All posts by Procurious HQ

Suppliers Are Key to Disruptive Innovation

A new study shows there is increasing focus on Supplier-Enabled Innovation (SEI) among global sourcing and procurement executives.

Procurement Leaders new study sheds light on disruptive innovation

New research by Procurement Leaders has detailed that procurement is a key enabler of corporate innovation thanks to the connectivity it enjoys with suppliers and key business stakeholders.

According to the Chief Procurement Officers polled, procurement is engaged in a new role that takes responsibility for connecting capability in the supply base with stakeholder and consumer need. In doing so – it opens the doors to the benefits of Supplier-Enabled Innovation (SEI).

“Tapping into the enormous capability of the thousands of suppliers with whom we do business is perhaps the single largest opportunity procurement has,” said John Paterson, Chairman of the Procurement Leaders Advisory Board and the former Chief Procurement Officer of IBM.

The Procurement Leaders Supplier-Enabled Innovation Compass explores 22 different activities that can be used to unlock innovation from suppliers; and found that connectivity with suppliers and consumers and the use of technology are key enablers to success.

Key findings include:

  • Trail-blazers in SEI put a large emphasis on the time procurement spends with its key suppliers.
  • Procurement must better understand consumer needs and aspirations if it is to successfully deliver results through SEI.

Procurement must see innovation as a formal, disciplined process if it is to achieve success, yet only 34 per cent do.

Jonathan Webb, Head of Strategy Research at Procurement Leaders and the report’s author, said: “We knew procurement had a significant role to play in helping to build the future product pipelines of their companies. Now we know how they should go about it, and the future potential is huge when you understand that some of our members expect more than a third of their product pipelines to come from SEI.”

The research involved quantitative research and in-depth interviews among members of the Procurement Leaders community.

Do you count yourself as a member of Procurement Leaders? Procurious has just added functionality that allows you to display a Badge on your profile page. Click here to add your Procurement Leaders Badge now.

3D Printing – The End of Outsourcing?

From golf clubs to firearms, pharmaceuticals to trainers, 3D Printing is disrupting the manufacturing process of an increasing number of products. But what are the long-term implications for the supply chain as a whole?

3D Printing - The End of Outsourcing?

It’s a common misconception that 3D printing is something new. Although the processes and thinking for it have been around for a number of years, it’s taken a while for the technology to catch up and allow wider functionality and usage.

As a procurement and supply chain professional, this opens up a world of possibilities – a world of potential cost savings as a result of lower manufacturing costs and a centralised supply chain. Of course this isn’t going to happen overnight, but organisations can start to think differently.

The End Outsourced Manufacturing?

Manufacturing in particular has the potential to see a big change. The advances in 3D Printing can allow certain products to be made in house, instead of being outsourced to ‘low cost’ countries. While good news for organisations bringing more jobs back home, it doesn’t provide a rosy outlook for countries like Mexico and China, traditionally strongholds for low-cost manufacturing.

By bringing manufacturing closer to home, it also gives organisations an opportunity to reduce risk in their logistics, reduce lead-times and make savings on transportation costs. Plus, there’s the lower carbon footprint of global activities as an added bonus. This is all illustrated in this neat infographic.

3d printing supply chain infographic

In the pharmaceutical industry, manufacturers are using 3D Printing to improve medicines delivery systems for patients. Printers are being used to produce pyramid-shaped pills, which provide a more rapid drug release than cylindrical pills, and layered tablets that dissolve quicker and more efficiently.

While these processes are still in their infancy, manufacturers are hopeful that technology and science will work hand in hand, lowering production costs, enabling local production and, in the long run, reducing the end cost for patients.

Changes in the Supply Chain

Beyond enabling organisations to bring manufacturing back to a local setting, lowering logistics and transportation risks and costs and even maybe reducing globalisation as a whole, there are other impacts in the supply chain to think about.

Organisations will be able to produce prototypes of designs much faster than before and facilitate testing by being able to print on site. Organisations will also be able to print packaging materials, more tailored to certain products, as well as tools, jigs and other aids for manufacturing.

Finally, the requirement to hold inventory can be reduced by having designs for applicable products and other parts held on a hard drive, ready to be printed on demand, rather than physically stored in a warehouse.

Beware the Magic Bullet

A word of warning, though. As great as all this sounds, there are still risks and issues that need to be considered with 3D Printing.

Protection of copyright and security of patents is a big deal when all the designs are held on a hard drive that could be hacked from outside the organisation. Some organisations have taken steps to protect their intellectual property, but can you be 100 per cent sure you’re safe from cyber attack?

On the environmental side, although footprints are lowered for transportation, the need for printers to run continuously to be cost-effective means increased energy usage and costs. This would lead also to increased carbon footprints for local factories.

Finally, with greater efficiencies in the supply chain, reduced transportation requirements and potentially fewer warehouses, where does that leave the supply chain manager? If parts are going to be printed on site as required, there isn’t going to be the need for someone to manage an end-to-end process.

Best learn how to use the printers then!

Do you work in an industry that’s seen an increase in 3D Printing? Do you work with printers – have we missed any big benefits? Let us know and get involved in the discussion! 

Meanwhile, we’ve been very good to you again this week and rounded up all the stories you need to be reading in procurement and supply chain.

Tapping into the ‘big data’ that can help Greek supply chains to be more agile

  • Supply chain platform provider GT Nexus has begun tapping into the big data that has accumulated in its system to help shippers, carriers and forwarders provide “assurance of supply”.
  • In an interview prompted by the possibility of a Greek exit from the Eurozone, GT Nexus’s EMEA director of marketing, Boris Felgendreher, said the Greek crisis bore all the hallmarks of major disruption – the sort that shows the limitations of supply chain planning.
  • “This sort of situation puts a premium on being agile, in respect of companies being able to move from one sourcing location to another, and that is always difficult. This particular disruption has an added element in that it is financial,” said Felgendreher, alluding to the fears of a ‘Grexit’ and the problems Greek companies have with making and receiving payments.
  • And although Greece itself has accepted the terms of its bailout, a number of Eurozone countries have still to ratify the deal, meaning the threat of a Greek exit persists. However, Mr Felgendreher explained that a recent development by GT Nexus could offer firms a way to circumvent these issues through a “fusion of the physical and financial supply chains”, following an agreement between the platform developer and trade finance solutions provider SeaburyTFX.

Read more at The Loadstar

UK food supply chain on the brink

  • Much of the UK’s food supply market is on the brink of collapse as the UK’s largest supermarkets continue to slash prices, according to business recovery specialists Begbies Traynor.
  • The recovery firm said that delaying payments to suppliers means that the food retail industry has never been tougher for the UK’s smallest food suppliers, independent grocers and farmers.
  • According to Begbies Traynor’s Red Flag Alert research for Q2 2015, which monitors the financial health of UK companies, the UK’s food retailers continue to experience rising ‘Significant’ financial distress, increasing 38 per cent to 5,258 struggling businesses over the past year (Q2 2014: 3,804), 97 per cent of which (5092) are SMEs. However in reality the UK’s food supply chain that keeps these stores stocked is by far the biggest loser.
  • During Q2 2015, the UK Food and Beverage Manufacturers, which include many of the food suppliers and farmers that supply the major UK headquartered supermarkets, witnessed the highest year on year increase in ‘Significant’ distress of all sectors monitored by the Red Flag research, rising 54 per cent, with 1,622 companies now struggling to make ends meet; up from 1,052 at the same stage last year.

Read more at Fresh business thinking

Mercedes revamps supply chain, logistics to trim costs

  • Mercedes-Benz aims to reduce logistics costs by about 20 per cent per vehicle as the company invests hundreds of millions of euros in a sweeping global reorganisation of its supply chain network.
  • The automaker has increased production outside of its German home over the past decade but many of the components used in its cars are still sourced from Europe. The shift has increasingly stretched its supply chain because of the distances parts have to travel, placing a bigger strain on a system that is already trying to cope with record demand.
  • Logistics is a “very significant” cost position, according to Mercedes production and supply chain boss Markus Schaefer, who said supply chain costs can exceed manufacturing costs in some of the division’s lower-wage plants.
  • “With more than 30 vehicle derivatives each built from several thousand parts, the complexity is immense,” Schaefer told reporters in Speyer, Germany, where the carmaker last week opened a 90 million-euro consolidation center. Here components from European suppliers will be consolidated and repacked more efficiently for shipping abroad to Mercedes plants in China, the U.S., and South Africa.
  • Mercedes may establish similar centers in growth regions like China and North America, the company said in a statement.

Read more at Automotive News

McDonalds vow to end deforestation in its global supply chain

  • McDonald’s, the world’s largest chain of hamburger restaurants, has recently announced a huge global commitment on deforestation across the company’s expansive global supply chain.
  • The commitment builds upon McDonald’s Framework and longstanding leadership in the area of sustainable sourcing. The pledge encompasses all of the company’s products and focuses on beef, fibre-based packaging, coffee, palm oil, and poultry for which the company will begin developing specific time-bound sourcing targets in 2015.
  • McDonald’s will continue working collaboratively with a broad range of stakeholders, including suppliers, governments and NGO partners, to develop long-term solutions designed to combat deforestation around the world.
  • Francesca DeBiase, Senior Vice President of McDonald’s Worldwide Supply Chain and Sustainability, said: “This commitment to end deforestation demonstrates another major step for McDonald’s as we work to increasingly embed sustainability throughout our global business. Making this pledge is the right thing to do for our company, the planet and the communities in which our supply chain operates. We’re excited to continue collaborating with our supplier partners to achieve our goals.”

Read more at Supply Chain Digital

Could North Sea Cod Be Back On The Menu?

A recent assessment of fish stocks indicate that cod might soon lose its ‘fish to avoid’ status as the fish’s population is growing at a near-sustainable rate.

Cod levels in the North Sea have returned to healthy status

The International Council for the Exploration of the Sea (ICES) has delivered an overview of the status of a host of fish and shellfish stocks across the Northeast Atlantic.

The Marine Conversation Society introduced tight controls on cod and plaice in 2006 owing to dwindling supplies, but those limits look set to soon be lifted thanks to the healthy numbers revealed in the new report.

The general picture indicates that the level of exploitation brought about by decades of overfishing has now been reduced. This has been determined in accordance with the advice provided by ICES and in line with management objectives for sustainable fisheries.

​​​​​​​​​​​The Chair of ICES Advisory Committee, Eskild Kirkegaard, said: “Over the last ten to fifteen years, we have seen a general decline in fishing mortality in the Northeast Atlantic and the Baltic Sea. The stocks have reacted positively to the reduced exploitation and we’re observing growing trends in stock sizes for most of the commercially important stocks.”

For the majority of stocks, it has been observed that fishing mortality has decreased to a level consistent with Maximum Sustainable Yield (MSY) – meaning levels that are not only sustainable but will also deliver high long term yields. The information encompasses around 150 stocks, of which cod and plaice were among their number.

In technical terms North Sea cod has seen a downturn in fishing mortality and an upturn in Spawning Stock Biomass (SSB) – which [crucially] means cod stocks are increasing, whereas North Sea plaice is now considered to have reached record high levels.

According to various sources the Marine Conservation Society have welcomed the news and are currently looking at improving cod’s rating in the coming weeks. It was originally feared that the diminished supplies, coupled with the increase in demand, would result in significant price-hikes come fish Friday. With the healthier picture coming out of the North Sea, it now looks like the UK (at least) will escape such a fate. However it’s a different story for the Mediterranean where latest estimates claim 91 per cent of the region’s stock is overfished.

20 Most Promising Procurement Solution Providers in 2015

Which companies have been recognised among CIO Review’s Twenty Most Promising Procurement Solution Providers?

Who's made it into the Top 20?

CIO Review has published their list of the ‘Twenty Most Promising Procurement Solution Providers in 2015’.

The list of best in class providers features supply chain qualification leader, BROWZ along with other industry favourites; Ariba, SciQuest and Zycus to name a few.  A complete listing of recognised providers can be found in this month’s edition of CIO Review.

CIO Review is a US technology magazine that informs readers on the enterprise solutions that will define the businesses of the future.

According to the publisher: “We present you with the 20 most promising procurement solution providers of 2015, featuring the best solution and service providers offering tools and services on the procurement landscape. The companies featured in this issue, have exhibited extensive business process knowledge combined with innovative strategies. A distinguished panel comprising of CEOs, CIOs, and analysts including the CIO Review editorial board have selected the top companies that are at the forefront of tackling challenges in the procurement landscape.”

Elaine Beitler, BROWZ, CEO, says “As a former CIO, I valued this magazine as a resource for information on new innovative technology solutions that could be applied strategically to advance the business. I’m proud of this accomplishment and congratulate all of those being recognized in this impressive list of companies.”

In addition to being named one of the ‘Twenty Most Promising Procurement Solution Providers in 2015,’ BROWZ is highlighted in a four page article of the magazine. In the article, Beitler discusses the challenges organizations face today when hiring and qualifying contractors and suppliers.

“Contractor screening is only one part of the equation,” says Beitler. “We’ve created a global compliance network that connects buyers and suppliers of goods and services. We work to ensure buyers have the solutions in place, to not only screen, but manage the ongoing compliance of their supply chain. Most organizations don’t have the resources or tools necessary to do an adequate job, especially once a bid has been awarded. We’re working with the world’s largest companies – ensuring they have safe, qualified and socially responsible supply chains. This is only possible when you have an end to end solution to address the risk that exists at all levels of the supply chain.”

What Are We Doing To Create Communities Of Practice?

Watch the Procurious Big Ideas Panel Discussion on working together to elevate procurement.

The fourth of the Big Ideas Summit panel discussions built on Tania Seary’s keynote speech and the idea of collaboration across the procurement profession. David Noble, Tania Seary, Diego Barilla and Sue Steele discuss what can be done to bring a dispersed community together.

Watch a sample below

From spend entrepreneurship to professional accreditation and certification, the panel threw up some interesting questions and answers and got the wider group thinking about how we can help to map our future.

Procurious members can view the full panel discussion here. Not a member yet? Register for free.

Procurious talks to Kylie Towie – ‘Procurement Leader of the Year’ 2015

Procurement Leaders 'Procurement Leader of the Year' Kylie Towie

They say that Texas is big. If you’ve been to Western Australia (WA) you’ll know that ‘big’ is a relative term. Western Australia’s size is so vast that Texas would fit within its boundaries three times, with still enough room left over for California and Connecticut to come visit. For the Europeans out there, Western Australia is as big as France, Germany, Spain, Poland, Italy, Greece, Portugal and Ireland combined.

It is from this vast part of the world that the 2015 Procurement Leader of the Year hails.

Kylie Towie is the Chief Procurement Officer of WA Health, the government agency responsible for providing health care to this enormous state and was recently awarded the prestigious title of ‘Procurement Leader of the Year’ at the Procurement Leaders Forum in London.

Kylie graciously took some time to catch up with Procurious to discuss her achievement.

Procurious: Kylie, first of all, congratulations. It is a huge honour to have been recognised as the Procurement Leader of the Year. Can you tell us what it means to you to take out this coveted award?

Kylie: Thank you. To be completely honest, it was a huge honour just to be nominated for the award. The other nominees (Kellogg’s, ITV), along with companies in the room such as Kimberley Clark, Unilever and IBM are global industry leaders and to be mentioned in the same breath as such high calibre organisations was a great achievement.

In terms of the award itself, it is a fantastic feeling to know that the work we’ve been doing at WA Health not only positions us as a leader in the Australian public sector (the department has also been recognised for it’s performance domestically), but is seen by the profession globally as something that is contemporary and leading the way in transformational procurement.

Procurious: Can you give us some background to the projects you’ve been working on at WA Health?

Kylie: My tenure at WA Health hasn’t been a long one. I was parachuted in, back in January 2014, to address some identified issues with the department’s procurement processes.

My first task was to establish a picture of the WA Health procurement landscape. Despite an organisational budget in excess of $8 billion (AUD); there wasn’t a clear view of what was happening from a procurement perspective within the organisation.

The department was also in the midst of constructing two new world-class hospital facilities at a cost of seven billion dollars. So procurement and spending was at the front of everyone’s mind.

When you’ve got programs of that magnitude, it clearly puts pressure on the procurement environment. For us, it was a matter of understanding and determining the levers and mechanisms we could utilise, to ensure the business’s strategic goals would be achieved.

Procurious: You’ve just mentioned that you were able to link procurement activities directly to organisational goals; can you expand on that? 

Kylie: At WA Health, we refer to procurement as business leaders and strategy leaders rather than procurement leaders. We aim to act as enablers to ensure the organisation meets its business objectives.

I have found that if you spend too much time ‘talking procurement’ you quickly get labelled as ‘back office’ rather than being viewed as a strategic leader.

The way that I see it, procurement underpins any business decision you make. Any business strategy requires a solid procurement strategy to sit beneath it.

As procurement professionals, it’s our job to lift the conversation up a level. If you start to talk about business levers, value propositions and achieving strategic objectives rather than discussing supply, invoicing and cost savings, you’ll quickly change perspectives about the function and the value it can bring to an organisation. By making simple changes to your dialogue, you’ll find that business partners will see you in a very different light.

Procurious: How did you go about delivering the transformational change program at Western Australian Health?

Kylie: Stakeholder engagement was critical. Doctors, nurses and clinicians are rightfully concerned with one thing: Better patient outcomes. At times, business and procurement processes can be seen as a burden or a roadblock to health professionals getting what they need to do their jobs. Obviously in health, the ability to get the right equipment or product at the right time has the potential to save lives. It was critical, that in order to be seen as enabler, rather than a roadblock, we engaged closely with these practitioners.

At the beginning of the transformation process, I met with a number of the most senior clinicians from across the state to discuss their problems and determine how, with smart procurement, we could help to solve them.

I found that by shifting our conversations back to the patient, I got immediate buy-in. Everyone at WA Health is working towards better patient outcomes and a healthier Western Australia, that’s our modus operandi. So now, as a procurement function, every time we make a decision, we ask ourselves “how does this serve our patients and our community?”

By asking these questions we are immediately aligning ourselves with our organisations goals and our community’s expectations.

Once we had an overview of what needed to be done, I set out to instil four fundamental procurement pillars that would guide our team through the transformation. The pillars we revolved our operations around were, governance, capability and capacity, training and education, and monitoring and evaluation. I have used the same framework to great effect in every procurement transformation I’ve run.

Off the back of these pillars, we identified 24 strategic recommendations, which resulted in 62 separate procurement improvement projects. We took a systemic approach to addressing these projects and finally delivered all 62 by the 19th of July this year (a remarkable 12 month turn around).

The transformation process means that WA Health now has a very robust foundation for procurement processes and activities with clearly defined roles and responsibilities. It’s also helped us improve our relationships with our providers and vendors.

Procurious: How is Procurement now perceived within WA Health?

Kylie: I think the critical success factor here is that we now have a seat at the executive table and are viewed as essential in the strategic planning of the organisation. This shows that we’ve earned the trust of the organisation. We earned this trust by pointing out where the department was exposed from a legislative point of view, but more importantly, by pointing out the holes in their fiscal buckets and, providing value through robust strategic business advice through procurement solutions that meet our organisations goals.

We were quickly able to point out where financial leakages were occurring. But more than that, we were able to suggest minor changes that stopped these leakages. We also quantified the dollar impact that implementing the changes had made to the organisation. Needless to say, after this, we found that we very quickly got the buy-in we needed.

As I mentioned earlier, another critical factor that lifted our perception was changing the way we spoke about our work. We’ve lifted the level of our conversations up to a point where we are now addressing real business problems faced by the department. By speaking their language, we’ve earned their trust. The procurement department is now seen as a trusted business partner at WA Health.

Kylie, once again, we would like to congratulate you again on this fantastic achievement and thank you for taking the time to share your story with Procurious. This there anything else you’d like to add?

Kylie: I would like to give some praise to my team here at WA Health. They have been remarkable; there is no other word for it.

We are only a small team, but they are the most outstanding, passionate, committed, driven group of individuals you are ever likely to meet. You simply can’t achieve things like this alone; you need people who share your passion and your drive. I really can’t speak highly enough of them.

Apple Pay ushers in a new dawn of payments on the go

Apple Pay has launched in the UK amid increased demand for smart wallets and connected services.

Apple Pay has launched in the UK

Apple Pay is now live in the UK – the first country outside of the US to offer the contactless payment service.  For the launch both Visa and MasterCard have announced they will offer cardholders immediate access to the new service, granting them the freedom to use their cards where and how they want with a seamless experience.

Security and privacy is at the core of Apple Pay. When you add a credit or debit card to Apple Pay, the actual card numbers are not stored on the device, nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your device. Each transaction is authorised with a one-time unique dynamic security code.

Mark Barnett, President of MasterCard UK & Ireland, said of the launch: “Innovation in UK payments means it’s fast becoming the most advanced market in the world and the arrival of Apple Pay heralds this new era. We will see more change in the next five years than we’ve seen in the last 50, bringing even more convenience and security for consumers.”

Steve Perry, Chief Digital Officer at Visa Europe, comments on the rollout: “Apple’s entry to the market represents a critical piece of the mobile payments jigsaw. This is a pivotal moment for digital payments and one that demonstrates the momentum behind mobile and contactless services.

“Visa Europe has led the rollout of NFC payments ever since we launched the first contactless cards and terminals in 2007. Today there are more than 1.5 million Visa contactless terminals in stores across Europe – all ready to take mobile payments. Apple’s decision to enter the market reflects the scale of opportunity that exists in digital payments today. Its support will drive awareness and usage of contactless services around the world – we anticipate a “halo effect” that will benefit all players in the mobile payments ecosystem.”

Are there other players too?

Indeed. It’s not just Apple innovating in the digital payment sector… Elsewhere, Android Pay is also vying for dominance in this lucrative space.

Android Pay is Google’s direct response to Apple’s mobile payment system, and a successor to Google Wallet, which (notably) has gained little traction over the past four years. Samsung Pay is also set to debut this September in both the handset maker’s own territory and the US.

And although Apple has dominated the lion’s share of the headlines, banks, card providers and retailers are keen to ensure they don’t get left behind – with each championing a digital payment system of their own. Zapp will soon allow those with older smartphones to make bank debit payments, Barclays’ customers can use Pingit and PayM, while Visa card holders are also able to take advantage of the V.Me service.

Of course if you’re after a complete card replacement then you’d be wise to look at Wocket is doing. Wocket has been designed to protect your identity and replace your old wallet. It can save all of your cards to one place, securing their details with a combination of pin and biometric voice print technology.

But it’s not just your wallet that’s getting an upgrade… At Mobile World Congress Shanghai 2015 – Visa unveiled its first foray into connected car commerce. The proof-of-concept solution is powered by Visa Checkout (and other innovative mobile technologies) to create in-car purchase experiences that are secure, convenient and easy. If successful it is envisaged to be applied to quick service restaurants, petrol stations, car hire and parking services.