We’re looking back at some of the most popular ideas from Big Ideas 2015. Peter Smith talks about the disappearing procurement function.
Peter Smith, Owner and Managing Editor of Spend Matters UK/Europe, shared a more controversial view than other delegates for his Big Idea, that the procurement function would cease to exist in its own right in the next decade.
As a former Head of Procurement, and CEO of CIPS, Peter is uniquely placed to share this view of a disappearing procurement function. Peter believes that as organisations realise how much value procurement can add, and how much value they should be getting from it, they will realise that it’s too important to be left as it’s own function.
This will lead to a situation where every manager will be charged with getting the most out of their budgets and out of their activities, and to add value to the organisation.
Peter also argues that as technology advances and makes information more available to a wider audience, it disintermediates the procurement function. By making the data more transparent, it’s not just procurement who have access to it and can leverage it, but the whole business.
Considered by many to be the next key frontier for business, Social and Sustainable Procurement are finally getting the attention they deserve.
Ahead of the Big Ideas Summit 2016 on April 21st, we are taking a look at the key issues facing procurement in the coming years. We have asked experts and influencers in our community to share their Big Ideas on the themes we will be discussing on the day.
Here, our experts and influencers share their thoughts on the Big Ideas impacting organisations in the fields of social and sustainable procurement.
Matt Perfect, Founder of Something Great – “Impact Spending and Social Impact Measurement”
I believe “Impact Spending” is the next frontier for defining ‘value’ in procurement. That is, spending on goods and services with the intention to generate a measurable, beneficial social or environmental impact, alongside economic benefits.
Some might say that the history of procurement can be traced by our broadening definition of value. In the old days, our decisions were mostly price-based with little regard for ‘value’ at all. The evolution of strategic procurement brought with it a greater understanding of the importance of quality and service and the ‘value for money’ equation was born. Increasingly, risk and innovation have been added to the mix, and evaluation models such as Total Cost of Ownership have become much more sophisticated.
It is becoming increasingly apparent (both in theory and in practice) that organisations can no longer separate their profitability and growth, from the impact their activities have in society. As such, procurement and supply professionals must be able to account for, and measure, the impact of their spending.
There is much the profession can learn from the emerging field of social impact measurement. By incorporating such measures as Social Return on Investment and Theory of Change into spending decisions, we will unlock the next wave of procurement value for our businesses.
Regulatory pressure on companies to report on CSR criteria in supply chain is increasing – the UK Modern Slavery Act and the Dodds-Frank Act in the US are recent examples. ISO/DIS 20400, currently under development, will provide clearer guidance about what is expected from organisations wanting to implement sustainable procurement.
Improved supply chain transparency will put pressure on procurement organisations to build category-specific strategies and make sourcing decisions with sustainability in mind. Criteria, such as sustainability and labour ethics, will be increasingly included alongside financial and risk data as factors that go into processes like supplier management, sourcing, and contract management.
Extended information and third party content, specialising in sustainability data for supply chains and procurement organisations, are on the rise. But it will soon be indispensable to have this information deeply integrated into people, process, and technology to make CSR-positive sourcing decisions as easy as possible.
It’s a crucial part of the wider picture of value-based sourcing: developing sourcing decisions beyond the purchase price.
In terms of the now, we are seeing procurement take an interest in what role they play in sustainability. Procurement is realising that they can make a huge impact in the way they source through the supply chain.
This is exciting to procurement professionals as their job now has a new lease on life, and they aren’t just feeling like they are saving money and going through the process of buying stuff. This will shape the procurement profession in the future too, as it becomes more strategic in achieving sustainability goals for the organisation.
In terms of the future, I see the concept of finite resources impacting the way we procure products. Concepts like cradle to cradle and circular economy are driving innovation through material use. Procurement will have to be more innovative than ever as the world shifts to more sustainable materials.
They must be on the lookout for sourcing decisions that make use of alternative resources, reduce waste and reclaim any unused materials. This also goes for materials that are toxic and do harm. Procurement must work to avoid these, and find materials that do not harm the environment.
Do you work in social or sustainable procurement? What are your Big Ideas in this area? Let us know and we could be discussing them on April 21st.
The Big Ideas Summit is just a few weeks away! We caught up with Paul Markillie, Innovation Editor at the Economist, to talk about the megatrends transforming manufacturing.
Paul Markillie is Innovation Editor at The Economist. He has covered the automotive and aerospace industries globally and was the magazine’s first Asian-based business correspondent, writing about the rise of China as a manufacturing superpower.
At the Big Ideas Summit, Paul will take us through the megatrends that are transforming manufacturing. He will explain how manufacturing is going digital and how that will disrupt the conventional economics of production and overturn established supply chains. He will give examples of how some companies are responding. He writes:
“I am particularly looking forward to the Big Ideas Summit because many of the things I talk about attract interest and curiosity. That can lead to some lively interaction, from which I often learn things from people who are already having to confront profound changes to the way they will do business in the future.”
According to the WEF, we are now in the Fourth Industrial Revolution – where does that leave businesses?
Four, three or some say half-a-dozen industrial revolutions have occurred. But however you measure these things, this one represents a fundamental shift because, as has happened in other industries – publishing, music, films, electronics, etc – the move to a digital world in manufacturing changes the rules comprehensively.
Developments like new materials, robotics, 3D printing and computer-aided design and simulation demolish the old notions of economies of scale, changing not just where companies locate factories but also how they organise themselves and arrange their procurement and supply chains.
What are the key impacts of new materials science for manufacturing organisations?
A good example is carbon fibre, already common in aerospace and now becoming more widely used in automotive industries. For example, BMW’s i3 electric cars start life in a Japanese rayon factory as a spool of plastic that looks like fishing line. This is carbonised at a plant in America and then shipped to Munich, where it is woven into carpet-like sheets on what appears to be a giant knitting machine.
When the sheets arrive at BMW’s car plant in Leipzig they are cut into shapes, stacked into multiple layers, injected with resin, cured and glued together by robots. That factory is unlike any other car plant I have seen, and so is its supply chain. And there are many other new materials coming that could change other industries just as dramatically.
These developments have increased the pace at which new products are developed – do you think supply chains can keep up with this demand?
If they do not, new supply chains will be developed. Or none at all: Tesla, for instance, is a new carmaker and quite vertically integrated. What suppliers need to remember is that many of these new manufacturing technologies allow a number of components to be integrated into one part.
So, for instance, a company making ceiling panels may decide to integrate thin-films of LED lighting into their product, thus offering a customer a product that no longer requires light fittings to be purchased.
What major changes do you think there will be in procurement and supply chain processes in the next few years?
First-tier suppliers will need to work much closer with companies in the development process. We already see some of this co-development. But there will also be huge opportunities for companies further down the supply chain to innovate. Second-generation robots are more affordable for medium and small companies; 3D printing processes are less wasteful of raw materials and allow greater production flexibility at lower volumes.
I think we will see some companies grasp these opportunities, which could re-order supply chains and lead to some companies that were previously suppliers of components making the leap to become producers of final products.
Paul Markillie will go into greater detail on all of these topics during his keynote at the Big Ideas Summit 2016 on April 21st.
Ahead of the Big Ideas Summit 2016 on April 21st, we’re on the hunt for your Big Ideas. Philip Ideson discusses his Big Idea of procurement-as-a-service models.
At the Big Ideas Summit 2016, which takes place on 21st April, we will be asking our speakers and attendees to record their ‘Big Ideas’ live on camera for the whole of our Procurious community to see.
But we also believe that every single procurement and supply chain professional has a unique vantage point in the industries, communities and businesses they work in. You have been submitting your Big Ideas to us, and so far, we think they have been great!
Philip believes that procurement-as-a-service delivery models will transform the procurement value proposition. Companies will be able to access procurement talent and technology “on-demand”. This means the cost of accessing procurement expertise becomes a variable cost rather than a fixed cost.
The result? Organisations of all sizes can now access specialist domain expertise which allows us to pull value levers that over and above cost savings that elevate our role and transform our value proposition.
Jackie Aggett, Regional Commercial Manager at Laing O’Rourke, discusses the gender bias she has come up against in procurement, and how she has overcome it to get to where she is today.
Jackie Aggett hadn’t been in procurement long when she needed to spend weeks preparing a major annual report about the procurement of earth moving tyres.
She handed it over to the site manager and watched him hurl the report angrily across the room. It hit the wall and fell apart.
“What would you know about earth moving tyres?,” he bellowed?
The slight blonde 28-year-old calmly walked over and picked up the report, and told him again that there were going to be changes. Like it, or not.
“Every part of me wanted to turn around and run out the door, but I’ve always found ways to overcome challenges in the workplace and turn them into opportunities,” Aggett says.
Finding a Voice
The experience did nothing to dampen her conviction. She has worked in male dominated roles for 25 years. She started out in a supply cadetship at BHP Billiton and then went on to work in rail, construction, marine services and a seawater desalination plant.
“I learned a lot in that cadetship. My boss at the time gave me the cadetship because he saw me as being very courageous, which was part of my upbringing. He sent me straight to Port Headland, where I was the only female.”
Her colleagues weren’t used to working with women. The only uniform available to her was the men’s trousers and shirts. “They were ill-fitting and very uncomfortable. Procuring some clothes to wear to work was high on the list in those early days,” Aggett says.
If anything, her presence among the male workforce was seen perhaps only as a novelty. But that all changed once she began finding her voice in the business, and began offering new solutions to old problems.
“I had a good work ethic and believed in what I was doing, and hit the ground running. But the team weren’t engaged when I started to suggest change, and that was a difficult process to go through. However, I didn’t give up. I continued to speak up and stand up for myself.”
Creating Trusted Advisors
Aggett’s depth of experience covers roles in commercial, contractual and financial management from project start-up through to close-out. This includes all facets of tender preparation, negotiation, contract award and subsequent on-site contract administration, claims, project controls, forecasting, financial reporting and risk management as the client asset owner or contractor.
Six months ago, she was tapped on the shoulder and offered the role of procurement head with international engineering enterprise Laing O’Rourke, which took her across the country from Perth to Sydney. She jumped at the chance.
Her focus in her role has been creating a vision – working to transform the procurement function from spend managers to trusted advisers, firstly among her team of 35 people.
“It is imperative we move beyond being seen and acting as a governance compliance function. We need to understand the business strategy and align our objectives to deliver sustainable value,” she says.
Challenging the Norm
Aggett has implemented a supply relationship management programme among other initiatives, which has been a big step forward for the procurement function within the business.
“A key part of this has been challenging the way in which we engage with the supply chain. The supply chain has a wealth of knowledge and capability which, if tapped into, can provide value creating solutions for our clients, ourselves and our supply chain partners.
“Unfortunately, the construction industry does not often afford the supply chain the opportunity to bring their knowledge and capabilities to the table. Our supplier relationship management program seeks to change this.”
Aggett wasn’t specifically chasing roles in such large corporate organisations, saying one thing just led to another.
“It certainly wasn’t planned that I’d work in male-dominated industries. I had four brothers and a working mother, and was raised to believe that girls can do anything.”
She admits that early on in her career, she came up against road blocks, but didn’t for a moment consider that had anything to do with gender bias.
“I definitely came up against a lot of unconscious bias in my early roles, and at times doing my job took some courage and self-belief. Being female has definitely been a challenge in the roles I’ve held.
“I’d wonder why someone wouldn’t listen to me, or how I could better showcase my skills. I’d work very hard to win someone over, and go through the problem solving process to try and work out why I wasn’t getting the result I wanted. The fact that I was a woman was always at the bottom of the list. Now, after 25 years working in the industry, I arrive at that conclusion a lot quicker and obviously have a lot more confidence in the role.”
Aggett hopes times have changed and that young women entering the procurement industry don’t come up against the gender bias she experienced.
“Saying that, I have been fortunate to work with individuals and organisations that have encouraged me to take opportunities, to believe in my abilities and to reward me for my efforts. I have experienced many organisations that have allowed flexibility in my working week, as I’ve raised two daughters as a single parent.”
While there are no requirements to do so, she advocates the importance of having a degree behind you for anyone working in procurement. Her law and finance degree has stood her in good stead, she says.
“It has absolutely served me well to have the formal qualifications behind me. When people are passionate about procurement and they’ve got the formal education, it gives them a seat at the board table in any situation they’re in.”
Jackie Aggett was one of the keynote speakers at the second annual Women in Procurement 2016 event. Catch up with what happened at the event here.
The Procurious Big Ideas Summit is back and it’s bigger and better than ever before!
We had a fantastic experience, and great fun, last year at the Big Ideas Summit, the world’s first digitally-led conference for the procurement profession. And it’s almost time to do it all over again at the Procurious Big Ideas Summit 2016.
If you aren’t familiar with the event, the Big Ideas Summit gathers together 40-50 of the world’s brightest minds, such as established thought leaders, senior decision makers and industry experts, to discuss the future of the procurement profession.
What’s the Big Idea behind it?
The event is a unique opportunity for professionals to gain insights into the evolving global space of procurement. It connects senior executives, thought leaders and CPOs with digital delegates on a live platform.
Big Ideas 2016 aims to get current and future procurement leaders thinking about and discussing the key trends, risks and issues in the profession, and giving them tangible outcomes they can use to drive innovation and change in their organisations.
The key themes our speakers will be addressing this year include:
The technological “megatrends” impacting procurement
The True Cost of doing business in the fashion industry
How social media breaks boundaries for innovation and collaboration
Attracting and retaining the best Millennial talent
Creating and sustaining organisational agility
The face-to-face component of the event will take place in London on 21st April 2016. However, as with last year, we’re inviting over 12,000 procurement and supply chain professionals (co-incidentally, the same number as the Procurious community!) to join us as digital delegates.
This will amplify ideas and content through Procurious, as well as give our global delegates the chance to submit questions to speakers in advance as well as tune in, learn and participate in real time.
Who will be speaking?
We’ve secured a high calibre of thought leaders and keynote speakers, including:
Tom Derry, CEO, Institute for Supply Management
Christopher Sawchuk, Principal & Global Procurement Advisory Practice Leader, The Hackett Group
Gabe Perez, Vice President of strategy and market development, Coupa
Elizabeth Linder, Politics & Government Specialist, Facebook EMEA
Lucy Siegle, Journalist and broadcaster, The Observer
Peter Holbrook, CBE, Chief Executive, Social Enterprise
Lucy Harding, Partner and Head of the Global Procurement & Supply Chain Practice, Odgers Berndtson
The Big Ideas Summit is open to all Procurious members. It doesn’t matter where you are in the world, we want you to help shape the agenda. Register your attendance in our Procurious Big Ideas 2016 Group.
As savvy social networkers you’ll already be of the mind that social media can be used to create a global stir. We want to amplify these Big Ideas throughout the global procurement community, connect with one another, start meaningful conversations, and ultimately drive change.
All keynote sessions will be captured on film and offered exclusively to registered attendees. As a ‘digital delegate’ you’ll also be able to access a rich collection of supporting material including articles, interviews and video content following the event.
In a landmark moment, the BBC are delivering up to one million micro:bit devices free to UK students to encourage more young people get creative with technology.
Every Year 7 student in England and Wales, Year 8 student in Northern Ireland, and S1 student in Scotland will receive a micro:bit. The device, launched as part of the BBC ‘Make it Digital‘ initiative, is a pocket-sized, codeable computer that allows young people to get creative with technology, whatever their level of experience, and aims to help develop a new generation of digital pioneers.
Students can program their BBC micro:bit to become anything they want – from simple games to smart watches and even fitness trackers. This is done by using one of the code editors at www.microbit.co.uk, or the mobile app, and by connecting it to other devices and sensors. The website also features a range of resources and tutorials to help teachers, parents and students take advantage of the BBC micro:bit’s vast potential.
It’s the BBC’s most ambitious education project in 30 years and builds on the pioneering role of the BBC Micro, which helped introduce the nation to computing in the 1980s. It has been made possible only through a ground-breaking partnership between the BBC and 31 organisations, including ARM, Barclays, element14, Lancaster University, and Microsoft.
BBC micro:bits will be delivered nationwide through schools and made available to home-schooled students over the next few weeks, but they will be the students’ devices to own. This allows students to keep their device as they move up through the school, and to continue bringing their ideas to life outside of school and term time.
Some additional BBC micro:bits have been included in the rollout to enable teachers to extend their BBC micro:bit lessons to students in other year groups, giving the BBC micro:bit partnership an even better chance of inspiring an entire generation.
Following the nationwide rollout, the BBC micro:bit hardware and much of the software will be open-sourced, and BBC micro:bits will be available to buy from a range of retailers. Money generated from these commercial sales will be used to further encourage as many people as possible to join the coding revolution. Further details will be announced soon.
Tony Hall, BBC Director-General, said: “This is a very special moment for us, our partners and most importantly for young people across the country. The BBC micro:bit has the potential to be a seminal piece of British innovation, helping this generation to be the coders, programmers and digital pioneers of the future.
“Only the BBC could attempt a project this ambitious, on such a large scale, and I’m thrilled we’ve persuaded so many people to get behind this and make it happen.”
Sinead Rocks, Head of BBC Learning, said: “The BBC micro:bit has seemingly limitless potential, especially when paired with other hardware, and we can’t wait to see what students will do with it. They’ve already come up with all kinds of ideas during testing and at events around the country – some ideas help solve some of life’s daily challenges, some could have business potential, and others are just great fun. Teachers have been quick to embrace it too, which is so important to the success of the project, and they have already made valuable additions to our online resources.”
Jessica Cecil, Controller, Make It Digital said: “BBC micro:bit represents a major milestone in our bid to inspire a new generation of digital innovators. As part of our Make it Digital initiative we want everyone to discover more about the digital world. We’re offering easy-to-use devices like the BBC micro:bit, up to 5000 Make it Digital traineeships across the UK, and shows on the BBC such as Girls Can Code and Calculating Ada, to achieve just that.
“Working with our many partners to create opportunities for children to code, make and to discover, together we aim to build the chances of the next generation.”
The BBC micro:bit is the result of a ground-breaking partnership on an unprecedented scale. The BBC micro:bit’s product partners have led on the software, hardware, design, manufacture and distribution of the device. This includes:
ARM: The BBC micro:bit was created using the ARM® mbed™ hardware and software development kits and compiler services. The project builds on the organisations’ collaboration on the original 1981 BBC Micro computer.
Barclays: Supporting the distribution and manufacture of the BBC micro:bit by incorporating it into their digital education programmes
BBC: The BBC micro:bit project has been conceived and convened by the BBC, bringing together partners to deliver a digital literacy project on an unprecedented scale.
element14: element14 manufacturers the BBC micro:bit and has worked closely with all partners in areas such as component selection, cost optimisation and design for manufacture. In addition, element14 has leveraged its manufacturing, logistics and packaging capabilities to safely deliver the first 1 million units into the UK.
Lancaster University: Designed and developed the BBC micro:bit runtime; the essential core code that makes the BBC micro:bit do all the amazing things it does. The University will continue to support the micro:bit community as it grows.
Microsoft: Developed the BBC micro:bit website (www.microbit.co.uk) to host code editors for all one million micro:bits and has also supplied two coding languages.
Nordic Semiconductor: Supplied the ultra low power Bluetooth® chip that integrates the micro:bit’s computer brain, and allows the micro:bit to both wirelessly communicate with other micro:bits, and sync to or be updated from smartphones, tablets, and computers via Bluetooth.
NXP Semiconductor: Provided the micro-controller that manages the BBC micro:bit’s USB connection, the accelerometer and magnetometer that enable the micro:bit to react to motion and the direction it’s facing.
Samsung: Developed the Android app for the BBC micro:bit.
Technology Will Save Us: A London-based start-up that designs ‘Do It Yourself’ tech kits that spark the creative imagination of young people. Tech Will Save Us led the BBC micro:bit design, producing the distinctive look & feel that encourages kids to get hands-on with technology.
Wellcome Trust: Through direct initiatives to schools, Wellcome Trust will provide exciting real life contexts for teachers and learners around the UK to use the micro:bit.
You may not realise the complicated Easter supply chain that exists in order to cope with increasing consumer demand.
Whether your Easter delicacy of choice is the humble egg, sweets like jelly beans and marshmallows, or something more like a Spanish torrija, you are contributing to the enormous spend on confectionary and other Easter-related items.
In the UK, Easter sales of chocolate make up 10 per cent of the figures for the entire year. According to the National Confectioners’ Association in the USA, around 70 per cent of the Easter sweets purchased are chocolate, which works out to a whopping $2.2 billion spend.
All of this puts pressure on the Easter supply chain plans that businesses have in place. And 2016 is expected to be a bumper year for consumer spend.
Highest for 13 Years
According to the National Retail Federation (NRF) in the USA, total spending on Easter this year is expected to hit $17.3 billion, the highest level for 13 years. To put it into perspective, that’s a spend of $146 for each person in the USA.
According to some statistics, this will put spending, particularly on sweets and chocolates, at a higher level for Easter than it is for Halloween. The NRF have estimated confectionary sales will total $2.4 million, surpassing the average of $2.1 million for Halloween sweets.
Possibly not good news for the 81 per cent of adults who admitted to stealing chocolate from their children’s stashes over the holiday period…
And it’s not just the confectionary market that sees a huge spend at this time of year. With adults planning on spending on average 50 per cent for Easter than they did on Halloween, the money is being spread around.
According to the NRF survey, spending will see high figures in the following areas:
$5.5 billion on food
$3 billion on clothing
$2.7 billion on gifts
$2.4 billion on confectionary
$1.2 billion on flowers
And with over 40 per cent of shoppers visiting department stores to carry out their shopping, and 21 per cent shopping online, organisational supply chains will be working flat out to cope with demand.
Easter Supply Chain Optimisation
Delivering all this chocolate, sweets and other items to stores requires a mammoth effort from logistics organisations around the world. Shipping efficiency, customer location, order quantities and supply chain management all have to be reviewed in order to keep up with the demand.
In the USA, Hersheys opted to optimise their supply chain around the elements of customer geographical location and grouping stock-keeping units with product groups. It is estimated that by doing this, and using off-the-shelf software, the organisation has saved itself in excess of $15 million per year.
Just Born, a confectionary manufacturer who are responsible for America’s favourite non-chocolate treat, the Peep, changed their Easter supply chain strategy in order to cope with the huge demand for their products over the holidays.
The organisation now uses distribution centres and 3PL to break bulk orders for more efficient delivery to retailers. Just Born also shares these centres with other organisations, with this collaboration further reducing the costs associated with deliveries.
An increasing use of technology for inventory management and planning is making life easier for organisations too. Barcodes can be used to manage inventories more efficiently, while also allowing for real-time tracking of stock at both distribution centres and retail outlets.
Further advancements in technologies such as ERP and MRP systems will allow organisations to further increase efficiencies, while increased collaboration will benefit not only the whole industry, but also the consumer.
So just remember, the next time you crack open that chocolate egg, there’s more than a simple process required to get it from manufacturer to shelf (and that’s before the Easter Bunny gets involved!).
We’re looking back at some of the most popular ideas from Big Ideas 2015. Gordon Donovan examines the concept of a Supply Chain Wiki.
Gordon Donovan, Procurement and Supply Chain Manager at Metro Trains in Melbourne, shared his Big Idea last year around the concept of creating a Procurement and Supply Chain Wiki.
Gordon believes that there is a dearth of good information for procurement organisations around the full supply chain. This isn’t just the Tier 1 suppliers, but Tier 2 suppliers and subcontractors, and further down the chain.
This Big Idea focuses on harnessing the power of the community to build a centralised knowledge base for all.
Gordon admits that his Big Idea is quite daunting, but as he points out, it all has to start somewhere!
Daniel Ball, Director at Wax Digital, explains how organisations can minimise supply chain risk through effective contract lifecycle management.
Today’s businesses are increasingly reliant on global, multi-tiered supply chains. While they can contain the essential ingredients for competitive advantage, cost efficiency and innovation, supply chain complexity also contributes to greater supply chain risk.
Consequently, contract lifecycle management (CLM) has become progressively crucial to organisations as they attempt to keep track of suppliers and their sub-contractors. Analyst group Gartner claims that no organisation is immune to the complexities of today’s contracts, or the pace at which businesses operate in the global economy.
Regardless of the sector you operate in, for anyone with a growing and increasingly complex supply chain, CLM has become a critical business process.
Mitigating Supplier Risk
You don’t need to search very hard to find examples of organisations whose complex supply chains have caused them significant issues, affecting both their reputation and bottom-line. Tesco’s infamous horse meat scandal is a classic example of how uncontracted and unvetted suppliers can become part of your supply chain and cause unforeseen damage.
The store was left at the mercy of the public and the media for months after the scandal broke causing huge reputational damage and financial loss to the organisation. Unfortunately for Tesco, the complexities of its supply chain meant that visibility was restricted, and it was unaware that one of its suppliers was sub-contracting work to an unknown and unvetted supplier.
Supplier risk can raise its head in many forms. The importance of ensuring all your suppliers have the necessary certifications required to work with your organisation shouldn’t be understated.
It’s irrelevant whether they are supplying food, people, commodities, electronics, or complex mechanical parts. Take the construction sector as an example. A building company’s supply chain manager will diligently vet all contractors required onsite to ensure they have the necessary health and safety certificates and public liability insurance details in place, as part of the supplier on boarding process.
But when pressed could they honestly claim to know when each of these certifications is due to expire, and that when that contractor is next onsite, his certifications are all still in date? If the answer to these questions is no, then an organisation could find itself in a very vulnerable position if an accident occurs, and the contractor’s health and safety certifications have expired.
Contract Lifecycle Management & Legal Compliance
What’s more, new sentencing guidelines have been introduced to create a more consistent and proportionate approach to sentencing for those individuals or businesses convicted of health and safety, food hygiene offences or corporate manslaughter. These new guidelines mean that all organisations should be looking to assess risk, both internally and across their entire supply chain, to ensure standards are maintained at all times.
Legal compliance with legislation such as Sarbanes-Oxley or ISO standards can also be monitored as part of CLM. The healthcare, financial services and manufacturing sectors are all subject to compliance demands. Stiff penalties can be applied if an organisation is found to be non-compliant.
Contract Management Databases
Contract management databases play an essential role in ensuring organisations know exactly when their suppliers’ contracts are up for renewal. No-one wants a contract which is no longer valid for your current business needs to roll over for yet another year. As important as that is, arguably the main benefit contract management offers is complete visibility of supplier performance and compliance.
Moving all contracts to a secure, electronic contract management database enables an organisation to practice effective contract lifecycle management and keep a firm eye on its entire supply base – both direct and indirect.
A contract management database that hosts all of an organisation’s contracts, and details on the criteria (certifications, regulatory requirements and SLAs) that its suppliers are contractually obliged to meet, enables organisations to quickly identify specific types of supplier able to compliantly fulfil a project.
It also allows organisation to identify their business-critical suppliers, and ensure their necessary certifications are in place and that any KPIs agreed at the start of the contract are being met. Some systems can even offer visibility into tier two suppliers. This is extremely beneficial if your supply chain is becoming increasingly complex, and can help identify who your critical suppliers are sub-contracting to.
Visibility at Your Fingertips
The benefits delivered by CLM are undeniable as it becomes increasingly important that organisations ensure that their compliance procedures are in place. Contracts filed away, stuffed in drawers or indexed on a spreadsheet can’t issue an alert if they’re about to expire. Nor does it make life very easy if you’re looking to identify which of your suppliers has the right credentials in place to fulfil a certain role.
Storing all suppliers’ contracts in a secure, manageable database, that is quick and easy to access, ensures that you have supply chain visibility at all times. Should the time arrive when you need evidence to defend your organisation, or pinpoint the cracks in your supply chain, you’ll certainly be glad to have this level of visibility at your fingertips.