All posts by Procurious HQ

Procurement Hero Reaches For The Skies In Aid Of Cystic Fibrosis

He has recorded every single flight he has been on since he was born — an incredible 1232 flights

Every two years Matthias Fuchs has been undertaking a flying marathon challenge. The challenge is supported by Qantas and raises funds for terminally-ill children at the Children’s Hospital Westmead.

This time around Matthias will take on a record 12 days flying in economy class without ever leaving a plane or airport terminal. Qantas has already supplied Matthias with the proposed flight schedule, and we can tell you that it clocks in at around 200 flying hours, over a distance of 167,000km…

During his time spent in the air, Matthias will cross the Pacific Ocean six times, and the Indian Ocean four.

The challenge has been an enormous success in previous years, in 2013 he alone raised a whopping $140k for the Cystic Fibrosis Unit at the Children’s Hospital Westmead. This year Matthias says that the proceeds will be used to maintain the mass spectrometer machine that was bought previously, as well as fund a clinical research fellowship.

Sponsor the challenge here

Matthias says: “This is a cause very close to my heart as my 12 year old daughter Kristen has cystic fibrosis.”

Matthias loves to fly, so much so he’s kept a record of every flight he’s ever taken. That’s 1232 flights…

Will you support the good man in his noble cause, as he attempts the marathon challenge for one last time? To-date $161k has been raised, but he hopes to reach $175k-200k before it’s time to take-off.

What’s more, donate $5k and you’ll get your company logo embroidered on the shirt he’ll be wearing during the challenge.

Come on, dig deep!

How Can Procurement Increase Health And Happiness?

By delivering social good, procurement has the ability to increase health and happiness.

How can procurement promote health and happiness?

Procurious has been attending the CIPS Annual Conference in London.

Professor Olinga Ta’eed, Director – The Centre for Citizenship, Enterprise and Governance, who spoke at our own Big Ideas Summit back in April 2015, said that although financial value is still wonderful and still king, we’re more interested in social value. It is essential that procurement (as a function) converts sentiment into financial value.

The Social Value Act was passed in 2012 and allows local and national government to consider the social good offered by bidders during procurement exercises in addition to monetary value.

The Act has been designed to make it easier for charities to win public sector contracts, applies only to procurement exercises worth more than £113,000 if awarded by central government and the NHS and £173,000 if awarded by local councils.

But what do we mean by social value?

“Social value” is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. For instance, social value asks the question: ‘If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community?’

It is now becoming increasingly necessary for social enterprises to report on their social value. Social value should equal happiness – but in order to promote the good you’re going to need happy people, a happy company, and ultimately a happy world. We have to look at ourselves, and how much value we bring to the table as both individuals and as businesses.

 

Is there a true and fair view of social value?

Olinga points out that there are lots of handcrafted metrics out there, but you need to have a model T Ford. You need a benchmark – the benchmark is critical. It has to matter. You can be doing great things, but you need to be able to articulate it.

Hugh Chamberlain – EMEA CSR Procurement Head, Johnson & Johnson, followed Olinga and explained how his organisation was helping people to live happier lives through the products they bring to market.

Johnson & Johnson has the lofty ambition of ensuring people live longer, healthier, happier lives, it is estimated that around a billion people use its products every day.

Johnson & Johnson’s Credo (a common set of values unifying diverse business) states: “We are responsible to the communities in which we live and work and to the world community as well”.

Hugh wanted to highlight the measurable social impact through procurement Johnson & Johnson was making. For instance it buys the goods and services it needs from organisations that would otherwise struggle to get a foot in the door – and also targets those organisations that employ people who are furthest from the job market.

What you need to know about social enterprises

Social enterprises are businesses that trade for a social and environmental purpose. At the time of writing there are 70,000 social enterprises in the UK, collectively contributing £24 billion to the economy. health and social care, but also in housing.

Social enterprises are growing faster than most SMEs, with more women leading and taking charge.

In-fact research from 2014, showed that that 38 per cent of social enterprises are led by women compared to 19 per cent of SMEs and 3 per cent of FTSE100 companies – and that 91 per cent of all social enterprise boards have at least one female director, compared to 51 per cent elsewhere.

Do you know how much social value can be achieved through buying your organisation’s services? How much emphasis (if any) do you put on delivering social value?

86% of UK Sales & Marketing Teams Say Procurement Hinders Progress

Sales and marketing fails to see importance of negotiating deals with suppliers.

Sales and marketing teams fail to see importance of negotiating deals with suppliers

According to new research from eProcurement software company – Wax Digital, sales and marketing is the department least likely to get the best deal from its suppliers, with a massive 86 per cent saying procurement hinders their progress.

The CPO Viewpoint research, surveyed by Redshift, on behalf of Wax Digital, found that over one in three sales & marketing functions place orders and spend budgets with suppliers without any procurement involvement. And only 24 per cent in sales and marketing said that they use formal supplier tender processes managed by procurement, far fewer than other departments such as IT and finance.

The problem seems to be sales and marketing’s negative perception of procurement with only 12 per cent of sales and marketing respondents describing the relationship as ‘very close’ and only a quarter of procurement respondents saying the same.

Sales and marketing appears to view procurement the least favourably, with only 28 per cent regarding it as value adding or critical, compared to 44 per cent of finance having the same view. A significant 86 per cent of sales and marketing describe procurement as hindering progress, and 1 in 5 view it as a ‘necessary evil.’

Dissimilar procurement priorities suggest why the two departments fail to work collaboratively. Procurement sees ‘handling supplier negotiations’ as the top way it can help other departments, but this scored the lowest with sales and marketing – only 4 per cent of them prioritising it.

The two departments also disagree over sales and marketing’s spending priorities. While sales and marketing are focussing on creative communication activities such as advertising, website and branding, procurement prioritises marketing fundamentals such as analytics, data and CRM.

Daniel Ball, director at Wax Digital, said: “Businesses need to bridge this gap between procurement and sales and marketing but it’s often a difficult challenge as the two departments function uniquely. This often places an importance on different areas such as creativity and personal relationships versus best price and supplier risk and compliance, which clearly leads to them clashing and being poles apart.

“Through better communication, sales and marketing could perhaps learn from procurement the importance of negotiating worthwhile deals with suppliers, and how damaging maverick spend with suppliers who are not adequately vetted can be. This could also help procurement better understand what sales and marketing value, hopefully leading to a more balanced set of priorities between the two departments.”

Will ‘Unicorns’ Deliver a Horn of Plenty in the Future?

Traditionally a Unicorn is a mythical creature, much wished for but seldom seen outside the bounds of the Harry Potter universe and the pictures doodled on children’s notebooks and stencilled on their bedroom walls. However, a new type of Unicorn has been coming to the fore in recent years and is multiplying fast.

unicorn-feature

For those who aren’t aware of this phenomenon, a ‘Unicorn’ was a term coined by Aileen Lee, founder of Cowboy Ventures, back in November 2013 and used to describe a start-up company whose value has exceeded $1 billion.

When you think of unicorns in this regard, think Facebook (actually classed as a ‘super-unicorn’ thanks to a valuation over $100 billion), Slack, LinkedIn and Uber. It is estimated that there are around 80 ‘unicorns’ prancing around currently, predominantly in San Francisco, but the odds of building or investing in a billion dollar organisation are around about the same as being struck by lightning…

So what’s the secret?

It depends who you listen to, but the common consensus is that there is no secret or magic bullet to creating a ‘unicorn’. As with any start-up, innovation plays a huge role in success, but for a unicorn it’s also about catching the right wave, at the right time, and taking advantage of prevailing trends and public opinion.

These trends, and their unicorns, go all the way back to the 1960s and look something like this:

  • The development of the semiconductor (Intel)
  • The advent of the personal computer (Apple; Oracle; Microsoft)
  • Development of new networks (Cisco)
  • The Internet (Amazon; Google)
  • The rise of Social Networks (Facebook; LinkedIn)

The list looks like a who’s who of powerhouse technology companies, all instantly recognisable, all companies we have come across or used ourselves during our lives. But where will the next trend come from?

The New Unicorns

Investors and experts have begun to look to the short-term future to see where the next unicorn might come from. According to a couple of sources, the Collaborative and On-Demand Economies may give birth to the next unicorns. You probably haven’t heard of them yet, but here are just some to keep an eye on:

  • Envato – an online marketplace for creative, enabling access to freelance talent, videos and tutorials
  • Canva – an online graphic design tool, aimed at making design accessible and easy for everyone
  • Campaign Monitor – providing easy creation, sending and reporting on e-mail marketing (clients already include Coca-Cola and Airbnb)
  • ROKT – online marketing platform aimed at delivering higher engagement for service advertising

Could the ‘Bubble’ Burst?

However, all this needs to be delivered with a word of caution. Most people in business are old enough to remember the dot.com bubble of the late 1990s. What started out as a rush of new, innovative online organisations, ended with a set of spectacular failures and the loss of hundreds of millions of dollars.

This is the concern for some analysts with this new wave of technology start-ups and unicorns. Greycroft Partners founder, Alan Patricof, warns against the belief of being able to raise endless capital, with businesses vulnerable to changes in the market and the outlook.

Some organisations have lost their unicorn status, and even Facebook’s value dipped dramatically before reaching its current peak of around $225 billion.

Your Unicorn

So if you have an innovative idea, now might be the right time to get started and you could end up with a unicorn of your own. But be wary, you might want to get started soon, before someone takes your idea or the bubble bursts entirely…

We’d love to turn Procurious into a unicorn, but there’s plenty work to be done first. If you’ve got any ideas or comments about the site, we’d love to hear from you!

And just because we’re so good to you, here are some top headlines from procurement and supply chain this week…

No Evidence of Wrongdoing in London Garden Bridge Procurement

  • An audit has concluded that there was no evidence of wrongdoing in Transport for London’s (TfL) procurement for the London Garden Bridge project
  • The audit aimed to provide assurance of an open, fair and transparent process in the procurement of design and development services
  • While the audit found that in some instances where TfL policy and procedure were not fully complied with, it concluded that it had not identified any evidence that the final recommendations did not provide value for money from winning bidders
  • However, concerns have still been raised by the London Assembly Liberal Democrat Group as key documentation supporting the evaluation of the bidders had been disposed of during a TfL office move and could not be evaluated

Read more at Supply Management

Schultz stresses need for Supply Chain at top table

  • Howard Schultz, CEO of Starbucks, stressed the importance of the supply chain during a keynote address at this week’s Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Diego.
  • Schultz explained that a classic mistake made by most companies is that two areas often left behind by companies are HR and supply chain
  • Schultz argued that the supply chain needs to be at the forefront of every enterprise in the world, especially the ones that are consumer-facing

Read more of the keynote points at Logistics Management

‘Freelancing in America: 2015’ Report Released

  • Upwork and Freelancers Union released their jointly-commissioned study “Freelancing in America: 2015” last week
  • The report included a sizing and segmentation of the freelancer population, and assessed a range topics, including freelancer motivation, earnings, attitudes and outlook for the future
  • The study estimates, as of mid-2015, that overall there were 53 million freelancers in the US, representing about 34% of the total US workforce
  • Upwork CEO Stephane Kasriel stated that “strong growth in the economy and the rapid increase in full-time job opportunities, has led some number of freelancers to return to full-time employment”, showing a potential changing environment

Read the results at Spend Matters

US Car Sales on the Rise in September

  • The Big Three car manufacturers in the US projected the overall sales pace for September will top 18 million vehicles
  • General Motors Co., Fiat Chrysler Automobiles NV and Ford Motor Co. each posted double-digit percentage increases compared to a year ago
  • If volumes continue at the same rate as predicted, it would be the highest yearly volume since 2000, bringing much needed good fortune to the industry

Read more at the Wall Street Journal

Procurious Big Idea #42 – Getting Involved With Risk Management

Matthias Fuchs, CPO at Boral thinks the procurement function needs to broaden its horizons.

Matthias talks about procurement broadening its horizons by getting involved with risk management and insurance management, adding the procurement rigour to the process.

See more Big Ideas from our 40+ influencers

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

You’re invited to come and join 14k+ others…

Did you know that Procurious is also on Facebook? Come and join our 14k+ fans!

There are many other ways to stay connected to Procurious – this post will highlight but one of them. Today we’re talking Facebook.

Like Procurious on Facebook

It doesn’t matter whether you’re a social media maestro, or tentatively dipping your foot into the cloudy networking waters for the first time – sometimes there are just not enough hours in the day to log on, contribute and share.

The folks here at Procurious know this, so that’s why we ensure all of our newsworthy announcements, talking points, notable events, and informative videos (along with the latest stories hitting the headlines in the world of procurement) are signposted across all of our social channels.

This is what our page on Facebook looks like – why not give us a like and share with your network!

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Facebook is also great for those who might have heard of Procurious, but perhaps don’t feel comfortable being a committed member just yet.

So come and join our Facebook page, after-all 14k+ fans can’t be wrong…

Social Sourcing, Talent Gaps And The Future Of Online Networks

A record of our Twitter chat with Xchanging Procurement #Procuretalk.

Twitter chat with Xchanging Procurement

Last week Procurious took part in a live Twitter interview with Xchanging Procurement (@xchprocurement). During the half hour we talked about everything from social selling to the future of social networks.

We present the dialog in its entirety below, just in case you missed it…

Temporary Worker Costs: Top Tips For Boosting Value For Money

Temporary worker costs: Top tips for boosting value for money

This is a guest post from Jamie Eaton – Head of Marketing & Insight at Comensura.

It might come as a surprise to some, but the cost of temporary workers goes beyond their salary or hourly rate. From ensuring that you have acceptable pay rates and costs in place to standardising expenses, there are a number of steps that organisations can take to ensure they’re getting value for money and they’re not presented with any hidden surprises each month.

By implementing the following measures on pay rates and costs, organisations can minimise costs incurred by a temporary workforce:

Ensure transparency

Recruitment agencies inform you on the pay rate for each temporary worker, and it’s important that you make this information visible to managers within your organisation. Look at the pay rates for temporary workers across the organisation and ensure they are consistent with those of workers performing similar tasks, and align them with that of permanent workers. This will help reduce any anomalies that might exist, and standardise pay rates to prevent workers demanding a raise based on how others are paid.

Benchmark against local employers

Probe into the pay of temporary roles in the area. Local sources such as recruitment agencies, competitors or the Jobcentre Plus may give you access to how much people are typically paid in the types of temporary jobs that you provide. This will give you a better idea of suitable pay rates and prevent you from paying over the odds.

Align with your employer brand and strategy

Your organisation may look for specific traits in candidates to fill certain roles, which you should abide by when procuring temporary staff. Vacancies are then more likely to be filled by a type of worker that has previously performed well in a similar role. Ensure that you’re offering a pay rate that will attract this kind of person.

Implement authorisation processes for inflation

It’s inevitable that you’ll need to uplift pay rates from time to time, particularly as a response to changes in the job market. The most efficient way of doing this is by using an approval process that consults all the relevant people and ensures that the rise is reasonable.

Standardise expenses

Temporary worker expenses such as travelling costs and accommodation can sometimes be forgotten about, even though it collectively amounts to a considerable cost. Determine what constitutes acceptable expenses for your organisation and apply it as a standard rate for every temporary worker.

There are many benefits to reap from the use of temporary workers, such as flexibility and the ability to cover permanent worker absences. But without maintaining the overall costs, you risk it being a drain of resources. By putting processes into place that determine acceptable pay rates and costs, you can ensure that you’re getting value for money when procuring temporary staff and that you’re carrying out the process cost-effectively.

Volkswagen Emissions Scandal: A Lesson In Awareness & Accountability

With Volkswagen caught cheating on emissions tests and its CEO quitting over the scandal, what can it teach us about awareness and accountability?

How will the Volkswagen scandal affect procurement?

The past few days have seen the great and good of the automotive industry waxing lyrical in the broadsheets and providing their take on events.

As the Volkswagen board gathered to appoint Porsche’s Matthias Muller as its new chief executive, and amid alarmist claims that it’s a bigger threat to the economy than the Greek debt crisis, questions are mounting over how much ministers knew in advance.

In light of such damning revelations we can expect reverberations to be felt within supply chains for months (even years) to come.

At the time of writing, US authorities predict the scandal affects over 482,000 diesel passenger cars sold in the States between 2008 and 2015. Affected models include the VW Golf, Jetta, Beetle, and Passat as well as the Audi A3. Damningly each car that violates the US Clean Air Act faces a fine equivalent to £24,000 – which equates to a £12 billion bill in US fines alone.

‘An investor’s nightmare’

Both Deutsche Bank and JPMorgan have downgraded Volkswagen -with DB cutting VW from ‘hold’ to ‘buy’ and slashing the price target target to €130 from €260. While JP downgraded its stance on VW’s preference shares to ‘neutral’ from ‘overweight’, cutting the price target to €179 from €253, saying it cannot rule out additional engine investigations and does not have visibility over the total liability for VW.

Citi said: “The regulators (not only the US ones) hold the key to answer the question of potential impact (not only on VW, but also on the global auto industry). We think regulators may not overlook the matter, given their stress on the compliance with environmental regulations.

“At this juncture, lots of uncertainties remain, but we cautiously view that some ‘spill-over’ to other regions/ auto industry is inevitable. Germany and Korea have already begun a probe into the matter for more scrutiny. Depending on the outcome, it could lead to some cost pressure and tighter regulations.

“VW commands ~25% share in the EU market, so it faces a potentially higher negative impact on sales in EU, if similar manipulations were to be found in the region.”

Kevin O’ Marah – commenting on the scandal for Forbes made the following astute observation:

For supply chain professionals however the VW scandal illuminates two important things:

  • Awareness of global operations is spiralling upward fed by digital technologies and ubiquitous information visibility.
  • Accountability for what business does, especially in terms of impacts on health, safety and the environment, is something we need to own.

But who really is accountable?

We doubt that talk of the device was included in VW’s procurement plan… Which raises even more questions – namely: who ultimately came up with the idea, and where did it come from? There has to be a paper trail back to the perpetrator, but again, was the true purpose of the device fudged? As we went to press, news sources are even reporting that a Volkswagen engineer warned the company about emissions rigging as far back as 8 years ago…

We’ve covered ethical arguments previously on Procurious – Transforming a bribery-entrenched culture, Rolls Royce accused of ‘buying the business’, Intrigue, money laundering and arrests at the Alhambra and you’ve weighed in heavily using the Discussion forums. Back to that Forbes analysis, which suggests that those involved turned a blind eye..  “Everything from child labour to adulterated foods and conflict minerals come from the same dirty bucket of extended supply chains that make it easy to ignore or even hide bad behaviour.  Accountability depends on visibility, which is expanding by leaps and bounds.”

As supply chain professionals, we together should take responsibility and own this. The buck should stop with us. Why then, didn’t this happen?

Here’s a selection of other big stories making headlines in procurement and supply chain this week…

Coca-Cola Co. is overhauling its U.S. supply chain

  • Coca-Cola said on Thursday it plans to sell nine production facilities to three of its largest independent bottlers as it seeks to unload low-margin assets and reduce manufacturing costs in the United States.
  • The bottlers, Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Company United and Swire Coca-Cola USA, will acquire the nine plants, valued at about $380 million, from Coca-Cola Refreshments, which Coke created after buying its top bottler in North America in 2010.
  • Additionally, Coke said all four entities, along with Coke’s operating group in North America, will form a new supply group to work together on decisions in areas such new packaging launches and ingredient purchases, Coke said. The new group will represent about 95 per cent of the company’s production volume in the United States.
  • The world’s largest soda maker is facing sluggish sales volumes in the U.S.. It has been selling bottling operations, which partly entail getting its products to retailers, to franchisees to shift away from the capital intensive and low-margin business of distribution.

Read more at Reuters

Chancellor George Osborne announces start of HS2 procurement

  • Announcing the bidding process for phase one of the project during a trip to China to woo investors for UK infrastructure projects, chancellor George Osborne said that at least seven new contracts would be opened up to companies, with a total combined value of £11.8 billion.
  • The government is also organising an “HS2 partnering day” to give Chinese companies an opportunity to partner with UK firms on bids.
  • HS2 will provide high-speed rail services from London to the Midlands, and the North and construction of phase one is due to start in 2017.
  • HS2 Ltd chief executive Simon Kirby said: “Together we will transform intercity rail travel in the UK, build specialist skills and expertise across the country, create at least 2,000 new apprenticeships and build a legacy to inspire the next generation of young engineers.”

Read more at Supply Management

Investors look to sew up Vietnam garment opportunities

  • There are big changes occurring in Vietnam’s bustling garment industry, as businesses and investors prepare for changes linked to the upcoming Trans-Pacific Partnership.

  • The agreement being negotiated by 12 countries, including the US, promises radical tax cuts for Vietnam’s garment exports, but only if they use fabric made locally or in other TPP countries, which excludes China.
  • For the emerging country’s thousands of small and medium-sized garment makers, however, the benefits are less certain. The 25 million garments produced every year at the Ho Guom Garment factory in northern Vietnam all bear the label “Made in Vietnam” but more than half the material used to make them comes from China.

Read more at Channel NewsAsia

Using the blockchain to fight crime and save lives

  • Blockchain technology has been described as email for money, but it has the potential to be so much more.

  • According to Blythe Masters, theblockchain represents a watershed moment in technological history. “You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s,” she said in an interview with Bloomberg.

  • Blockchain technology is a hyper-secure record of digital events that is distributed among many different computers. The blockchain can only be updated by consensus of a majority of the participants in the system, and once information has been entered, it can never be erased. Blockchain technology is best known for its connection to the cryptocurrency, Bitcoin. It’s what enables transactions to happen without middlemen or a central body, while protecting against duplication and fraud.

Read more at Techcrunch