudan, resulting in the country’s first-ever coffee exports in 2013
  • Nespresso aims to source 100 per cent of its coffee from its AAA Sustainable Quality™ Program by 2020

Read more at PR Newswire

Wal-Mart to add Supply Chain Capabilities

  • The US retail giant will aim to add capabilities to its supply chain in order to improve efficiency in the coming year
  • CFO Charles Holley, speaking at an investors’ day, stated an expectation of an earnings fall in the year to January 2017
  • Wal-Mart plans to extend the capabilities of its distribution warehouses to allow for shipping of individual items, rather than servicing of stores alone
  • It is expected that this will improve accuracy and efficiency, while at the same time reducing costs

Read more at Just Style