All posts by Procurious HQ

Is Trouble Brewing for Apple Following Supply Chain Order Reduction?

A recent report from Credit Suisse has suggested that Apple’s Asian supply chain is weakening following a reduction in orders. Is the tech giant struggling? Or is it just standard market forces at work?

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According to the report, Apple has reduced orders by up to 10 per cent, with this figure expected to grow to 20 per cent in the first quarter of 2016. As a result of this, Credit Suisse has downgraded its sales estimates for the iPhone 6S from 242 million units, to 222 million units.

While this might not seem like a major decrease, the period covered runs through Thanksgiving, Black Friday, Cyber Monday and Christmas, which would be a big story for any organisation, let alone one that has dominated the technology scene for over a decade.

What’s more, the company’s share price fell 2.5 per cent on the back of the announcement, which came just 24 hours before the launch of the iPad Pro.

Knock-on Effect in Asia

Lower orders in the Asian supply chain, where Apple has traditionally done a decent proportion of its manufacturing, will inevitably have a knock-on effect on the organisations in the region.

Organisations such as San Disk Corp., AAC Technologies (Hong Kong), Largan Precision (Taiwan) and Texas Instruments, all of which have exposure to Apple’s Asian supply chain, also saw their shares fall following the announcement.

An on-going decrease in orders across the supply chain could lead to a much wider impact, particularly if concerns about falling sales of the iPhone become a reality. However, many experts have said that the situation is not as bad as it seems.

Reasons to be Positive

Tim Cook, the Apple CEO, remains confident and has been quoted as saying that Apple is still receiving strong demand for the iPhone 6S from China. Other reports have suggested that the appetite for the 6S may be on the wane due to rumours of a new and improved iPhone 7 being released next year.

Another US-based investment firm, FBR, also disagreed with Credit Suisse’s announcement, arguing that it was expecting to see “a very strong December quarter/holiday quarter on healthy iPhone 6s demand and legacy iPhone 6 shipments.”

That, combined with a number of new products that Apple has lined up to released during 2016, including a new streaming service and a peer-to-peer payment service, keep the organisation in a very healthy position.

Customer Loyalty

The other thing that stands Apple in good stead going forward is its fiercely loyal customer base. While sales of the iPhone were inevitably going to plateau and then tail off, Apple retains its users through the high-specification of its products.

Apple has also developed its “Apple iPhone Upgrade Program”, which allows consumers to buy phones directly from Apple on a two-year instalment plan, then upgrade after a year or extend the terms for a further 12 months. It is anticipated that the results of this service will show in September 2016, plus drive long-term sales.

Good or bad over the next 6-12 months, Apple is here to stay. It takes a brave investor to back against them, particularly as the company has a reputation for pulling innovative products out of the bag when required.

However, not even Apple are immune to a volatile market and changing trends, so it will be interesting to see if the predictions pan out, and how Apple will react if and when that happens.

What do you think about Apple’s situation? Is it something to be worried about or a flash in the pan? Let us know your thought

Have you got what it takes to join Procurious HQ? Digital Marketing & Social Media Specialist Opportunity Available

Procurious has an exciting opening in our small but exceptional team for a Digital Marketing and Social Media rising star!

Are you who we're looking for?

This is a new role supporting the General Manager and the Content & Social Media Manager to cleverly propagate and amplify our niche content to build global awareness about our brand and attract new members.

Procurious is looking for a candidate with 2-4 years quality Digital experience, with a strong understanding of social media platforms. The candidate will have excellent communications and client management skills, along with a desire to start a career in the exciting start-up business world.

The candidate should also bring strong writing and project management skills, and have some experience in event management.

We will expect you to jump in at the deep end, and as such you must have a confident and capable personality.

Candidates without digital marketing knowledge will not be considered.

This is an excellent opportunity for an energetic, aspiring candidate to work in a unique start-up environment, taking part in exciting projects over the coming years.

The position is based in London

To apply:

  1. CV: Please send a copy of your CV to Procurious HQ at [email protected] marked: ‘Attention: Digital Marketing & Social Media Specialist Role
  1. Procurious Video: Along with your CV, all applicants should submit a brief (no more than 3 minutes) video about why you want the job; Why you want to work for Procurious; and why you qualify. We will be looking for knowledge of digital marketing, communications abilities and creativity.

You can find out more about Procurious at www.procurious.com or for more information about this role, please see below for a job description or please contact us with any questions at [email protected]

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Job Description: Digital Marketing & Social Media Specialist

Responsibilities: 

The Digital Marketing & Social Media Specialist will be responsible for supporting the execution of all marketing and communication activities.

This position will interact with Procurious’ third-party suppliers of PR services, sponsorship partners, and with internal stakeholders to develop and deliver the tactical digital marketing plan for Procurious.

Your first task will be arranging and promoting The Big Ideas Summit and other events from start to finish, and supporting the implementation of social media marketing plans.

Digital Marketing & Events
You will:

  • Develop and drive digital marketing initiatives that align with Procurious’ growth objectives, with an initial focus on developing and deploying all pre- and post-Big Ideas Summit event promotional activities across social media platforms and using web-based e-marketing software and social media marketing plans
  • Design and test digital marketing tactics to increase brand awareness and member conversions to Procurious
  • Act as the first point of contact for The Big Ideas Summit and other event guests, speakers and sponsors.
  • Administer and coordinate all logistics and resources associated with The Big Ideas Summit and other events, including all booth hardware, badge registrations, furniture and plasma screen hire, as well as any other on-site services.
  • Manage all external event opportunities and speaking requests received, filter these requests and re-direct them to the relevant individuals within the company.
  • Maintain accurate administrative records in SalesForce.
  • Foster and grow relationships with media and influencers
  • Foster and grow relationships with Procurious community and our partner PR agency

Social Media 

You will:

  • Contribute to and support implementation of Content & Social Media strategy, including:
    • Scheduling and publishing content to Procurious;
    • Writing blog articles and marketing copy;
    • Maintain WordPress associated sites (e.g. bigideassummit.com)
  • Spend time building your own social media presence across Procurious’ main channels to drive engagement with influencers
  • Deliver weekly social media and digital marketing reporting to assist allocation of budget and resources.
  • Liaise with writers and contributors on statistics for guest content on the Procurious blog
  • Help grow and maintain Procurious’ presence across its owned social media accounts through the sharing of written and video content from the Procurious website, as well as the Big Ideas Summit

Key Skills

  • Excellent working knowledge of digital marketing and social media platforms
  • End to end project management skills
  • Fantastic communication and client management
  • Creative – an eye for design/layout and a flair for copy
  • Excellent written English skills
  • Great attention to detail

Personal Specification

  • 2-4 years’ experience, working in a similar digital marketing and event management role. A combination of the two skills would be highly valued.
  • Be flexible and have proven ability to work with limited supervision
  • Excellent organisational and project management skills, able to juggle multiple tasks within challenging deadlines against fixed budgets
  • Energetic, flexible, enthusiastic and self-motivated individual.
  • Adherence to Procurious’ values.

Social Media – Breaking News and Misinformation

Social media was awash this weekend with information, news and an overwhelming outpouring of sympathy in the wake of the atrocities in Paris on Friday night.
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The Procurious team would like to take this opportunity to offer our most sincere condolences and sympathies to people of Paris, and all those affected by this horrendous act of terrorism. We would also offer the same sympathies to the people of Beirut, Syria, Iraq and Egypt, who have all suffered similar attacks in recent days and weeks.

Social media has changed how the world sees events such as the ones in Paris. Breaking news, information and pictures all appear on the Internet during the events, with people uploading their first-hand accounts on the ground.

But, while social media can be a force for good, and a fantastic tool to help victims and their families, there is also a darker side, with misinformation, vitriol and rhetoric all spread in equal measure, often taking the focus away from the real story.

The Good

As the attacks in Paris unfolded on Friday night, many people turned to their phones to get an understanding of what was going on. With the news cycles taking time to unfold, social media was able to fill that gap with the headlines as they broke.

As well as providing access to the breaking news, social media accounts were being used to communicate with families and friends, to let others know that people were safe. Facebook immediately launched its “I’m Safe” button, which was first used during the Nepalese earthquake earlier this year, allowing a simple way to notify hundreds of people at once.

Not for the first time, a Twitter hashtag trended in the wake of the attacks. The #porteouverte hashtag offered a place to stay for those affected by the events, similar to the #illridewithyou hashtag, which trended in December last year following terror attacks in Sydney.

A sign of sympathy, a sign of solidarity, showcasing all the good that social media can accomplish in these situations.

The Bad

For all the good that social media can do, there is a dark side to the power that is wielded by its users. Giving everyone a voice allows for the support and sympathy, but also gives a voice to misinformation and ignorance.

For the most part, the misinformed stories that appear in the aftermath of such events are not malicious. A small story or throwaway quote can be exaggerated out of all proportion, taking on a ring of ‘truth’ as it spreads across social media.

Stories of the Eiffel Tower lights being turned off as a mark of respect (the lights are always turned off at a certain time of night) and of fires at the Calais refugee camp due to an act of retaliation (the cause is still unknown, but pictures were from a fire in November), are just some of the ‘facts’ that grew legs thanks to the virality of social media.

Where the misinformation is malicious, it can lead to hatred and prejudice being spread, and innocent people being targeted as a result. Already there have been arrests in the UK as a result of social media posts over the weekend.

Unifying Force

The power for good of social media outweighs the power for bad in most cases. The volume of news and information we all have access to means we can be better informed and more up to date on all the breaking stories. It would be a shame to see a tool that has the potential for being a conduit for social good be lost to the many, as a result of the actions of the few.

We have the responsibility to use this wealth of information appropriately, and keep our posts factual, especially when it comes to breaking news and events like Friday night (please still have your own opinions – this is part of the beauty of social media too!).

Let’s ensure that we use social media as a unifying force across the world, share quality information (and the occasional cat video…), shine a light in dark corners and allow us to create a global community. Are you in?

Here are some of the top procurement and supply chain headlines this week…

PepsiCo Scraps Marketing Procurement Function

  • PepsiCo has scrapped its marketing procurement function, handing procurement responsibilities to its brand teams
  • The move has been claimed as necessary in order for the company to remain competitive in “an environment where cost cutting and value building are paramount”.
  • With procurement now sitting with the brand teams, the company believes that discussions with agencies will have a more strategic slant, rather than being about cost cutting
  • The move will also help PepsiCo rid itself of the tension that existed between the two functions, while creating a leaner organisation

Read more at The Drum

Indian Supply Chain Firm Makes UK European Hub

  • TVS Supply Chain Solutions has announced its UK arm, TVS Logistics, is to become a regional hub for the business in Europe
  • The move is expected to create up to 100 new jobs at a newly built warehouse and call centre in Barnsley, and up to 500 more over the next 5 years
  • R Dinesh, managing director of TVS Logistics, said: “The UK is a highly successful investment destination for TVS Logistics. TVS will continue to make further investments in the UK and will make it the gateway for future growth and expansion for its business in Europe. ”
  • The announcement comes as Indian Prime Minister, Narendra Modi, visits the UK to discuss trade and investment deals worth up to £10 billion

Read more at Supply Management

Alibaba Sees Record ‘Singles’ Day’ Sales

  • Alibaba, the Chinese e-commerce website, has seen record sales for its ‘Singles’ Day’ promotion on the 11th of November
  • The platform boasted sales of 91.2 billion yuan ($14.3 billion), a figure that was up by 20 per cent on 2014’s total, and making the day larger than Black Friday and Cyber Monday combined
  • It was estimated that 68 per cent of the total transaction value were orders placed on mobile devices
  • Speaking at the end of Singles’ Day this year, Alibaba founder, Jack Ma, estimated that future events would see growth of up to 50 per cent

Read more at Supply Chain Digital

Open Procurement for Trans-Pacific Partnership (TPP)

  • The nations involved with the newly-signed Trans-Pacific Partnership (TPP) have agreed to opening their procurement contracts as part of the agreement
  • The deal will require its signatories to provide suppliers in other member nations with equal treatment in procurement processes
  • Public agencies will also have to publish tender notices which must include the description, conditions of participation, and selection criteria
  • Organisations will not be allowed to exclude suppliers purely on the basis of them not having won business in that country before

Read more at Supply Management

Mergers on the Horizon for Shipping Industry

A crippling slowdown in the international shipping sector is causing many industry leaders to rethink their strategy, and it appears that mergers are on the agenda.

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Last weekend the Singapore based Neptune Orient Lines announced that it was in ‘preliminary’ talks with both A.P. Moller Maersk of Denmark, and CMA CGM SA, based in Marseille, France over a potential merger.

When asked about the talks, the company was quoted as saying it “has a duty to assess all options to maximise shareholder value and improve its competitiveness.”

Mergers are afoot

These discussions are not the first movements toward consolidation of the shipping industry, a market sector that has been traditionally stagnant and unresponsive to cyclical market fluctuations.

Last year, German shipper Hapag Lloyd merged with its Chilean counterpart Compania Sud America de Vapores. Industry analysts have kept a close eye on the merger, with its outcome likely to have some bearing over the Neptune Orient Lines sale.

Oversupply of Capacity

The consolidation of the international shipping this thought to be driven by a vast oversupply of capacity in the market, coupled with decreasing freight rates.

The industry has traditionally avoided this sort of merger talk, as many firms (including Neptune Orient Lines) are owned by sovereign wealth funds or private organisations, which have been financially stable enough to take a long term position on the market and ride out these cyclical blips. However, it seems the market is due some correction with some industry observers suggesting it is over supplied by as much as 30 per cent.

Decreasing Competition?

Further consolidation in the industry is anticipated in China, with the country’s state-owned Cosco Group and the China Shipping Group Co. in discussions about combining their shipping operations.

The move has been ordered by the Chinese Government, who are looking to consolidate state-owned operations. Between the two organisations there was a total of $911 million in operating losses (EBIT) from container operations in the previous five years, as well as a significant drop in market share.

However, many experts are concerned about the knock-on effect of this merger across the industry in Asia, as it could precede further mergers and alliances in the region, ultimately damaging competition.

Stay tuned to Procurious for news and updates on these mergers, as well as to keep abreast of future changes in the shipping industry.

Procurious Big Idea #48 – Leverage Real-Time Supplier Feedback

Paul Rakovich, Global Market Sector Manager at BP, thinks procurement needs to stop supplier performance management being a transactional activity and create value by speaking to suppliers directly.

By leveraging real-time supplier feedback and data from sources like social media, procurement can use it to analyse and predict supply chain issues and crises before they happen.

See more Big Ideas from our 40+ influencers

Like this? Join Procurious for FREE and meet like-minded procurement professionals from across the world.

Why More Women in Senior Roles Makes Sense

Should supply chains, and organisations as a whole, be working harder to bring more women into senior roles?

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Recent headlines, research and reports have firmly placed the spotlight on the subject of gender equality. The hack of Sony communications earlier this year very publicly lifted the lid on the lack of equality in salaries for world-famous actors and actresses.

It led to Jennifer Lawrence writing a passionate article on her feelings upon finding out how much less she was being paid than her male co-stars.

Procurement and supply chain are just a couple amongst a multitude of professions in which women are fighting for equality, not just in wages, but also promotion opportunities and organisational responsibilities.

The Business Landscape

Women constitute more than half of the total global workforce, but the figures are much lower when it comes to their presence in the boardrooms of the large organisations. Although recent reports in the UK showed that 26.1 per cent of boardroom positions on the FTSE 100 are held by women, overall there are just 10 per cent of top supply chain executive positions in Fortune Global 500 companies held by women.

Why is this?

There is some evidence that it can be down to perceptions of the roles. Research conducted by SCM World found that the majority of men (63%) and women (75%) believe that the natural skillsets of women differ from those of men, and that these differences are advantageous for supply chain management.

However, other research suggests that women are actually better equipped than their male counterparts for roles within the supply chain. Leaving aside the idea that women think less of themselves, what could be other reasons.

Held to Higher Account?

In many cases, female executives are both better qualified and better educated than male peers. A report from the American Management Association showed that:

  • Women are 33 per cent more likely to earn a college degree than men
  • 36 per cent of women (versus 28 per cent of men) in leadership positions hold STEM (Science, Technology, Engineering, Mathematics) degrees
  • Female executives attended colleges and graduate schools that were ranked higher on average than the schools attended by men

In spite of this, it has been suggested that female CEOs may actually be held to a higher standard than male leaders, which causes them to be passed over and left behind when advancement opportunities arise.

Just 4.8 per cent of Fortune 500 CEOs are women and only 1.1 per cent earn $150,000 or more per year, compared with 4 per cent of men.

Women in Supply Chain

And this is where organisations are missing a trick. Attracting and retaining women within the supply chain sector is a realistic, common sense solution to many countries’ human resources challenges.

Add to this the fact that companies in the top quartile for gender diversity are 15 per cent more likely to have financial returns above their industry median, and you are looking at a recipe for success.

The benefits are further extolled in this webinar from Kinaxis and supported by Women In Supply Chain (WISC).

In the Real World

The imbalance is borne out when considered against industries and sectors in the UK, but, according to some members of the Procurious community, there may be a change occurring, however slowly.

Helen Mackenzie, Head of Exchequer Services at Comhairle nan Eilean Siar, argued that procurement and supply chain aren’t that different from other professions. Traditionally, and still in some areas, women still have to appear to be 20 times better than their male counterparts in order to progress.

However, the balance is shifting in Scottish Local Government, where 17 of 32 Heads of Procurement are female. Helen also went on to say that expectations of procurement are shifting, which could play into the hands of women, as the profession focuses more on trust, relationship building and communication, something that women often have the edge over their male counterparts.

Juliet Frost, a freelance procurement expert, also hasn’t experienced any discrimination where she has worked, although pointed out that only once has she worked in an organisation where there was a female above her in the hierarchy.

From Juliet’s point of view, it’s important to work for an organisation that values diversity across the board, not just gender related. This will permeate into the procurement team and allow for a greater balance.

Procurious GM, Lisa Malone, believes that the issue for many women is not just balancing motherhood with work, but returning to work full-time after a long period away from the workforce.

Women are joining the supply chain profession in almost equal numbers now, Lisa says, but the numbers drop off in the early-30s demographic, usually associated with family raising. It’s important for organisations to help these women return to the workforce and get back on a career trajectory.

‘Returnship’ Programmes

Some organisations are now actively helping women (and men in some cases too) return to the workforce after an extended, voluntary career break. These ‘returnship’ programmes (a term trademarked by Goldman Sachs) are higher-level paid internships, offering flexible working over a 10-12 week period, often alongside free childcare and mentoring for returnees.

Organisations including Deloitte, JP Morgan and RBS all offer similar programmes – you can find a good list here. The programmes have been credited with helping to bring women back into work, with a good percentage of women offered full-time roles once their ‘returnships’ have concluded.

And finally…

We’ll leave the last word to Women in Supply Chain, with this infographic on how they suggest addressing the growing labour shortage in supply chain management in Canada.

It just makes sense, doesn’t it?

WISC Infographic

Are Drone Deliveries a Good Idea?

There has been a lot of talk about drones delivering ordered good in the media recently. Both Google and Amazon seem to be progressing towards a ‘Jetsons’-like logistics chain faster than was thought possible.

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It’s not hard to see the drawbacks to drone-led deliveries. Most people are happy to walk to the store to buy batteries and bread. If the latest Jamie Oliver cookbook arrives at their house, rather than tracking them down on their morning jog, they’ll be pretty happy with that too. The noise, too, is an issue – walking near a drone is akin to sleeping near a mosquito for many.

Beyond these issues, there are some other, more serious concerns that the drone movement could create in our lives.

Air Traffic Concerns

Drones are said to create a major headache for airspace controllers. In July of 2014, an Airbus A320 taking off from London’s Heathrow airport narrowly avoided a crash with a drone. The Civil Aviation Authority classed the incident as a ‘serious risk of collision’ which is highest classification it can give.

Helicopters too have reported close calls with drones. The US Federal Aviation Administration launched an investigation into an incident where a helicopter crew spotted a drone hovering just metres above them.

If Google and Amazon are able to get their drone program off the ground (pun intended) then the airspace is likely to be much more crowded and the risk of incident will be greatly increased.

Threats to personal safety

Drones too have created serious security threats with one crash landing onto the White House lawn earlier this year, sending the presidential residence into lock down.

German Chancellor, Angela Merkel, has also had a run in with the mechanised device. A drone, driven by a member of the German Pirate Party was crashed in front of her, raising fears for the leader’s safety.

And in Perth, Australia, a triathlete received a head wound when an errant drone trying to photograph athletes crashed into her during a race.

Threats to Privacy

And of course there are the inevitable concerns about surveillance and privacy that surround our skies buzzing with thousands of mechanised drones.

Even with relatively few drones currently patrolling our cities, there are numerous complaints from residents and business about the intrusive nature of drones on their personal space. This is only likely to increase should we continue to move toward drone delivery systems.

Animals hate them

Finally, and comically, it seems that it is not just people who hate drones. Animals too, seem to get rather frustrated with them as this video shows.

So rather than the postman being chased by a dog, it could now be the case that it’s a drone that’s chased by a dog (or perhaps a chimpanzee).

Imagine arriving home to find that your new Jamie Oliver cookbook had made it all the way from the Amazon warehouse to your neighbour’s place, where it was crash tackled and chewed up by your neighbours’ Golden Retriever.

Maybe this needs a bit more thought…

‘Rethink Supply Chains’ – The Innovation Challenge to Fight Labour Trafficking

The Partnership for Freedom launched its ‘Rethink Supply Chains‘ competition last week, aimed at providing a technological solution to help fight labour trafficking in global supply chains.

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In International Labour Organisation (ILO) estimates that there are 14.2 million people around the world who are victims of forced labour in industries such as agriculture, construction and manufacturing.

The goods and service provided through these industries are often purchased or used by consumers who are none the wiser, thanks to a lack of transparency in supply chains.

Formed in 2012, the Partnership for Freedom is an American-based public-private partnership, which brings together organisations and governmental departments such as the Department of Justice, the Department of Labor and Steven Spielberg’s ‘Righteous Persons Foundation‘.

The Partnership challenges individuals and organisations to create innovative solutions to human trafficking challenges. In 2013, it launched its first Challenge, “Reimagine”, and granted $1.17 million to fund two winning innovative models, aimed at improving the infrastructure of support for survivors of modern slavery in the United States.

Challenge Two – Rethink

Now, Humanity United, the organisation leading The Partnership for Freedom, has announced the second challenge in its set of three – Rethink Supply Chains.

With a fund of $500,000 for winning solutions, Rethink Supply Chains seeks new ideas, tools, and efforts that use technology to combat and prevent labour trafficking in global supply chains.

The challenge encourages developers, designers, advocates, and innovators to focus on one or more of the following areas:

  • Workers’ Voices: Tools that help workers to share information and foster community, access resources, and report labor violations to businesses, governments, NGOs, or each other in the most safe and secure ways possible.
  • Recruitment: Tools to improve the transparency and accountability of the labor recruitment process, encourage responsible practices for employers and recruiters, and empower workers to more safely navigate the recruitment process.
  • Traceability: Technologies that enable businesses, workers, governments, and NGOs to track, map, and/or share information on commodities, products, and labor conditions in supply chains at high risk of forced labor.

Eliminating Human Trafficking

Randy Newcomb, President and CEO of Humanity United, stated, “The scope of this issue is enormous. We need new actors, new skills, new data, new ideas and new energy to improve anti-trafficking efforts around the world.”

This was also emphasised by Ambassador Susan Coppedge of the U.S. Department of State’s Office to Monitor and Combat Trafficking in Persons, who said, “Forced labor has no place in our global supply chains nor in the goods and services we buy every day.  We look forward to the innovative ideas and designs we anticipate from this Challenge as we seek to eliminate human trafficking from the global marketplace.”

How to Get Involved

All the details you need to know about the competition can be found here. The deadline for initial solution submission is the 13th of December, with finalists being announced during January 2016.

Entries can be submitted by individuals who are resident in the United States, or organisations with the United States as their primary location for business. Rules and Terms & Conditions can be found here.

If you can’t take part, you can support the campaign and follow the competition on social media, via Facebook and Twitter. Also stay tuned to Procurious, as we will publish the finalists next year and keep you all posted with the winning solutions.

If you are thinking about taking part, please let us know! We’d love to tell everyone your story and why you think your solution will help to end human trafficking and forced labour for good.

Supplier Competition Unwinds Japanese Business Culture

Increasing competition in the global automotive market looks to be forcing an end to traditional working relationships in Japan.

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A few months ago Procurious published a piece on keiretsu, a Japanese business practice involving very close links between suppliers and buying organisations. These practices are back in the news this week, as Toyota looks set to further unravel some of these links.

To summarise, keiretsu is a business practice that sees companies with overlapping business interests (normally buyers and suppliers) taking a financial share or interest in one another. This practice has traditionally been very common in the Japanese economy, and has been particularly popular within the automotive industry.

However, in the past two decades or so many Japanese organisations have moved away from this business practice and towards the more open supply market competition we are accustomed to in the west. Nissan abandoned its keiretsu policy about 15 years ago to reduce costs. Honda too has moved away from its preference for interlocked supplier relationships with Japanese suppliers.

Toyota sticks with it – until now

Toyota, however, has held firm on its keiretsu policy. Or at least it had until the beginning of this year.

Much of Toyota’s past success has been attributed to the company’s lean supply chain operations and, specifically, its keiretsu business practice. The close relationship the firm had with its suppliers (not to mention their shared financial interests), meant that these organisations were able to work collaboratively and innovate far beyond what was ‘normal’ in more traditional supplier relationships.

Recent decisions, however, suggest that these close relationships are starting to unravel. The most visible sign of this was when Toyota released its new Corolla earlier this year. The best selling Corolla was, for the first time, fitted with anti-crash technology that was produced by a German auto parts manufacturer. Blasphemy in the world of keiretsu.

A shift in capability or in strategy?

All of this poses a question – are Japanese auto parts manufacturers losing their competitive edge, or is Toyota actively looking to diversify its supply chain?

The answer seems to be ‘a little bit of both’. While it does appear that the gap between Japanese parts markers (once seen as the driver behind the powerful Japanese auto industry) and manufacturers across the rest of the world is closing or has closed, the decision to leverage foreign suppliers may in fact be part of a diversification strategy by Toyota.

Speaking on the strength of the foreign supply market, Toyota President Akio Toyoda was quoted as saying, “Competition in the global automotive industry is becoming fiercer”.

It is also clear that foreign manufacturers, like Continental, who supplied the Corolla’s new crash avoidance technology, have closed the gap on Japanese suppliers.

It is thought these organisations are maturing more quickly than their Japanese counterparts, because they have a broader customer base and a wider geographic spread, opening them up more opportunities, innovations and economies of scale. Japanese suppliers have missed this exposure through their arguably insular relationships with one (or very few) buying organisations.

Perhaps driven by this increase in global competition, Toyota has, over the last year, looked to diversify and unravel some of its interlocking supplier relationships. In April, the automaker took the bold step of installing a former Toyota executive, Yasumori Ihara, as the CEO of one of one of its leading suppliers (and keiretsu partner) Aisin Seiki Co.

Ihara’s role at Aisin was to slacken the ties between the business and Toyota, and look to make the organisation more competitive in the global market, a move that was thought to be beneficial for both Toyota and Aisin.

Where do you think the balance lies for Toyota? Open markets or close supplier relationships? Could western Businesses learn something from the keiretsu mantra?

Are Price Wars Impacting The UK Food Supply Chain?

The price war between supermarkets in the UK is frequently referred to as a ‘race to the bottom’ . But as the major retailers fight for market share, suppliers with already wafer-thin margins are the ones feeling the price war’s impact hardest.

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A report released last week by the National Farmers’ Union (NFU) in the UK, argued that, while trying to win customers, retailers were returning to “damaging short-term practices“, and heaping pressure on their producers and suppliers.

Numerous suppliers have argued that retailers have begun to prioritise price over quality and service, and trying to recover their decreased margins across their supply chains.

Over Supply Issues

Compounding these issues are two other factors – over supply and aesthetics – something that farmers and other industry stakeholders, including chef Hugh Fearnley-Whittingstall, have called out retailers on.

Although bound in some cases by EU Regulations on fruit and vegetables, many retailers are rejecting high-quality food (usually vegetables) as “imperfect”, even if the food in question is in good condition.

Around one-third of fresh food produced in the UK is never eaten, with vast quantities being rejected on cosmetic grounds. As well as the issue of rejection on quality grounds, supermarkets have also been accused of wasting tonnes of food that is over-ordered, so that they can have full shelves for customers.

Financial Distress

An estimated 1,500 UK food and beverage manufacturers in the UK are currently classed as suffering from “significant” financial distress. Although this figure has fallen by 4 per cent during the second quarter of 2015, it still represents a figure three times higher than in the same period 2 years ago.

Experts believe the cause of this distress is linked to a readjustment to supermarkets’ lower price strategies. With suppliers under pressure, industry professionals are calling for change in order to ensure a future for all parties.

Judith Batchelar, Director of Brand at Sainsbury, has argued that there needs to be a more “joined-up” approach across the supply chain, with collaboration between all the parties and steps taken to integrate the latest technologies and information systems.

Although admitting that Sainsbury itself had a long way to go in this respect, Batchelar argued that this was the best way to create long-term sustainability, and help to balance the inherent supply and demand driven industry fairly.

Fresh Strategies

In the US, retailer Target is also addressing its supply chain strategy for fresh produce in the wake of major stores closures across North America this year.

The food supply chain, described as a “Frankenstein” system by Target COO, John Mulligan, is seen by the organisation as a key element in its battle to regain its market share.

However, it’s not all bad news in North America. US-based agriculture co-operatives have announced record income and revenue figures for 2014, with incomes up 16.4 per cent and a total of $246.7 billion revenue for the same period.

The figures are credited to an increased reliance on co-operatives, increased involvement in communities and greater number of producers joining one or more co-operatives in the past year.

It is hoped that the success of the co-operatives can be repeated in the UK, increasing the importance of the co-operatives and bringing the same collaborative strategies supermarkets are talking about into practice and achieving tangible benefits.

Do you work in procurement in retail or for a supermarket? We’d love to hear your experience of these issues, as well as how you might have solved them. Get involved on Procurious.

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Read more at The Telegraph

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Read more at The Plymouth Herald

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Read more at The Guardian

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Read more at Maritime Executive