All posts by Procurious HQ

Construction & Transport Industry Facing Effects Of On-Demand Economy

The construction and transport industries are beginning to feel the effects of an on-demand economy.

constructionaccounting

According to popular jobsite Indeed.com, employer demand is now outpacing jobseeker interest in the construction and transport sectors.

While job growth in the construction industry has increased 10 per cent in the last quarter, jobseeker interest in these positions has remained stable since the beginning of 2015.  Similarly, Transport has seen a 13 per cent increase in job availability compared to last quarter, while jobseeker interest in these roles has fallen  2 per cent in August from its peak in March.

The figures suggest these industries are amongst the first to feel the impact of an economy that is increasingly reliant on contractors and temporary hires, with an increasing number of tradesmen and drivers branching out to start their own businesses or work on a contract or freelance basis. This trend is more evident for electricians – job searches for electrician including the term self-employed has grown 61 per cent since Q4 2014.

Gerard Murnaghan – VP EMEA, Indeed, commenting on the market, said: “The tightening labour market in the UK coupled with the prevalence of self-employment is likely to accelerate this trend in the run up to and following the introduction of the new minimum wage, which will come into force in April 2016.  SMEs and micro firms are major contributors to growth in both of these sectors and the backbone of the UK economy. The wage increase may discourage them from taking on additional, junior staff.

This is a particular concern in the construction sector, which is grappling to attract young talent in an industry which does not generally appeal to the new labour force. For an industry that is reliant on boosting its ranks with new trainees, it is also noteworthy that two thirds of construction apprentices are currently trained by micro firms – a talent stream the industry cannot afford to lose.” 

U.K. Industry Employment Trend Highlights – August, 2015

Top Growth in Job Openings (compared to previous quarter)

Transportation   +13 per cent
Media   +11 per cent
Construction   +10 per cent 

Lowest Growth/Decline in Job Openings (compared to previous quarter)

Education – 10 per cent
Human Resources   -8 per cent
Healthcare   -2 per cent

The Secret To Unbelievable Engagement

Office Lens 20150922-123648

Earlier this week at eWorld Procurement & Supply we were lucky enough to sit in (and participate) in Christopher Barrat’s thought-provoking workshop on communication tactics.

Christopher benefits from real life experience in the procurement world, having been a procurement director for a major blue chip organisation. For the last 12 years he has spoken and worked with companies all over the world to help them with commercial communication skills.

At eWorld Christopher explained the key role that networking and collaboration play when working to undo entrenched behaviour.

Christopher’s steps to success:

Gathered in groups of 8-10 we were told to think of someone, (preferably at work but it can be from home life too) with whom we were having a challenging time.

If we didn’t feel comfortable being open about who this person actually way, we could have given them a pseudonym. 

Now we had to think of some specific circumstances where we interacted with this person – we were told to be quite detailed – i.e where/when/what exactly happened on this occasion. This didn’t necessarily have to be a big or dramatic event, just something that was meaningful and challenging to us.

Having thought about this, we then had to consult a diagram that had been placed on our tables. The diagram in question is shown below:

PAC Diagram

Looking at the aforementioned PAC diagram, we were told to think about the position we were going to adopt (as well as the position our antagonist took).

In order to help us gather our thoughts, PAC can be broken down into these respective behaviours/attitudes:

P: This is our ingrained voice of authority, absorbed conditioning, learning and attitudes from when were young. We were conditioned by our real parents, teachers, older people, next door neighbours, aunts and uncles. Our Parent is made up of a huge number of hidden and overt recorded playbacks.

A: Our ‘Adult’ is our ability to think and determine action for ourselves, based on received data. The adult in us begins to form at around ten months old, and is the means by which we keep our Parent and Child under control. If we are to change our Parent or Child we must do so through our adult state.

C: Our internal reaction and feelings to external events from the ‘Child’. This is the seeing, hearing, feeling, and emotional body of data within each of us. When anger or despair dominates reasons, the Child is in control.

Note the adult position – Christopher suggested that if we both ended up on this then maybe we should think again…

Armed with our positions we laid out the PAC circles on the floor, and in our groups discussed each of our difficult interactions. The next step was to physically stand on the relevant descriptor and talk through the sorts of things you would say (and do) from that position, as well as how the other person would be responding.

Finally, we moved ourselves to the Adult position. If we had adopted this stance at the time of our difficult exchange, what would be going through our minds? And how would we have talked and interacted with the other person knowing what we now know?

Office Lens 20150922-123342

Next time you are trying to deal with a difficult colleague, why not go through the steps outlined above? Try and control things, so ultimately you’ll both be able to see eye-to-eye.

How Can Agility Unlock Success In Procurement?

When it comes to procurement – don’t underestimate the value of agility.

Why it's important for procurement to be agile

As a startup we’re always banging on about agility… we believe that by their very nature startup companies need to be nimble, be willing to adapt to changing market conditions, and fail fast (if something isn’t working). That’s why Procurious was particularly enamoured by The Hackett Group’s opening address at eWorld Procurement & Supply in London this week. Indeed, agility (and what does it mean for procurement specifically) was one of the sticking points in Chris Sawchuk’s keynote…

Agility equals relevance

Chris noted fairly early on that perhaps the greatest challenge facing procurement today is staying relevant in the face of other business functions. It is imperative that procurement finds new ways to create value, not to mention justify its existence as departments across the board vie for slices of the budget. Hackett made this recommendation as far back as 2013, demonstrating that by breaking down traditional borders, procurement could become an enabler of internal business functions thanks to its intelligence around suppliers and markets.

So far, so good (you’d think) But fast-forward to 2015 and it seems that procurement has stalled somewhat – with the function uncertain what it should be doing to innovate (and thus adding value). What then needs to happen?

The problem stems from the fact that sometimes procurement’s idea of innovation comes from a very different place to what the business believes needs to happen. Procurement needs to be on the same page as its stakeholders and be seen as trusted advisor

To do this effectively procurement can’t sit still, it needs to be constantly looking at the market, identifying issues that could lead to business concerns and being perceived as having a sincere interest in helping stakeholders achieve their business goals. How will procurement achieve this? Through being more customer centric and ultimately (yep, you’ve guessed it) – more agile.

Chris Sawchuk

Customer centricity is king

To this end we need to take a view of what procurement organisations can do differently. You don’t need to look far to see that professional organisations are starting to spend more time aligning with their internal stakeholders – services like Uber are already doing this (meeting and exceeding SLAs etc.), and this practice in itself is generating more value.

As a function procurement needs to make the customer central to everything it does. But in order to do this successfully and improve the customer experience, procurement needs to put a structured approach in-place.

Hackett suggest that procurement needs to (over time) build a more holistic approach which incorporates things like channel management, governance, service design, and relationship management.

The first step to making this happen is to begin mapping out the influence and importance of key stakeholders. What criteria do we look at to determine who we measure? They are not all equal, for instance, suppliers can fall into several different camps – there’s strategic, then your preferred etc. Can you identify which of your suppliers represent risk, who are innovating? Likewise, can the same thinking be applied to the customer side? These are all important factors that procurement departments will need to take into account when deciding upon their implementation.

You’ll also fairly quickly come to the realisation that you don’t have the necessary resources to treat everybody the same (or survey thousands). Hackett note that crucially, a one size fits all approach won’t work.

Executives aren’t likely to respond to a survey. How then do we engage with them? The answer is a multi faceted approach. If you’re going to carry out a survey there has to be something in it for them, give something back. Why not provide them with the results?

To round things off Hackett left us all with five quick steps to help getting started (presented below). Hopefully you’ll be able to recognise the value in such an exercise, and in-turn begin to be more agile in your approach going forwards.

  • Define a customer-centric mission
  • Identify key stakeholders
  • Schedule/plan check-in meetings
  • Assess the broader organisation’s view
  • Take steps to ‘market’ procurement’s new mission

If you want to hear more from Chris, you’ll be pleased to learn that he appeared at our very own Big Ideas Summit in April of this year.

Watch the whole thing – here.

WHY And HOW Procurement Must Change

‘Innovation’ – the action or process of innovating.
“Innovation is crucial to the continuing success of any organisation” – it’s a new method, idea, product, etc.
innovation-box-purchased-no-credit

We’re here at eWorld Procurement & Supply in London and Alex Saric – Global Vice President, Marketing, Ariba, wants to talk about innovation…

While ‘The Innovation Imperative’ sounds like an episode title from The Big Bang Theory, today we were told about a different sort of evolution. Alex wanted to drive home the message that in order to truly transform the function into a strategic value driver, procurement leaders need to innovate.

And while it’s all well and good that we toot our own horn, when we’re talking about innovation it is critical that everybody thinks about procurement, and in-turn goes about their job differently.

Why now? The screws are tightening… Today there’s increasing pressure on companies thanks to increased competition. Just look at new players like Uber who have introduced wildly new business models. But, as Alex notes, whenever there is a great challenge, there’s also great opportunities. As such there is a need to embrace these changes, but to do so, procurement needs to rethink its entire approach.

Crucially procurement (as a function) is in a prime position to take advantage, it needs to strike while the iron’s hot as no-one else has really stepped up to the challenge (yet).

What can procurement learn from Uber?

In order to successfully innovate we need to recognise that procurement is becoming embedded in other parts of our organisations – and in doing so, it is also playing a more strategic role.

Here Alex pinpoints four areas where we can add value:

  • Product innovation
  • Market expansion
  • Working capital management
  • CSR/Regulatory compliance

With all these in mind, what do we need to enable procurement innovation?

People: people need to want to develop. Here we are provided with the example of people not willing to use social media at work, while they are more than happy at home (in personal time). It’s this shift in attitudes that needs to be addressed and adjusted in order to progress.

Automation: the automation of processes will enable you to free your capacity to concentrate on other things.

Connections: in order to drive innovation you are going to be talking to a lot of suppliers (but you need to be talking to the WORLD). Expand your connections by whatever means necessary.

Business networks: Business networks are simplifying business collaboration and delivering benefits across all network participants. In this example procurement isn’t the only function that wins, benefits will be felt across the entire organisation when you open up the communication channels.

Wrapping up a very packed session, Alex reminded us that innovators are already starting to reap the rewards. For instance, Staples has reduced its processing costs and Cisco is making savings across its services. Along with the aforementioned Uber and Amazon, innovation is starting to drive key changes across the world’s stage… The question is what are you doing to follow suit? Isn’t it about time you caught the innovation bug too?

Tackling the Supply Chain – Rugby World Cup 2015

On Friday night, the eighth Rugby World Cup kicked off with a hard fought win for tournament hosts England over Fiji at Twickenham. With over £1bn expected to be added to the UK economy over the next 6 weeks, how will supply chains cope with, and ultimately benefit from, increased demand?

Rugby World Cup 2015

Over the course of 44 days, 48 matches will be played out in front of a global television audience expected to surpass 4 billion people across 207 countries. It is also estimated that over 466,000 international fans will visit one or more of the 14 cities where matches are staged or fan zones are in operation.

Investment, Jobs and Opportunities

In preparation for the tournament, over £85m has been invested in infrastructure around the UK, with further investment expected in creating a ‘legacy’ for rugby around the country. Over 41,000 jobs will be created, including 16,000 related to the tournament and over 12,000 along the supply chain. In total, outputs are expected to surpass all previous tournaments at £2.2bn.

UK businesses will also see a legacy from the tournament. At the 2011 tournament in New Zealand, 52 per cent of businesses increased their international networks, and the same is expected this year in the UK.

The British Beer and Pub Association (BBPA) anticipates an additional 25 million pints will be drunk during the tournament, bringing over £86m into an industry that has been struggling in recent years.

However, it’s not good news for all companies. Thanks to a £20 million pound sponsorship deal for Heineken, Guinness has been removed from all 13 host stadia. No small matter, given that Guinness accounts for half of all pints sold at Twickenham in recent years.

Procurement and Supply Chain Matters

With the increased tourism to the host cities, there is a positive knock-on effect for supply chains across the UK too. Businesses have been encouraged to work directly with organisers and tourist boards in order to ensure that they are ready for the influx of extra customers.

As might also be expected, there have been a considerable number of opportunities for businesses to get involved with supplying the tournament itself, as well as the teams. A dedicated tender portal was set up for all official opportunities and advice given to businesses to enable them to boost their chances of winning business.

England Rugby 2015 Chief Executive Debbie Jevans was quoted in 2014 as saying that companies need to be aware of the attributes England Rugby 2015 look for when deciding on procurement options.

“Awards will generally be given to companies that are suitably qualified and can provide a competitive commercial proposal, as well as a compelling service proposition,” she said.

And with awards made for all manner of things, including security, fleet management and medal making, there is huge potential for UK business to take advantage of this great opportunity and get their slice of the pie.

And We’re Off

So, with the tournament firmly up and running, and team Procurious collectively supporting Scotland, England and Australia (or if you are like this writer, hoping Scotland don’t perform as abjectly as in 2011), it’s either time to kick back and watch some matches, or avoid them at all costs.

Just don’t be one of the anticipated 4.4 million workers who will skip work just to take in a match…

Is your business benefitting from the Rugby World Cup? What does the tournament mean for you? Let us know and tell us your stories of this, and past, World Cups.

For those of you needing something other than rugby to talk about this week, here are the big headlines in procurement and supply chain…

Plunging oil prices put question mark over $1.5tn of projects

  • Plunging oil prices have rendered more than a trillion dollars of future spending on energy projects uneconomic, according to a study that suggests that the impact on industry operators is worsening.

  • A report published Monday says $1.5tn of potential investment globally — including in North America’s shale-producing heartlands — is “out of the money” at current oil prices close to $50 a barrel and unlikely to go ahead.

  • Industry operators expect capital spending on new projects to decline by between 20 and 30 per cent on average in the wake of the price slide, says Wood Mackenzie, the energy consultancy. It calculates that $220bn of investment has been cut so far, about $20bn more than it estimated two months ago and much of it the result of projects being deferred.
  • Such a decline in spending means that the price crash since last summer — the result of weaker Chinese demand, record US production and Saudi Arabia’s decision not to cut output — could resemble the savage downturn of the mid-1980s.

Read more at the Financial Times

Target supply chain woes get serious

  • Target is now taking its supply chain problems seriously. The major retailer has been struggling with running out of stock and even having empty shelves in stores. But last week, John Mulligan, the newly appointed chief operating officer, called the company’s woes “unacceptable.”
  • “We’ve been asking our supply chain to move well beyond its original design and become more flexible in the way we serve our guests,” Mulligan said. “However, while we understand the reasons, the simple fact is that our current performance is unacceptable.”
  • Target’s online ordering and in-store pickup options have reportedly magnified the retailer’s supply chain problems. The growth in online ordering could have more widespread impacts in the retail sector, where other companies’ supply chains might not be up to the task.

Read more at Spend Matters

European auditors warn over public procurement errors

  • The European Commission and member states must do more to address problems with public procurement in EU cohesion spending. The European Court of Auditors said failure to comply with public procurement rules has been a “perennial and significant source of error in EU cohesion expenditure”.
  • It also recommended payments to member states should be suspended if shortcomings on public procurement were not rectified.
  • €349 billion (£395 billion) was allocated in the area of cohesion policy through the European Regional Development Fund (ERDF), the Cohesion Fund (CF) and the European Social Fund (ESF), between 2007 and 2013. A significant part of this money was spent through public procurement, which is governed by the EU purchasing regulations.
  • The auditors’ Special Report assessed whether the European Commission and member states were taking steps to address the problem of public procurement errors in the area of cohesion policy. It examined more than 1,400 transactions between 2009 and 2013 and detected errors relating to public procurement in around 40 per cent of all projects.

Read more at Supply Management

Canada’s biggest-ever military procurement at ‘very high risk’

  • Documents obtained by CTV News suggest that the Conservative government’s plan to overhaul the Royal Canadian Navy with a multi-billion dollar procurement to replace frigates and destroyers may be in trouble.
  • According to internal documents obtained by CTV News’ Mercedes Stephenson, the “Canadian Surface Combatant” program is at “very high risk” of running over budget, behind schedule, lacking skilled manpower, and producing inadequate capabilities.
  • The documents warn there is a risk the project, “may be unable to deliver the optimal number of ships with the capabilities necessary to meet operational requirements” and that may, in turn, lead to the navy’s “inability to deliver operational effect and/or a failed procurement.”
  • Sources tell CTV News that a fixed budget, combined with increasing costs and procurement delays, mean the navy has likely already lost one or two of the promised 15 ships.

Read more at CTV News

Chill, China’s economy isn’t collapsing: China Beige Book

  • Current market perceptions of China are “thoroughly divorced” from the reality on the ground, according to the latest China Beige Book (CCB) survey, which has found that while the economy slowed in the third quarter, there are no signs of an impending growth collapse.
  • “In the aftermath of the stock market collapse and a surprise currency action in August, global sentiment on China has veered sharply bearish—too bearish,” Leland Miller, president of CBB said. “While we have long cautioned clients against relying on rosy official views of the Chinese economy, we believe sentiment has swung substantially too far in the opposite direction,” he said.
  • Corporate revenue growth, although weaker than the second quarter, actually improved over the first quarter, and was stable in on-year terms, according to CBB.
  • While manufacturing saw its weakest performance in two years, as indicated by recent purchasing managers’ index (PMI) surveys, other sectors buoyed the economy.

Read more at CNBC

Predictions For The Next Decade Of Payment Innovation

Industry experts predict how we will pay (and be paid) in 2025.

Payment innovation

A UK payment infrastructure provider has published a collaborative whitepaper – titled Moving Money 2025 – which has gathered the leading voices in the payments industry together to predict how payments could change by 2025. 

Contributors who gave their views to this report included Nationwide, Toynbee Hall, Tooley Street Research, Consult Hyperion, Financial Fraud Action UK and the UK Cards Association

The results have clearly demonstrated that, whilst we are a nation that is still getting to grips with a whole host of new ways to pay, the appetite for innovation is accelerating.  

Greater security demanded – but flexibility over identity authentication is expected

However we end up paying for things in 2025, security is the number one concern for consumers – 65 per cent identified this as their number one priority when it comes to financial transactions. Contributing experts to the paper agreed, predicting that by 2025 there will be multiple ways of authenticating identity before payment can be made. In fact, as smartphone security increases, physical payment cards are expected to become obsolete since account details will be stored on the device itself. We’ve already seen a glimpse of the impact that biometrics-initiated mobile payments could have in the future and VocaLink’s research has found 1 in 4 UK consumers would consider using biometric technology to access banking or payment services.

Advanced biometric authentication and dominance of real time payments expected to become the norm in ten years.

However, by 2025, some experts believe biometrics will be the principle method to authenticate our identities, with the usage of facial recognition in particular significantly reducing fraud and time/hassle constraints in making payments.

Real-time payments will offer certainty

Over the next ten years we will likely see an increase in adoption of immediate payments, via the Faster Payments system, as well as new innovations which build on this existing infrastructure. Larger transactions will become available on an immediate basis, particularly as the value limit on transactions rises past the current level of £100,000. This has obvious benefits for SMEs who will make and receive payment quicker, providing greater cashflow certainty and enhancing growth potential. Paying staff salaries will also be increasingly easy, as a payment can be made at the end of a week to reflect the exact hours worked with the employee receiving their salary immediately.

Empowering payers to make informed purchases in a way that suits them  

Flexibility in how we pay is already an acute need for many today. The employment market is changing with a growing number of workers reliant on multiple income flows, rather than having one steady and periodic source of income. One prediction regarding this issue is that by 2025 incomes could become even more erratic so should be met with technology that offers the necessary agility to accommodate these customers.

Similarly, another contributor to the Moving Money whitepaper believes that one of the most successful future innovations will be to make it easier to quickly ‘undo’ payments made in error to the wrong person or organisation.  This is a problem nearly 1 in 4 people in the UK, (rising to 1 in 3 for those under 45), have already experienced according to VocaLink’s consumer research. Of these, approximately three quarters eventually got their cash back whilst the rest simply did not see their money again, highlighting the need for a universal process to be devised and adopted in the event of erroneous payments.

Chris Dunne – Director at VocaLink commented: “The UK is in a fantastic position to make real time payments and all these other predictions a reality over the next decade. We have a world class digital payments infrastructure and this puts us at a distinct advantage – however if we are to stay ahead of the crowd, it is vital we start laying groundwork for the future now.”

“The collective insight of this whitepaper has shown us what we could and should be able to achieve in the payments sphere. Disparate corners of the UK’s society and economy will benefit hugely if we can map their needs against the evolution of the UK’s payment system and the burgeoning technology that supports it. This collaborative effort is only the beginning; we are keen to catalyse discussion across all relevant parties about what comes next and set the wheels in motion to make future payment technology a reality.”

Market Intelligence: How to Find Information to Supercharge Your Sourcing

How to Find Information to Supercharge Your Sourcing
Supercharge your sourcing!

By Connor Cantrell, The Hackett Group Strategy & Operations Consultant.

Gaining market intelligence is a recognised way to both develop and support strategic sourcing decisions that will ultimately pay dividends for an organisation. However, the ability to gather market, supplier and industry information that is both accurate and timely is a challenge many organisations face. Understanding the core components, and creating a library of tools and resources to effectively collect this information, will enable an organisation to promote a culture of informed decision-making and support efficient third-party supplier relationships.

Core Components of Market Intelligence

Three types of intelligence can be collected to optimise your strategic sourcing and business performance: market research, competitive intelligence and market intelligence. Market research covers a broad range of applications and techniques for gathering, storing, analysing and providing access to data, while competitive intelligence is the process of obtaining information for strategic purposes. Although, understanding and applying all 3 areas will ensure optimised decision-making, for purposes of supercharging a company’s sourcing processes, this article will focus on market intelligence.

Market Intelligence

Developing market intelligence includes elements of market research and competitive intelligence, but is largely defined by the process of gathering and analysing information relevant to a company’s supply markets, specifically for the purpose of supporting accurate and confident decision-making in the procurement process.

The potential benefits can be “bucketed” into 2 main categories: gaining external awareness and developing data to better support internal planning. It is imperative that an organisation has the ability to view the external marketplace in order to gather data on supply market capabilities, observe how the competition is developing and managing their supply base and supply chain, as well as understand key trends impacting or occurring within the market. On the flip side, it’s critical that an organisation effectively synthesises the external environment to refine internal product plans, identify competitive opportunities and execute enhanced sourcing strategies in support of the organisation’s stated strategy and business requirements.

The ability to simultaneously pair the external awareness capability with internal planning allows an organisation to effectively leverage buying power, which in turn will provide a competitive edge in the marketplace.

Market Intelligence: How to Find Information to Supercharge Your Sourcing

Library of Tools

While the benefits of market intelligence are visible and apparent, a common struggle for many organisations is finding pertinent information from credible sources. These difficulties may include: supply data for spend categories not readily available, biased information or a lack of knowledge on where to begin. Luckily, market research sources exist across multiple dimensions and avenues. There is not a “golden rule” on how to start or where to research. Several examples of sources and types of research are outlined below:

Market Intelligence: How to Find Information to Supercharge Your Sourcing

These resources are not all-inclusive, and as you define your research process, you can customise the process to fit your organisation’s needs and extend your reach. A great way to grow your resource base is to review known sources for additional material. For example, what sources are cited in a quarterly report on a particular commodity or service – where do they get their data? However, it is important to keep in mind not all of these resources will be in-scope. Also, remember to prioritise resources in a way that enables you to identify useful, timely research in a cost-effective manner.

Market Intelligence: How to Find Information to Supercharge Your Sourcing

Going Forward

Market intelligence allows category managers to make credible, data-driven strategic sourcing and supply base decisions by leveraging a wealth of market facts and data. We can’t do our jobs effectively without constantly staying abreast of relevant industry, market and competitive developments. If you want to test your knowledge on a particular commodity – go back to the home page of Spend Matters and type the commodity name (goods or services) into the search bar. See what comes up, who is publishing it, and what is happening that is relevant to your work. It’s a great starting point for developing your subject matter expertise!

In summary, it’s important to explore the plethora of resources available in order to categorise and tailor your research to meet the specific requirements of both your commodity/service and the organisation. Your team will increase its strategic sourcing capabilities and buying power by supercharging your market intelligence and continuously updating its market, industry and competitive knowledge to create value for the organisation.

2015 Dow Jones Sustainability Index (DJSI) Results Revealed

24 companies have been named as Industry Group Leaders – but who made the cut?

Results of Dow Jones Sustainability Index?

The first Dow Jones Sustainability indices (DJSI) date back to 1999, and have been compiled annually by S&P Dow Jones and RobecoSAM (a sustainable investment specialty firm) ever since.

The three largest additions and deletions to the DJSI World this year include:

Additions: Bank of America Corp, Telefonica SA, BHP Billiton Ltd Deletions: Cisco Systems Inc, PepsiCo Inc, Royal Bank of Canada

Guido Giese – Head of Indices, RobecoSAM, commented: “Over the years the DJSI index family has not only come to be the gold standard for corporate sustainability but has also become a competitive platform where companies receive recognition for their sustainability practices. The CSA is a state of the art, in-depth sustainability performance assessment methodology. Thanks to its broad reach, the results of the CSA are one of the leading sources of information on how listed companies around the globe are exercising financially material ESG practices. The entire DJSI index family benefits from that.”

And the Corporate Sustainability Leaders of 2015-2016 are…

The Dow Jones Sustainability World Index tracks the financial performance of companies that lead their respective industries in managing economic, environmental and social issues with a strong focus on long-term shareholder value. It focuses specifically on the top 10 per cent of the 2,500 largest companies in the S&P Global Broad Market Index.

For each of the 24 industry groups represented in the Index, one organisation is crowned leader. The 2015-2016 leaders are shown below:

Dow Jones Industry Leaders

 

Out of the results, Unilever put on the most impressive show –  leading or jointly leading the industry in eight of the 23 Food Products criteria, including: Innovation Management; Strategy for Emerging Markets; Climate Strategy; Packaging; and Talent Attraction & Retention.

Action needs an audience

One of the companies involved – AkzoNobel, penned an article on the importance of being represented in the DJSI.  Citing it provides them with a useful roadmap for where to drive improvements, and aids in advancing areas like innovation, resource efficiency, product safety, customer focus and commercial excellence.

Furthermore: “It promotes internal collaboration helping to start conversations across different departments and functions that might not otherwise have happened. This involves leaders and experts coming together from across the business to exchange ideas, helping to spark new ideas for sustainable solutions… It is important to take action, because if companies don’t make progress and adopt a continuous improvement mindset, they’ll drop down the list or fall off it altogether”. The company also offers other incentives, like renumeration packages for executives involved in the work.

David Blitzer – Managing Director and Chairman of the Index
Committee at S&P Dow Jones Indices, added: “More and more investors look at companies’ environmental policies and track records in making their investment decisions. The Dow Jones Sustainability Indices are comprehensive benchmarks that allow investors to gauge the collective performance of those companies that meet the RobecoSAM standard for corporate sustainability and to formulate global allocations consistent with sustainable investment standards and practices.”

Inside China’s Red Supply Chain

Does China’s emerging ‘red supply chain’ pose a threat to the wider tech industry?

China's red supply chain

The emergence of a ‘red supply chain’ in China is exerting increasing pressure on existing suppliers in the fiercely-competitive technology sector. The move to cultivate a domestic supply chain is the brainchild of Chinese authorities and is looked upon as providing a much-needed shot in the arm to the country’s tech manufacturing sector.  Great news for China and its economy, less so for the countries that rely on China’s trade such as Taiwan.

Do you prefer your chips salty… or with an added sprinkle of competition?

Taiwan is feeling particularly threatened as this means China will depend less and less on imported parts (such as semiconductors and their ilk). And while predictions from some quarters point to Taiwan’s IT industry being replaced in the near future, others are confident in Taiwanese companies’ ability to sustain lead with smart manufacturing technologies.

Plans were also unveiled in May to set a 10-year plan in motion that would revolutionise manufacturing. The “Made In China 2025” initiative will be underpinned by smart technology and help China to shed its tired image and repackage itself as a respected player on the world’s stage.  With $20 billion already in the pot, a further $161 billion investment over the next decade will help to move China further away from its dependence on imported chips.

Earlier this year Chinese Vice Premier Ma Kai – speaking at CeBit, the world’s largest ICT trade fair, commented: “China intends to implement Made in China 2025 – which will change it from being just a big production country to a very powerful production country… Support for ICT, and innovative breakthroughs in ICT, will be an important link in this chain.”

China’s ability to manufacture chips on its own doorstep will no doubt send shockwaves through PC, smartphone, and tablet supply chains. Taiwan has long been the go-to for semiconductors, and is a highly profitable sector of the Taiwanese economy. The sector is currently valued at $70 billion and is expected to grow a further 5.5 per cent over the coming year.

In quotes obtained by Taiwan Business TOPICS Magazine, Christopher Thomas – co-head of consultancy McKinsey & Company’s Asia semiconductor practice, said that: “China’s increasing importance as a designer and manufacturer of ICs will not necessarily displace other semiconductor centers of excellence.” Adding that while Chinese IC firms enjoy important advantages, such as state support and proximity to a big mainland customer base, they are also “built for speed.”. He goes on to comment: “Chinese semiconductor makers are nimble, responsive, and with rapid design cycles, a good fit for the fast-moving mobile phone and consumer electronics markets.”

In a further twist of intrigue Taiwan has relaxed curbs on its own companies setting up semiconductor manufacturing plants in China, – a move that enables them to better compete for mainland clients.

According to Reuters, the Taiwanese economics ministry is now allowing a maximum of three wholly-owned 12-inch wafer foundries to be set up in China by Taiwanese companies, easing previous rules that limited such investments to mostly older technology and to joint ventures.

With global technology powerhouses like Samsung and Qualcomm already setting out stalls in China, along with Dell’s recently announced plans to invest $125 billion over the next 5 years – it is set to be an interesting few years indeed…

More information on the issues highlighted in this story can be found in a newly-published report that analyses the driving factors behind China’s red supply chain, along with Taiwan’s view on the emerging situation.