All posts by Procurious HQ

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.

supply chains

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.

In need of some news to share with your colleagues over morning coffee? Look no further than what we have for you…

Tata Demands Suppliers Cut Prices

  • The Indian Steel Giant, Tata, has been accused of “bullying” tactics towards suppliers by demanding a 30 per cent reduction in prices
  • The company recently wrote down the value of its UK assets, and has made over 2000 people redundant in the past few months
  • A letter signed by Lorraine Sawyer, procurement director of Tata Steel Long Products Europe, was issued to the whole supply base, initially asking for a 10 per cent price reduction across the board
  • The letter goes on to ask for “contribution from all…suppliers” and implies that suppliers who do not comply may end up losing business

Read more at The Telegraph

Nurse Saves NHS Trust “Thousands”

  • A nurse has helped save tens of thousands of pounds in Plymouth – by introducing new and more efficient equipment.
  • The Senior Sister, who also acts as an Clinical Procurement Manager, has saved Plymouth Hospitals NHS Trust thousands of pounds over a 6-week trial period
  • Michelle Winfield said the key to saving money was “involving clinical staff in the choices and changes”
  • James Leaver, category manager for the trust, said, “We are seeing a real sea change in attitude with people no longer taking the historic view that procurement and finance are ‘imposing’ changes on clinical staff.”

Read more at The Plymouth Herald

BHP Billiton Shares Plunge Following Dam Disaster

  • Shares in Australian mining giant BHP Billiton have fallen sharply following the collapse of two dams at a co-owned iron ore mine in Brazil
  • What caused the dams to break is unknown, but it caused a wave of water, mud and debris to be released, engulfing nearby villages and killing at least 2 people
  • Shares in the company fell by 3.5 per cent on both the Australian and UK stock markets on Monday morning
  • The disaster has prompted calls for better regulation on the mining industry in Brazil, which is one of the country’s leading sources of export revenue

Read more at The Guardian

Obama Signs Illegal Fishing Laws

  • U.S. President Barack Obama has signed the Illegal, Unreported and Unregulated (IUU) Fishing Enforcement Act
  • The legislation includes a number of provisions preventing illegally harvested fish from entering the U.S. and supports efforts to achieve sustainable fisheries around the world
  • Currently, U.S. fisheries law focuses on at-sea or dockside enforcement of domestic fishing operations and does not provide the tools needed to address imported seafood and fishing violations
  • It is hoped that the new laws will ensure that both the economic and environmental sustainability of the U.S. Fishing Industry are protected

Read more at Maritime Executive

Procurious Big Idea #47 – Measuring Social Values in Procurement

Olinga Ta’eed, Director at the Centre for Citizenship, Enterprise and Governance (CCEG), talks about how businesses need to measure themselves on their social values driven by procurement.

While previously intangible, social values can now be measured through big data, sentiment analysis and social media.

See more Big Ideas from our 40+ influencers

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

From Novice to Master – Upping Your Social Media Game

Social media is disrupting the world of communications. It’s now just as easy to speak to someone on the other side of the world, as it is to speak to someone on the other side of the room.

real-estate-technology-news-how-eclincher-can-up-your-social-media-game_1430_40070820_0_14115342_960

Social media is no longer just for your personal life. From marketers who can reach consumers quickly and easily, to sales people able to speak to customers directly, the platforms are becoming increasingly valuable for professionals too.

Procurement is playing catch up, but the possibilities for the profession on social media are endless. Procurious wants to help more procurement professionals get involved with, and leverage, social media to help with their day-to-day work.

For the last year and a half, the Procurious team has been running workshops up and down the UK, as well as in Australia, highlighting all the ways procurement can make social media a valuable resource, allowing them to interact with stakeholders and suppliers, keep abreast of market trends and change the image of ‘brand procurement’.

How Procurement Measures Up

It wasn’t until recently that Procurious decided that it needed a tool to measure how professionals were doing on social media. We know how much procurement leaders love a good KPI, so we created something that individuals could use to keep track of how they were progressing.

Many of you will have heard of Klout, the most commonly used social media audit tool. Klout measures both personal and professional platforms, including Foursquare, Facebook, LinkedIn and Twitter. The site is relatively easy to use, but it is hard to understand how your score develops.

Procurious took the theory behind this tool and created its PRISM (Procurement Relationships and Influence on Social Media) tool. PRISM takes into account the three platforms we feel are most readily leveraged by procurement professionals: Procurious, LinkedIn and Twitter.

We look at a number of criteria across all three platforms, including profile completion, number of connections, level of engagement and participation and publishing of original content. Where PRISM differs is that it also takes into account offline influencing activities including conferences and training courses attended.

Levels of Influence

Screen Shot 2015-11-03 at 16

Individuals are scored out of 100, and matched against one of four Influencer Levels:

  • Novice – Novices are just getting started on social media. They may have profiles on a couple of platforms that need spruced up, and they haven’t yet expanded their social media network.
  • Builder – Builders have found their feet on social media, have built good profiles, and have expanded their social networks. Builders are still searching for their voice on social media, but are generally good at sharing content.
  • Influencer – Not only have these individuals found their voice, but they are also actively participating in the conversations on social media. Influencers post content most days, ask and answer questions, and maybe even moderate groups.
  • Master – Well done! As a Master, you are an avid social media user, posting your own thoughts, sharing other people’s posts and creating original content on the platforms or maybe your own blog. The chances are very good that you are also a keen networker offline too.

Up Your Game

Even without a score, you’ll should have a rough idea of where you sit on the scale. Don’t worry if you think you are a ‘Novice’ – this is where most procurement professionals are!

The good news is you can take some really easy steps to up your game and your score at the same time.

If you don’t know where to start, find the platform that you feel most comfortable with and build your profile. If you need some inspiration, see what Tania Seary has to say about getting started and your next steps.

If you think you’re in the Builder or Influencer level, think about what groups you could join on Procurious or if there is a discussion you could either start or contribute to.

Done all of that? Good work. But even if you think you are a ‘Master’, you shouldn’t rest on your laurels. If you have a story to tell, or an idea for some content for Procurious, drop the team a note and we can chat it through. We also have an exciting article on getting started with blogging coming up that you don’t want to miss.

Workshops

If you want to get the most from PRISM, and get your colleagues involved too, the best way to do this is to get in touch with Procurious and organise a workshop for us to come and show you it first hand.

 

We can talk you through how the tool and scoring works, get you set up with initial scores and give you and your team some great tips and tricks to build both your individual, and organisational, social media brand.

Don’t get left behind on social media – take these easy steps, and before you know it, you’ll be well on your way to mastering the art!

Is Twitter losing its ‘Star’ Quality?

Twitter’s latest change to its user interface, replacing its ‘Favourite’ star with a ‘Like’ heart has raised the ire of its community. Has the social media giant made a huge misstep in the battle to remain relevant? Twitter-Heart-1

To the casual user, this might not seem like a big deal, but to seasoned users of the social media platform, it represents a change that no-one expected, or even wanted.

The chances are fairly good that the furore about the change will die down in the near future as users become accustomed to it, but there is also a chance that a very human resistance to change could ultimately cost Twitter some users.

New Users

In an explanation of this move, Twitter posted a blog stating that the change was to “make Twitter easier and more rewarding to use” and removing any confusion about the star for newcomers to the site.

The heart, in contrast, is immediately recognisable for what it signifies, has the same meaning in many different cultures and Twitter also stated that the new idea had gone down well in testing.

And it is new users that Twitter is aiming for in what is becoming a fiercely competitive social media market. It might seem strange that a company valued at approximately $22 billion, with over 1.3 billion accounts and over 300 million monthly active users, would be worried about its user base.

However, for many people, Twitter is actually falling behind in the market, with user numbers actually in decline. Twitter is also falling behind Instagram (now owned by Facebook) in terms of active users, while lacking the development of other sites (think Facebook ‘Dislike’ button).

Changes at the Top

Twitter permanently re-appointed Jack Dorsey as its Chief Executive back in June, and he immediately set about making changes, including letting go 8 per cent of its workforce.

Twitter also appointed Omid Kordestani, a former Google Executive and the Internet giant’s 11th employee, as its Executive Chairman in August. Both men have been charged with turning the platform around, increasing profitability and gathering new users.

It is thought that Mr Kordestani will look to target countries where Twitter is currently unavailable or blocked, such as China, in order to boost the site’s user numbers.

Simplicity vs. Usability

The major challenge Jack Dorsey appears to have, is in making the platform more user-friendly and accessible for its members. When even your Executive Chairman says they find the platform “intimidating” and has only ever sent 9 tweets, you know you have a problem.

For many, the simplicity of a chronological news-feed in 140 character bursts is also the biggest drawback of the platform. By presenting the tweets in chronological order it doesn’t show the information individual users want to interact with or value being able to see.

There is functionality to create lists, as well as use tools like Nuzzel and Tweetdeck, to organise tweets into a more valuable resource format, but users want the same functionality on the site itself, rather than having to set up accounts elsewhere.

It remains to be seen what impact today’s change to the interface will have, if any, in the long run on active users, and if it will ultimately be a success.

As active Twitter users ourselves at Procurious, we would love to see the platform develop, while still retaining the essence of a short-message news feed. Just as procurement professionals are beginning to see the benefits the platform offers, it would be a shame to see it fall by the wayside.

If you want to join the debate, follow Procurious on Twitter – we don’t mind a few extra likes!

Jamaica Invests in Procurement Capability

2

400 procurement professionals from the Jamaican public sector have undergone extensive training in procurement practices. Some of those involved in the initiative were sent as far away as Canada and the United Kingdom to receive their education.

The move comes as part of a concerted effort from the Jamaican government to transform its procurement operations and ultimately deliver a more effective and efficient public service.

Of the 400 people trained, 300 received instruction under a certification series delivered by the International Procurement Institute, 40 received training in procurement law from the Osgoode Hall Law School, York University, Canada, while another 60 people were trained in E-procurement by Crown Agents and European Dynamics in the United Kingdom.

Certification Critical for Reform

Malisa McGhie (Senior Procurement Analyst in the Procurement and Asset Policy Unit in the Ministry of Finance and Planning) discussed the training as critical for the ongoing development and success of procurement and the public service in Jamaica, claiming that the certification of procurement officers is a key component of the reform process.

“Procurement practitioners must also be trained in what the standards are and understand how to actually execute, those types of procurement, to meet international standards,” said McGhie.

Echoing discussions both here on Procurious and in the procurement media in general, Senior Director in the Procurement and Asset Policy Unit, Cecile Maragh, highlighted the importance in improving the profile of the procurement profession in Jamaica.

“We have to make sure that public procurement is seen as a profession and not a clerical function.  It is not just something that you receive specifications and go to tender. It requires analytical thinking, it requires market research, so persons undertaking this function must understand that public procurement is in fact, a profession, and it should be treated as such,” she said.

The Finance Ministry has committed to training a further 500 procurement professionals over the coming three years.

Austrian Wastewater Solution Wins Procurement Innovation Award

This year’s Public Procurement of Innovation Award has been won by the Austrian Federal Procurement Agency for its work in delivering a ground breaking wastewater solution.

RTEmagicC_PPI-Platform_star_award__Elnur_01

The award, which was presented to the Austrian delegation at a ceremony in Paris, aims to recognise successful public procurement practices that have been used to purchase innovative, more effective and efficient products or services.

This year’s finalists included entries from Sweden (medical imaging for optimisation of care flows), Italy (integrated energy service framework contract), Netherlands (learning space self supporting river systems) and Spain (Galician Public Health Service).

Innovation led to Sustainability

Ultimately it was the Austrian solution that came out on top. According to the Awards panel, the project, which recycles wastewater by vaporising it to remove waste particles, was chosen as it not only involved the application of innovation-friendly procurement procedures, it also ensured increased resource efficiency and improved environmental sustainability.

“We felt that the procurement of the vaporising system best showcased the impressive work being carried out, as well as the type of solution that public procurement of innovation can achieve, the procurement brought together the institutional knowledge of public procurers with the ingenuity of the private sector” said Wouter Stolwijk, Director of PIANOo, the Dutch Public Procurement Expertise Centre, who presented the award to the Austrian delegation (pictured below). 

21923714803_fe9ae61dd1_k-2

The solution, that will be used to clean the residual water left over from the production of coins and notes at the Austrian mint, is said the reduce the amount fresh water used in the process by 97 per cent. It is believed that the machine could also have uses in other industry sectors.

 

 

2015 marks the second year of the PPI award with last year’s award being won by an impressive robotic bed washing facility at the Erasmus Medical Centre in Rotterdam. That innovative solution reduced bed-washing costs by 35 per cent and cut the CO2 footprint by 65 per cent.

See the full list of finalists here.

Are Supply Chains Taking IT Security Seriously Enough?

The IRS, the CIA, Sony Pictures, TalkTalk, Kaspersky – what do all of these organisations have in common? Security

If you said that they have all been victims of cyber attacks during 2015, you would be right. With each high-profile incident, the profile of IT security and cyber crime is raised further.

For procurement and supply chain, this is something that needs to be considered, but is it being taken seriously enough?

Supply Chain Security

A recent poll carried out at IP Expo Europe by cyber security firm Tripwire, revealed a startling statistic when it came to IT security. Nearly a fifth of respondents to the poll said they would be prepared to use IT suppliers who do not meet their IT security standards.

Additionally, nearly half of the respondents (47 per cent) admitted that they currently do not carry out audits before working with suppliers, although 23 per cent did say they were planning on introducing this in the near future.

This is not a new issue, as this 2013 article highlights. So why, in 2015, are so many organisations not taking this issue seriously? With brand, reputation and share price at risk, not to mention potential regulatory fines, what should organisations be doing?

As simple as it seems?

While these statistics do not exactly paint a rosy picture, the truth is that the reality is not as simple as it might seem. One of the victims of a hack this year was Kaspersky, an Internet security and anti-virus software organisation.

Symantec, a global provider of Cloud, mobile and virtual security, was held to account by Google this month for issuing fake security certification for websites. These certificates could be used to intercept and subvert SSL/TLS protected traffic, which underpins e-commerce, banking, government and other important services.

Following two audits, Symantec has uncovered an incredible 2458 certificates for unregistered domain names, and Google has demanded an explanation and resolution to the issue.

Even the US Senate, taking action to pass a version of the Cybersecurity Information Act (CISA) that allows companies to share any and all information about their user base with the Department of Homeland Security, has come in for criticism.

John McAfee, founder of the IT security and anti-virus software company that bears his name, points out that while this Act helps the cyber security fight within the US, it doesn’t help with attacks from foreign soil, where the majority of the US hacks in 2015 are believed to have originated from.

What’s to be done?

If you weren’t already aware, the UK Government released new training in June this year to help procurement professionals stay safe online. The training is free and can be accessed via CIPS.

The Chartered Management Institute has also offered these tips to business leaders, which can be implemented in every organisation:

  • Understand the potential threats – review any internal and external vulnerabilities in business web systems, such as any easy entry points for hackers
  • Integrate cyber security policy within corporate culture – security policies must permeate throughout every process and decision with a company. This includes audits of suppliers.
  • Practice an incident response plan – have a ‘go-to’ plan of action for responding to a cyber incident

Good IT security comes down to good education, not only employees, but also stakeholders and suppliers, as well as good communication. Equally, one of the best ways to beat the cyber threat is by collaboration – with governments, regulators and even rival companies.

If organisations put their differences to one side and work together, there may be light at the end of the tunnel yet.

We’ll leave the last word to Jeh Johnson, the United States Secretary of Homeland Security – “Cyber security is a shared responsibility and it boils down to this: in cyber security, the more systems we secure, the safer we all are.”

Do you work in IT procurement? Do you have any good tips that you could share with your fellow professionals? Let Procurious know and we can spread the word.

We’ve scoured our sources to come up with the key headlines in procurement and supply chain this week…enjoy!

Boerum Showcases Supply Chain Transparency

  • Boerum Apparel, a clothing company based in Brooklyn, has released a sweatshirt which shows off its entire supply chain
  • Each garment’s journey from plant or animal to the finished product is is written on its label, and includes where the raw materials were sourced and where it was turned into a sweater
  • The organisation is working hard on its “radical transparency” programme, and hopes that it will lead others to follow suit
  • You can get more information by search for the Twitter hashtag #knowyoursources

More at Treehugger.com

Toyota Breaks with Supply Chain Tradition

  • Japanese car manufacturer Toyota launched its new Corolla model this year, but departed from their traditional supply chain process of keiretsu
  • For the first time, Toyota chose to source a key component, a crash prevention system, from German manufacturer, AG Continental, rather than a Japanese-based firm
  • The decision is regarded as a symbol of Japan’s automotive suppliers falling behind the rest of the world when it comes to cutting-edge technology
  • Toyota plans to keep its keiretsu, but wants suppliers to be more globally successful and spend more on technological development

Read more at the Wall Street Journal

Living Wage on the Rise

  • The voluntary living wage in the UK is set to rise by 40 pence per hour, rising from £7.85 to £8.25 per hour in London
  • The rise is set to be officially announced this week, with organisations having six months to implement the changes
  • The move follows a report from KPMG that claimed almost six million workers in the UK were paid less than the living wage
  • In the last Budget the UK government announced a new compulsory National Living Wage that will come into force from April 2016, starting at £7.20 per hour

Read more at The BBC

Volvo to Test ‘Kangaroo Avoidance’ Technology

  • Around 20,000 kangaroo collisions are reported on Australian roads each year
  • Volvo has conducted a trial in Canberra last week aimed at adapting and using existing technology to help avoid the creatures on the nation’s roads
  • The technology uses radar and cameras to sense kangaroos along the road ahead and automatically brake as necessary
  • The technology has been used in the past for cows, moose and reindeer but requires calibration due to kangaroos’ more erractic behaviour

More at The Verge

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.

See more Big Ideas from our 40+ influencers

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

Halloween – A (Trick or) Treat for Supply Chains

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

halloween_2013_by_unidcolor-d6qp9mx

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

halloween1

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.”