All posts by Procurious HQ

Digital Transformation Skill Gap Shock

Only six per cent  of CPOs possess the strategic leadership trait of being able to lead digital and analytical transformation in their organisation. What’s going on with the skill gap?

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It seems that everyone’s talking about digital transformation. Every procurement team globally lies somewhere on the maturity curve that begins at one end with 1990s-style manual processes, to world-beating teams who are embracing tech enablers such as predictive analytics and cognitive technology. Procurement publications (including this one) are writing article after article about the wave of exciting new technology coming down the Industry 4.0 pipeline, while the profession’s biggest conferences always have digital transformation experts high on the agenda.

Key findings in Deloitte’s 2018 Global Chief Procurement Officer Survey, however, suggest that digital transformation isn’t as high as priority for CPOs as we might think. When just over 500 procurement leaders across 39 countries were asked to identify the most common leadership traits in procurement, they listed:

  • acting as a role model – 23 per cent
  • collaborating internally and externally to deliver value – 20 per cent
  • delivering results – 14 per cent

Yet, as the report points out, strategic leadership traits are not widely evident:

  • positive disruption – 5 per cent
  • leading digital and analytical transformation – 6 per cent
  • innovation – 8 per cent

Similarly, modern technology usage is low, with only one-third of those surveyed using technologies such as predictive analytics and collaboration networks. Only one-third of procurement leaders believe that their digital procurement strategy will enable them to deliver on their objectives and value, even though analytics was nominated as the single factor that will have the most impact on procurement in the next two years.

The authors call out these disappointing results twice in the report:

“Progress and adoption has been slow over the past year and the survey findings show that procurement leaders remain hesitant about investigating new digital tools and technologies such as artificial intelligence, robotics and blockchain.”

“Despite recognising digital technologies, their impact and imminent uses, few organisations appear to be progressing at the rate that their c-suite executives consider necessary for achieving overall goals. Indeed, in the majority of areas, the level of impact has declined and the forecast application of new technologies is low … The level and speed of digitalisation across procurement functions is lower than expected and needed.”

So, what’s going on? The answer might be found within the report itself, across the following three areas:

  1. CPOs don’t know where to begin

The main barriers to the effective application of digital technology identified in the report include a lack of data integration (46 per cent), quality of data (45 per cent) and a limited understand of data technology (27 per cent). This suggests that one of the reasons for the disappointing adoption of technology is that CPOs are still coming to terms with the overwhelming task of getting their house (their data) in order before they can effectively roll out a tech enabler such as cognitive procurement.

  1. CPOs are losing faith in their digital strategy

Deloitte found that only 4 per cent of procurement leaders believe that procurement has a big influence in delivering their organisation’s overall digital strategy. Only 6 per cent believe their digital strategy will help them to fully deliver on their objectives and improve enterprise value, while only 18 per cent have a digital procurement strategy supported by a complete business case. The trend in the report appears to be that procurement leaders are struggling to understand the impact of digital technology. One of the stand-out pieces of commentary in the report contains the following:

“Applying digital technologies to the procurement function will enable strategic sourcing to become more predictive, transactional procurement to become more automated, supplier management to become more proactive, and procurement operations to become more intelligent.”

 3. CPOs are not investing in digital capability

Remember last year’s report? The main callout in 2017 was that 60 per cent of CPOs didn’t believe their teams had sufficient capabilities to deliver on their procurement strategy. This figure has improved slightly and now sits at 51 per cent, yet digital skills still remain a red flag. The report found that nearly three-quarters of those surveyed said that their procurement teams possess little or no capability to maximise the use of current and future digital technologies, but only 16 per cent of procurement leaders are focusing on enhancing the digital skills of their teams. Overall, 72 per cent of CPOs are spending less than 2 per cent of their operating budgets on training and development programs for their teams.

Download the full report here: https://www2.deloitte.com/uk/en/pages/operations/articles/cpo-survey.html


In other news this week:

 

Procurious celebrates International Women’s Day – Get Involved!

  • Women account for just 20-35 per cent of procurement association memberships, represent just 30 per cent of procurement conference attendees and 20 per cent of speakers, and earn up to 31 per cent less than their male counterparts
  • To address this disparity, we founded Bravo, a Procurious group that celebrates and promotes the contributions of women in procurement last year
  • Ahead of International Women’s Day on 8th March 2018 Procurious are running a new campaign, “A Wise Woman Once Told Me…”.  We want procurement pros across the globe to take part and  finish that sentence.  Write the best advice you’ve been given by a woman, be it a colleague, mentor, friend or family member and share your advice on both Twitter (Tagging @Procurious_ and #Bravoprocurement) and in the Bravo group on Procurious 
  • We’ll be amplifying all of your great advice to the global procurement community and, to encourage more procurement pros to join Bravo Movement, we’ll donate £1 to Action Aid for every person that joins Bravo before 10th March 2018

Contact Laura Ross via [email protected] to request your  “A Wise Woman Once Told Me…” digital kit.

 

KFC Supply Chain Cock-Up Continues

  • KFC has yet to reopen all of its UK stores after nearly 700 of the the fast food chain’s 900 stores were shut down after the company ran out of chicken last week.
  • Speculation about what went wrong has focused on DHL, which had taken over the contract only one week previously. DHL has one centralised warehouse in contrast to the previous contractor, Bidvest, which operated from six.
  • The hashtag has been trending on Twitter, while KFC’s marketing team has been praised for its handling of the crisis.

Read more: http://www.wired.co.uk/article/kfc-chicken-crisis-shortage-supply-chain-logistics-experts

 

Trump announces steel and aluminium tariffs

  • President Trump has announced a 25 per cent tariff on imported steel and a 10 per cent tariff on imported aluminium.
  • The tariffs are designed to punish China for what the White House has described as unfair trade practices, while reducing blue-collar job losses and wage stagnation.
  • U.S. steel production has fallen from 100 million to 82 million metric tonnes over the past decade, with imports increasing in consequence.

Read more: Reuters

When the Data Strategies Align….

There is a growing need for consuming data almost at the same time as the data gets generated – but how do you get your procurement data strategy straight, and align it with the corporate strategy?

There are many factors that require careful consideration to bring about effective cognitive solutions.

It’s akin to conducting a group of musicians – it might be possible (easy even!) to attain a pleasant sound from a solo instrument…

But, if expertly managed,  you could accomplish a symphony from the entire orchestra!

This week, our podcast series will guide you through the five steps required to conduct a dazzling cognitive symphony.

On Day 5 of Conducting A Cognitive Symphony Peter discusses the importance of having a single data strategy across procurement, how to align this with the corporate strategy and the value in creating a Chief Data Officer role.

A single data strategy

“It’s very important in today’s world [to have a single data strategy]” begins Peter “because there is a growing need for consuming data almost at the same time as the data gets generated.”

“New potential data sources arise every day. This requires a strategy in place that can be applied quickly and efficiently which covers the entire life cycle of the data from acquiring the data, through curation to consumption.

“And without having the right data strategy or a comprehensive data strategy in place that covers the anterior life cycle of the data, businesses may face some issues very quickly.

“They will not have an understanding of what data they acquire, what that data is and what business that data provides to them.

What about the importance of having a single point-of-contact, a Chief Data Officer, for smaller organisations? Is it still important that, even the role isn’t an individual job in itself, that there’s  a single person who has accountability, and responsibility for data?

“Ideally, yes” says Peter.  “A dedicated person, not necessarily a full-time person.

“And the data officer can be supported by data stewards, data management, data engineers. It’s really up to the organisation – how they want to set about a process for those right now.”

Procurement data vs Corporate data

Does procurement’s data strategy typically feed into a corporate data strategy of which procurement just becomes a subset?

“Corporate data strategy, if it exists,  is likely addressing a good portion of what a procurement specific data strategy would address,” explains Peter.

“If that’s the case then the implementation and the execution of the data strategy in Procurement will require less efforts and also gives the opportunity to put more focus on the procurement specific elements of a data strategy like implementing the right business process for capturing data in better quality from suppliers.

“There are lots of things that are significant between procurement data strategy and corporate data strategy. Likely if a corporate data strategy exists then it covers a significant portion of what the procurement data strategy would need to cover because in the end it’s just data. But with some specifics for procurement.

“Procurement does not need to invent new things that’s likely covered by the corporate data strategy.”

“What procurement teams can do better, is start focussing on specific things- the most crucial things. For example, buyers don’t always consider the importance of off-loading data from suppliers.

“Procurement can do a lot. But it just has to get the right data.”

Striving to conduct a cognitive symphony but in need of some expert guidance? Our podcast series runs throughout this week and will have your orchestrating cognitive success in no time! Register here.

Procurement Leaders: Stop Talking About Headcount Reduction!

If you want your procurement teams to be more open to adopting cognitive solutions and less scared of them, stop talking about headcount!

BUTENKOV ALEKSEI/Shutterstock.com

There are many factors that require careful consideration to bring about effective cognitive solutions.

It’s akin to conducting a group of musicians – it might be possible (easy even!) to attain a pleasant sound from a solo instrument… 

But, if expertly managed,  you could accomplish a symphony from the entire orchestra! 

This week, our podcast series will guide you through the five steps required to conduct a dazzling cognitive symphony. 

On Day 4 of Conducting A Cognitive Symphony Marco Romano – Procurement Chief Analytics Officer, Global Procurement, Transformation Technology, IBM talks on the common pitfalls in the adoption of cognitive solutions, the most impactful actions procurement pros can take to increase the speed of adoption and how to overcome the fear factor!

The Fear Factor

“How the leadership works with the teams to remove barriers (operational, physical and psychological) will ultimately have a huge influence on the rate and pace of adoption of cognitive and analytics solutions” explains Marco in his white paper. 

When it comes to the fear factor, “there is no doubt that there is a concern that rich insightful analytics will show opportunities that imply the practitioners have historically failed in their jobs.

“There is also no doubt that there is fear that cognitive solutions could replace some of the activities currently carried out by practitioners.”

One factor that causes this fear is the “poor messaging on why you want to commit these tools, and what the desired outcome is which creates fear and resistance, to adoption and change.”

How can organisations manage their employees fear to ensure the adoption of cognitive solutions isn’t impeded?

Stop talking about head count!

When procurement professionals look at something that brings new information and insights that haven’t been available before, it leads them to question a number of things:

  • Is it a challenge to what I’ve done before?
  • Is it a challenge to the accuracy of what I’ve done before?

and, ultimately:

  • Is this technology going to make what I do now redundant?

“Fear is something that we see. CPOs are constantly talking about robotics, automation, right?”

“And very often, I hear head count being brought into the discussion, Head count reduction being brought into the same discussion with cognitive analytics, and whilst that might be the eventual outcome, I think it’s a dangerous way to enter into the dialogue”

“If that is the primary driver, to reduce head count in the organisation, I find that very often that’s reflected in your metrics. It’s reflected in the behaviours. And in turn, it’s reflected in poor adoption, and resistance by practitioners.”

“You’re creating that fear of job security. And invariably, I find practitioners push back, and they’ll find they spend their time trying to justify why a tool won’t work for them.”

“To overcome this you need the right methods, but secondly, and very importantly, I think you need to provide practitioners with the road map on how to change, and sharpen their skills in this changing environment.”

Educate your teams

Procurement professionals need to have an understanding of the strategy and impacts new solutions will have.

You need to be able “to show the practitioners how the change benefits them, not just the enterprise” Marco explains.

“And this sounds really basic, but it is so important. [You need to be able to show them]  I’m going to help you spend less time on those lower value, tedious, time-consuming tasks, allowing you to focus on the higher value activities.  Most professional practitioners that I know, prefer to spend their time on those higher valued tasks -negotiating with suppliers, rather than crunching numbers”

That’s the first thing. But the second thing  is, providing them education and training, on this new data skill set. I think you very quickly erode that resistance. They see a path for them, within the enterprise, within the organisation, but you’ve given them a marketable skill, which in turn removes resistance and fear.

“I’m not talking here about turning practitioners into data scientists. I’m talking about arming them with knowledge about how they impact data, teaching them the art of the possible, with regards to how technology can help them to be more effective consumers of that data, and insights.”

Striving to conduct a cognitive symphony but in need of some expert guidance? Our podcast series runs throughout this week and will have your orchestrating cognitive success in no time! Register here.

How To Avoid Transaction Automation Landmines

When it comes to implementing transaction automation, managing the trade-off between the speed of execution and the granularity of data is a challenge…

NikoNomad/Shutterstock.com

There are many factors that require careful consideration to bring about effective cognitive solutions.

It’s akin to conducting a group of musicians – it might be possible (easy even!) to attain a pleasant sound from a solo instrument… 

But, if expertly managed,  you could accomplish a symphony from the entire orchestra! 

This week, our podcast series will guide you through the five steps required to conduct a dazzling cognitive symphony. 

On Day 3 of Conducting a Cognitive Symphony Anna Madarasz, Analytics & Cognitive Lead , IBM Global Procurement discusses the importance of appropriately applied transaction automation, striking a balance between speed of execution and granularity of data and how to avoid landmines.

The importance of transaction automation

Marco Romano, Procurement Chief Analytics Officer, Global Procurement, Transformation Technology, IBM discusses  taxonomy in his white paper, “Transaction automation is a business necessity.

“We all want to spend less time doing repetitive lower-value work and use our skills to provide higher-value services to the business. However, as with many good things, badly applied transaction automation results in poor data and ultimately lost productivity and analytics effectiveness down the road.”

Transaction automation landmines

Procurement organisations are usually very well intentioned when it comes to the implementation of transaction automation but that’s not to say the process is without its challenges. We asked Anna to describe some of the landmines she’s seen procurement professionals hit.

Catalogs or other automation processes that allow the editing of item description and price can make the life of the client and the buyers easier.

As companies  see the positive effect of this they are likely to have a higher percentage of their transactions and spend going through catalogs.

The risk with this, as Anna points out, is  setting yourself unrealistic targets, “there is always a logical threshold, over which it is a risk to apply automation. Of course, you will not implement a catalog line if you  only have two purchase orders of the same nature in a year.

“With wrongly defined targets, a catalog isn’t going to decide action and then, of course, you spend more time on creating and maintaining your catalogs than creating your purchase orders.

Bulk Purchases

Anna also advises avoiding the catalog lines that allow bulk purchases.

“Many times it is really not easy to identify the purchase in a fixed line. Let’s say you are buying server configurations [or] storage configurations. Those are made up of multiple parts, so you  have hardware, software and services elements in it.

“A configuration can be made up of 50, 100 lines. If you allow your clients and your buyers to raise purchase orders simply as a one line item, this server [could cost] one million US dollars!”

“Of course, it’s a really sensitive balance because you also want to avoid the workload of raising incredibly granular purchase orders, so it is really your call at what level you would like to analyse [a given category.]”

“If this is a category which is your main area of focus, then try to go granular, try to get the data. If it’s not, then it’s your call if you are allowing these bulk purchases.”

The trade off

“There is always going to be a trade-off between speed of execution and granularity of data” says Marco

“Finding the right balance again takes us back to developing an understanding of what data we need to achieve our desired cognitive and analytics state. There is no doubt that teaming with the right technology and innovation provider, and selecting the right tools, is critical to that balance”

Striving to conduct a cognitive symphony but in need of some expert guidance? Our podcast series runs throughout this week and will have your orchestrating cognitive success in no time! Register here.

Is Your Taxonomy Flexible and Multidimensional?

For a taxonomy to be effective, and feed a cognitive engine, it needs to be multidimensional, flexible, and situation based…

There are many factors that require careful consideration to bring about effective cognitive solutions.

It’s akin to conducting a group of musicians – it might be possible (easy even!) to attain a pleasant sound from a solo instrument… 

But, if expertly managed,  you could accomplish a symphony from the entire orchestra! 

This week, our podcast series will guide you through the five steps required to conduct a dazzling cognitive symphony. 

On Day 2 of the series, Anna Madarasz, Analytics & Cognitive Lead , IBM Global Procurement discusses how procurement pros are using taxonomy today, assesses homegrown taxonomy versus industry standards and explains why an effective taxonomy needs to be flexible, multidimensional and situation based.

What is taxonomy?

Marco Romano, Procurement Chief Analytics Officer, Global Procurement, Transformation Technology, IBM defines taxonomy in his white paper, as follows “Simply put, taxonomy is a hierarchical representation of data, products and services into logical groupings through the application of an alphanumeric scheme of sorts.

“Sometimes, these are industry standards and sometimes, they are locally-devised schemes to meet individual needs. These conventions are useful for purposes of reporting spend or segregating categories into lower-level components.

“However, the world in which we operate is not hierarchical; it is more like a network of many disparate parts of an ecosystem that is constantly interacting and evolving, and that it needs to be intertwined together to drive value

“for a taxonomy to be effective, and to feed a cognitive engine, the taxonomy actually needs to be multidimensional, flexible, and situation based.”

What does this mean?

1. Flexible

“There’s a level of flexibility you have to have, and usually if you do have a homegrown taxonomy, then it is there by nature” explains Anna.

Problems can arise within organisations when there is no global standard and different regions adopt different practices. “Let’s say one of your geographies breaks down their software license spend into accounting software or project management software. Whilst another geography chooses to break down their software spend into whether that software license is delivered electronically or non-electronically.”

Of course, you can’t take much global insight from this. So it is important to enforce some level of standard taxonomy. “But, depending on the industry, depending on the geography, you have to allow a little bit of flexibility.”

2. Multidimensional

There are many dimensions of taxonomy. And, multidimensional means that you really have to define what you need that taxonomy for.  Sometimes it will be sufficient to have your homegrown taxonomy, other times it might be preferable to have an industry standard such as UNSPSC. If, for example, you want to monitor the price trend of a certain product, then you will definitely need an OEM part number.”

“Multidimensional means that you really have to define what you need that taxonomy for.”

An OEM part number, for example, clearly defines a certain product or a certain service. If you have a notebook in front of you, and you type the OEM part number into a browser, your search will return exactly the same notebook.

You might however,  want to go down to the component level and ask what characterises that notebook?

“Is it the screen size, it is the memory, and so on, and so on? If you want to look for a comparable product in your catalog then  you need ontology.”

“If your business challenge is to note which supplier is providing a certain model of notebook cheaper then it won’t be enough for you to have an eight-digit UNSPSC code defining the notebook.”

3. Situations-based

In his white paper Marco states “It is not about how you buy, but rather what you buy. I would argue that an appropriate taxonomy is about identifying how you resolve a business problem through products or services.”

“Try to use taxonomy for future transactions. Trying to predict what your prices will be, trying to evaluate whether the quotations, whether the bill of material in front of you is competitive enough. Or use it for risk evaluation. There are endless opportunities, but it really all depends on setting up the proper categories.”

“What you should keep in your mind” advises Anna “is that you have to come up with a powerful combination of these taxonomy characteristics.”

Striving to conduct a cognitive symphony but in need of some expert guidance? Our podcast series runs throughout this week and will have your orchestrating cognitive success in no time! Register here. 

Is Your Procurement Data Fit For Purpose?

How do you know when your data is fit for purpose? Start by putting the why before the what!

Robyn Mackenzie/Shutterstock.com

There are many factors that require careful consideration to bring about effective cognitive solutions.

It’s akin to conducting a group of musicians – it might be possible (easy even!) to attain a pleasant sound from a solo instrument… 

But, if expertly managed,  you could accomplish a symphony from the entire orchestra! 

This week, our podcast series will guide you through the five steps required to conduct a dazzling cognitive symphony. 

On Day 1 of the series, Marco Romano – Procurement Chief Analytics Officer, Global Procurement, Transformation Technology, IBM, talks about the development of data strategy, how to determine if a data source is fit for purpose and understanding the data that you want to see.

“To me the cognitive and analytic strategy really starts with the data strategy” explains Marco, “how we acquire, enrich, store and curate our data. Then it really becomes about what you do to that data to bring business value and actionable insights.

“I’d argue anything’s possible quite honestly, limited only by our imagination and one very important point, which is the quality and quantity of the data that’s available to us.”

The orchestra analogy

So where did the orchestra analogy come from?

“When you sit there at the start of a performance invariably you’re hearing these individual members tuning their instruments – warming up.

“It’s very melodic and you really get to hear the class of the instrument and the performer. But it’s really when the conductor walks on stage and all of those instruments are played together in harmony, that’s when it really becomes incredible.

That’s when the goosebumps come in and you hear the power of the sound.”

So how does this translate into data and insights? “One good piece of data is absolutely valuable and can really help you make better business decisions” says Marco. “But like an orchestra, a collection of this transformed data, properly orchestrated to provide these varied and powerful insights at the right time and in the right format for the intended audience really gives you that competitive advantage and operational efficiency.”

“You really need everyone playing from the same sheet of music, or the same hymn sheet!”

Putting the why before the what!

If the foundation to cognitive strategy is the acquisition of data, what kind of data should we be seeking to acquire? It’s easy to think about it in a one dimensional way, only considering one or two sources of data. But in reality data is coming from multiple sources. So where should we be looking for it?

“I think before you even answer the question of what data is it that you need, you really need to address the question of why you need it” explains Marco.

“What is the business outcome that you’re trying to drive? What is it that you want to achieve by acquiring this data? Then I think you can start to determine what data you need, and how you go about acquiring it and enriching it.

“I’ve seen an awful lot of effort go into acquiring data that never results in a business action. Not because it was bad data but it was just not fit for purpose. I think the importance here is that it is fit for purpose at the time that it’s needed and of course for the intended recipient.”

How do you know when your data is fit for purpose?

What are some of the things that you do to determine if a data source or a potential data source is fit for purpose, before you go down the road of actually trying to acquire and cleanse and build it into your models?

Marco firmly believes that you have to start with establishing what the intended outcome is that you want.

Secondly, “there is a point, which we of course have to consider, and that’s ROI. We can’t afford to throw manual resources off to fully invested activities. Some data is extremely difficult to come by, or extremely difficult to get to the level of quality that we need.

“I think you need to have a clear line of sight, of how these insights are going to allow you to change business course or alter business strategy and effect an outcome. Then you can start to also establish to what degree this data will help you achieve that?”

Ask yourself “how much impact is that data going to have, and in turn you can start to then make sensible decisions about ROI and the type of data that you need.”

Striving to conduct a cognitive symphony but in need of some expert guidance? Our podcast series starts today! Register here.

I Don’t Have Time To Do Market Price Research

We’ve all experienced it – a niggling feeling that we could have gotten a lower price for a product or service … if only we’d done our research. But who has that sort of time?

Nomad_Soul/Shutterstock.com

IBM’s CPO, Bob Murphy, is concerned that his peers around the globe aren’t getting a proper night’s rest.

“Chief Procurement Officers lose sleep at night worrying that their procurement teams are buying over market prices or that falling prices in a particular category of spending are not being rapidly achieved.”

Access to data on historical prices paid and current market conditions isn’t the problem. The data is out there, and readily available, but it takes time and resources to do the research, and it’s a never-ending task.

Monitoring the market is too big a job for a single person, which leaves our sleepless CPO with two options:

A) Carve out an entire team to do the research, or

B) Bring in Artificial Intelligence through a robot to augment the team capabilities.

And that’s what IBM has done. The procurement team collaborated with data scientists and developers to design a solution harnessing external data and analytics that provides users with market intelligence, historic IBM purchasing data, and market sentiment surrounding subcontractor services. IBM Watson Analytics partners with “PeopleTicker” to ingest real-time, external market intelligence providing a comprehensive view of global markets. By comparing historical data with current market information, buyers get an immediate view on the price difference that may be available, enabling new levels of cost competitiveness to be achieved.

The result is “Pricing IQ”, a product where millions of data points can be efficiently organised with interactive graphics and visually clear dashboards where useful trends and insights can be identified. This solution opens opportunities for live price negotiation via the use of advanced analytics – with significantly reduced manual workload for the buyer.

Alongside Watson Analytics, Watson’s Explorer and Alchemy software capture key words and provides sentiment analysis to indicate rising or falling markets. Additionally, PeopleTicker’s data is integrated within the “Pricing IQ” product enabling a seamless solution for our customers. “We have been using PeopleTicker internally now for over 2 years. As a client, they have provided us with over 10,000 global rates. What started as a client relationship has grown into a Watson Analytics partnership.”

Real time insights

If you’re hurtling down a freeway in a high-performance car, having a speedometer that only shows yesterday’s speed isn’t going to help you. That’s why access to genuinely real- time data is emerging as one of the key competitive advantages across procurement functions. The team that developed Pricing IQ recognised this, and have built in real-time alerts for action.

Take A Bow, Pricing IQ

You’ll be hearing a lot more about Pricing IQ, especially since the solution won the Most Innovative Use of Technology Award at the 2017 CIPS Supply Management Awards.

Like all good innovators, the IBM team identified a significant pain-point held in common by procurement teams across the globe, and came up with an idea that eases the burden.

So, the next time you’re manually wading through reams of pricing data and wondering to yourself if there’s a better way – be assured, there is.

UK Accuses Russia Of Massive Cyberattack on Global Supply Chains

Maersk, TNT and other global companies that suffered nearly a billion dollars in collective damages were not the intended targets of a Russia-launched cyberattack. How, then, were they infected?   

wk1003mike/Shutterstock.com

“The UK government judges that the Russian government, specifically the Russian military, was responsible for the destructive NotPetya cyberattack. Its reckless release disrupted organisations across Europe costing hundreds of millions of pounds. “We call upon Russia to be the responsible member of the international community it claims to be, rather then secretly trying to undermine it.”

This statement was part of the UK Government’s unusual step last week of publicly accusing the Russian military of being behind a cyberattack. The White House also called out Russia, issuing the following statement: “In June 2017, the Russian military launched the most destructive and costly cyberattack in history. This was also a reckless and indiscriminate cyberattack that will be met with international consequences.”

Experts believe that Russian hackers launched 2,000 “NotPetya” attacks in the early hours of June 27 last year. NotPetya was designed to masquerade as ransomware, but was soon revealed to be wiper malware with the purpose of destroying computer systems, erasing data and disrupting business operations.

Global firms were collateral damage

One of the consequences of living in a connected world is increased vulnerability to indiscriminate cyberattacks, even for organisations that are not the hackers’ intended victims.

NotPetya’s primary target was a shipping company in Ukraine, which has been locked in conflict with Russian-backed separatists since 2014. However, the virus-like nature of the cyberattack meant that businesses with strong trade links with Ukraine, including parts of FedEx, Danish shipping giant Maersk, UK manufacturer Reckit Benckister, and Dutch delivery firm TNT were also affected. Pharmaceutical firm Merck & Co and FedEx reported permanent damage to the systems, while a West Virginia health system had to replace its entire network after being attacked.

Russian officials have responded that the claims are “groundless” and that Russian businesses were among those whose systems were affected.

Read more: Wall Street Journal

 

In other news this week:

Unilever Publishes Palm Oil Supplier Data

  • In a move to boost transparency, consumer goods giant Unilever has published the location of over 1,400 mills and over 300 direct suppliers of palm oil.
  • The palm oil industry is under increasing pressure from consumers after revelations of deforestation and human rights abuses in Indonesia and other countries.
  • A spokesperson from Unilever said the company hoped that sharing the information would be the start of a new industry-wide movement towards supply chain transparency.

Read more: The Straits Times

 

Tennessee Truck Dealership Selling Dirty Engines

  • A loophole in emissions control laws has enabled a truck dealership to sell Peterbilt and Freightliner trucks with rebuilt diesel engines that spew 40 to 55 times the air pollution of other trucks.
  • The New York Times reports that the loophole is being “championed” by Environmental Protection Agency administrator Scott Pruitt after the Obama administration failed to close it.
  • The trucks are known as “gliders” because they are manufactured without engines and are later retrofitted with the rebuilt, 1990s-era engines recovered from salvage yards.

Read more: New York Times

 

CIPS Announces New Group CEO

  • The Chartered Institute of Procurement & Supply (CIPS) last week announced the appointment of Malcolm Harrison (FCIPS) as Group CEO.
  • Currently Chief Executive Officer of the Crown Commercial Service at The Cabinet Office, Harrison will take over the post from the current interim CEO, Gerry Walsh, in July 2018.
  • The announcement comes nearly one full year after the sudden passing of former CEO David Noble in February 2017.

Read more: https://www.cips.org/en-cn/news/news/cips-announces-group-ceo-appointment/

4 Ways Diversity Makes A Rock-Solid IMPACT

Cultural diversity – whether it’s racial, ethnic, gender, or sexual – is an increasingly hot topic that shows no signs of slowing down. Let’s examine why diversity in the workplace has gone from a “nice-to-have” to a critical business imperative.

  1. Diversity leads to a higher market share

While communities are becoming increasingly culturally diverse, businesses need to mimic the communities they serve by bringing together individuals from different backgrounds and experiences. Put simply, people want to engage with companies that employ people similar to them. This enables companies to capture a greater share of the market by marketing more genuinely to diverse communities, communicating effectively with their diverse customers, and understanding their needs.

Looking for proof of the above? Research from McKinsey revealed that companies in the top quartile for racial and ethnic diversity are 35 per cent more likely to have above-average financial returns, while companies in the bottom quartile were less likely to achieve above-average results.

  1. Diversity supercharges problem-solving

Institute for Supply Management CEO Tom Derry told Procurious that cultural inclusiveness is no longer an idea, but an expectation. “Your team needs to be diverse – in fact, you’ll look impoverished if you don’t have that. The benefits include being able to tap into a diversity of experience and opinion to solve challenges. This creates a truly attractive environment for top talent.”

If you lived in a dystopic Brave New World scenario where every member of your workforce had identical cultural backgrounds, education and work experience, it’s highly likely that each individual would come up with an identical set of solutions when presented with a problem. That’s why it’s imperative that any group includes people with culturally diverse backgrounds and highly varied work experience who can bring entirely different schools of thought to the table, and hence a wide variety of innovative solutions.

  1. Diversity in the workplace helps you become a more effective global professional

Supply management professionals are increasingly working within the global supply chain, which is why being about to communicate effectively in different parts of the world is a must-have skillset. Having high cultural intelligence (CQ) means knowing how to create relationships, understand cultural nuances and adapt your approach to suit cultural differences in foreign countries.

Shelley Stewart, CPO and VP, DuPont, told Procurious that “A diverse workplace provides a wealth of varied experiences that are crucial for supply management organisations to operate even more effectively in the global economy.”

How? Because an inclusive and diverse business will increase the empathy (and CQ) of all employees as cultural tunnel-vision is reduced. In short, everyone benefits from a higher appreciation of different outlooks and an increased understanding of others. Armed with these skills, a supply management professional is much less likely to suffer culture shock or put a foot wrong when interacting internationally.

  1. Diversity will help you attract and retain the best talent

If your company has built a solid reputation as an organisation with a truly diverse and vibrant workforce, it will attract the very best and brightest in the market. Companies that fail to recognise this are missing out on top talent, as potential candidates may have the perception that your company simply doesn’t tend to hire people from their cultural background. To state the obvious, companies should be making every effort to widen, rather than shrink, the talent pool.

There’s evidence that businesses which fail to foster inclusive, diverse workforces suffer from higher turnover rates, as a hostile work environment forces employees to leave. High turnover leads to avoidable costs, which is another reason why cultural diversity positively impacts your organisation’s bottom line.

More resources on Diversity from ISM:

Buying Social, Expressing Yourself Online and Other Procurement Challenges…

Does it pay to buy social? Can I build greater trust online? And how do I prepare my team for AI developments? We answer some of the questions and challenges on the minds of procurement leaders…

Olga Savina/Shutterstock.com

The Procurious London CPO Roundtable was sponsored by Basware

How do you evolve your organisation from the mindset of  “we’re not doing anything bad” to actually “doing something good” ?

What happens when people who don’t know what they’re talking about start talking online, what does that mean for society’s leaders?

With the development of RPA and AI, are we all out of a job, and when?!

How should organisations go about developing existing talent to prepare them for leadership roles?

These are just some the questions we answered at last week’s  Procurious CPO London Roundtable, sponsored by BaswareWant to know the answers? Look no further…

The Buy Social Corporate Challenge

Charlie Wigglesworth, Deputy CEO – Social Enterprise UK (SEUK) gave a fascinating insight to the great work social enterprises are doing across the UK.

SEUK was established in 2002 as the national body for social enterprise. Now, with over 1200 members they strive to support social enterprises and develop the evidence base to showcase their benefits, as well as influencing policy and political agendas within UK government.

Social enterprises sit comfortably in between a charity and a private sector company. They have a clear social mission and  look to make profits to further that social mission – they are “businesses which trade for a social purpose.” 

“Businesses and governments can support social enterprise in lots of ways but the best way to do good is to buy from them,” explains Charlie.

They are much more likely to be better represented or minority led or based in the most deprived areas. They are more likely to employ people that wouldn’t have work otherwise had work or give money where people wouldn’t otherwise have had it.

Supporting these companies is good for your business because they are likely to be cheaper, more innovative and doing so gives corporations the opportunity to overlap and integrate CSR with normal business, rather than have it exist as a separate entity.

Buying social doesn’t cost more money or change the procurement process  but it has significant strategic and ongoing value for communities and your business.

Of course, as Charlie admits, it can seem hard to make changes and switch your mentality from “not doing anything bad” to “doing something good”. Charlie’s advice is to “find opportunities locally- they may seem tiny but there can be significant opportunities. Look at where you can do things directly.”

SEUK is working with a number of businesses for The Buy Social Corporate Challenge with the challenge to achieve $1 billion of procurement spend with social enterprises by 2020. Follow their progress here.   

The Conversation Century

Elizabeth Linder, Founder and CEO of The Conversational Century joined Youtube in 2007 and often thinks back to that year, a significant time for Youtube, in order to understand the social media space.

It was an exciting and life-changing time for skilled amateurs. A time that had millions of people singing in their bedrooms or racking  up millions of video views for a commentary on something they would never otherwise have been considered an expert in. Youtube ultimately offered them the opportunity to be heard.

Elizabeth is a strong believer that the internet is the best place to build trust. “The people” ( i.e. you and me) have already got this all figured out. But the reason so many people still believe the internet is destroying trust is that our leaders are still so far from getting it right! We simply don’t have leaders at a political level that have invested in a voice on social media.

Some key things to remember when trying to start conversations online:

  • Most leaders fear that they have to move at an increased pace because of today’s internet culture. You don’t. Go at your own pace but keep people informed as you do it. It’s ok to communicate to people that “the discussions are still in progress” or “we don’t have information on this yet” so long as you’re communicating something!
  • Believe in the power of primary sources because the public certainly do. Hearing directly from the source rather than a paper adds a lot of value to your communication. If you’ve ever been quoted in an article, blog or feature you’ll know the producer of that piece never quite gets to the meat of what you were trying to say because you don’t own the conversation or drive the discussion – they do!
  • Embracing in the hacker culture, i.e. making it up as you go along, is key. EU politicians, for example, only see social media as a tool for outbound communications and not for their inbound policy making. Hacker culture dictates that they need to consider the latter.

Elizabeth’s take away advice on owning the social media space? “Be yourself online and talk to people in a way that lets them in but not in a way so casual that you’re treating them like family.”

RPA and AI – Are We All Out of A Job?

Where are we at in terms of Robotic Process Automation (RPA) and Artificial Intelligence (AI) ?  Paul Clayton, Head of New Service Development, Basware outlined the current threats and challenges.

RPA essentially replicates things that aren’t easily automated; the things a human would do. Its skills lie in coding systems and inserting data. The downside to RPA is that there is no intelligence or decision making process, which means it can go very wrong!

There are four levels to AI:

  • Level 1:  This is the simplest form of AI and is quite prevalent today.  It’s reactive and rule-based with no memory or recollection and decides what to do based on a set of rules.
  • Level 2:  Limited, but not long-term, memory with decisions based on recent experience. It will react to data from the things it sees.
  • Level 3:  These are computers that learn and have memory. They  can re-formulate their view on the world so they can make decisions and remember actions. Whilst there are Level 3 computers out there, other than C3P0 (!),  it hasn’t been applied in procurement except in the areas of fraud and risk management.
  • Level 4:  This, fortunately, does not exist…yet! These are machines that are self aware and can form their own view on anything, redevelop their own software and change their behaviour entirely.

Levels 1 and 2 cover most of the repetitive tasks in procurement and finance. Not before long, 90 per cent of the people in this sphere wont be required.

So yes, as Paul admits, the jobs we have today won’t be here tomorrow and people won’t have careers in the way that we currently define “a career”. But the workforce coming in today is used to their environment changing every 30 seconds,  they already expect instantaneous change and they’re able to adapt quickly to something different.

Barclays’ leadership development process

Jonathan Harvey – Global Head of Talent & Culture, Barclays PLC, gave us a high level overview of Barclays leadership development framework and how it compares or contrasts with other leading companies.

When Jonathan joined Barclays two years ago he was tasked with assessing whether Barclays were doing enough to embed a common set of values and to measure their progress in embedding them.

He evaluated how they were developing existing talent in preparation for leadership roles and eventually established a set of criteria for potential leaders at Barclays. This criteria demands they live by Barclays’ values and inspire others to live by them and that they have leadership critical experience such as experience managing more than 1000 people, across different geographies and through different business cycles.

The most successful leaders of organisations will be those who can think the most adaptively and creatively, and that comes down to experience!

Procurious are hosting CPO roundtables on 30th May, 19th September and 14th November. If you’re a CPO and would like to attend one of our roundtables in person please contact Olga Luscombe via [email protected] to request an invitation.