All posts by Procurious HQ

Adding Value to Procurement Through Change Management

Rio Tinto’s procurement function is globally known for its high standards and principles. When it comes down to building a world class global procurement department, change management plays a key role.

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Ahead of Women in Procurement 2016, Renae Rutherford, Director – Optimisation Delivery, Global Business Services from Rio Tinto, has shared some key insights with us, which will be presented as a case study at the conference. Renae has embraced change management as a strategy in all her roles to help Rio Tinto functions, including Procurement, achieve significant improvement on a global scale.

Challenges and Opportunities

We asked Renae to share the biggest challenges and opportunities Rio Tinto is facing in procurement at the moment. She says that Rio Tinto is in a moment of “more opportunity than challenge, with decreasing commodity prices, business units are depending on procurement to deliver significant cost reductions including managing working capital more effectively. The challenge is finding more value, as we have a mature global & regional category management model that has caught most of the quick win opportunities.”

Renae also identified a number of other challenges for Rio Tinto’s procurement team, including “achieving efficiencies through global process standardisation in Procure to Pay and master data management” and “identifying how best to evolve procurement as part of a cross-functional organisation that is moving towards an integrated business services model, where procurement will operate more closely with other global functions including IS&T, people services, finance services and property”.

Value in Change Management

When asked how change management is helping Rio Tinto manage these conditions, Renae responded: “Change management is a very broad category.”

“The very first module in my change management post-graduate course was self-management skills – and this was a revelation!  All leaders are change agents, and the most capable leaders have excellent self-management skills, which they apply to cope with job challenges and organisational change, as well as propel their own professional development (aka personal change!).”

“People change management skills are essential for identifying others’ reactions to change and helping them work through this fully, in the fastest way possible.  Resolving business challenges typically brings change impacts to our people and it’s important we help them manage this effectively.”

“Organisational change management skills are essential for taking a holistic approach to bringing about and sustaining the change, where changes will not achieve full benefits nor be sustained if they are not aligned with formal and informal people, process and organisational systems.”

Speaking at the Women in Procurement 2016 conference in March, hosted by Quest Events, Renae will be presenting a session focused on how to embrace change management to build a world class procurement function, including Rio Tinto’s approach, lessons learned, and being a change leader.

Leadership and Career Advancement

Women in Procurement 2016 is also addressing leadership and career advancement themes, so we asked Renae to share some useful tips of how she has approached her career progression.

Here are Renae’s 5 recommendations for those aspiring a leadership role in procurement:

  1. Take on every opportunity to learn and develop, especially when it’s different or daunting
  2. Put in the hard work early, to build that depth of diverse experience
  3. Recognise you passions as well as situations that bring our your strengths, and find more like these
  4. Big 4 consulting experience was a significant accelerator – taught me how to learn quickly, how to influence, and how to manage risks with engaging people and leading projects
  5. Be ok with not knowing everything or not feeling comfortable in your role (mistakes provide the deepest learning); when you do feel comfortable, it’s time to move on

To read Renae Rutherford’s bio and find out more about Women in Procurement 2016, please visit the website here or download the conference agenda.

Your Procurement Christmas Booklist

The Christmas holidays are great – plenty of time to relax, see family and relax in front of the fire with a glass of wine and a good book…

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If you’re like the team at Procurious HQ, you can’t get enough of procurement, supply chain and leadership related literature, then we’ve compiled a short list for you to add to your bookshelf/Kindle/eReader for the festive period:

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  • Strategic Sourcing and Category Management: Lessons Learned at IKEA – Magnus Carlsson
  • A Quick Guide to Procurement (for non-Procurement people) – John Bowen
  • The Procurement and Supply Manager’s Desk Reference – Fred Sollish and John Semanik

Procurement-Mojo

  • Procurement Mojo – Sigi Osagie (procurement capability)
  • The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change – Stephen Covey (change)

Getting To Yes

  • Getting to Yes – Roger Fisher and William Ury (negotiation)
  • The Brand You 50 – Tom Peters (personal brand)
  • Start with Why: How Great Leaders Inspire Everyone to Take Action (leadership)

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  • The Art of Social Media: Power Tips for Power Users – Guy Kawasaki and Peg Fitzpatrick
  • Music Rights Without Fights – Richard Kirstein (marketing procurement)
  • Who Moved My Cheese – Spencer Johnson (change)
  • Winning! – Clive Woodward (leadership)
  • Extreme Ownership: How Navy SEALs Lead and Win – Jocko Willink and Leif Babin (leadership)

That should be plenty to keep you occupied when you are looking to escape the mayhem or avoid another couple of hours of dodgy Christmas TV.

Let us know if we have missed your favourite and put the title in the comments below!

Happy Reading!

Working Capital: The Role of Procurement

Procurement has a central role to play in the effective management of working capital, enabling investment, growth and supply chain efficiency.

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This article has been written by Neil Ross, Regional Manager, EMEA Trade Credit.

Working capital is the fuel behind any successful mid-market organisation, representing the amount of cash available at any one time. If managed effectively, it ensures the business is able to invest in new products and services, optimising its existing operations, while also shoring up against future risks. Failure to maintain control of working capital will inevitably force companies to rely on borrowing, often through expensive bank finance, putting further pressure on the business.

There are three primary factors dictating working capital – Days Sales Outstanding (DSO), Days Payable Outstanding (DPO) and Days Inventory Outstanding (DIO). Essentially, if DSO and DIO are too high and DPO is too low, then companies will encounter cash flow issues. Simple economics mean money will be going out of the business faster than it is coming in, so striking the right balance between these three factors is imperative.

The Role of Procurement

Responsibility for the day-to-day management of working capital ultimately sits with the treasurer, whose role it is to ensure the company has the necessary funds to operate and meet its objectives for the months and years ahead. But the treasurer cannot work alone. He or she must collaborate closely with numerous departments across the business to ensure working capital is maximised. The procurement team forms a crucial part of this network.

As the primary interface between a business and its supply chain, procurement can make or break an organisation’s working capital strategy. Procurement has numerous factors to consider within its remit, not least management of cost vs. value from suppliers. However, a fixation on costs alone can be a mistake, masking other factors which can also seriously impact working capital.

For example, high logistics and warehousing costs can make working with a particular supplier unviable. Similarly, the ease of doing business with suppliers is a prime consideration – if their contractual terms or the process of purchasing are overly complex, this will eat up hours of administration time that could be better used elsewhere.

Favourable Payment Terms?

But perhaps the most important working capital consideration for procurement is the ability to negotiate favourable payment terms with suppliers, ensuring that money isn’t leaving the company bank account until it absolutely has to.

Extending payment terms is a popular method used by large and increasingly by mid-market companies to maximise their working capital and cash flow. Research by YouGov on behalf of PrimeRevenue and AIG[1] found that over three quarters of supplier businesses have been asked to accept longer payment terms, potentially holding up over £29bn.

A smart move by buyers you might think? Well not necessarily, when you consider the impact this could be having on the supply chain. YouGov’s research found that these longer payment terms are affecting suppliers’ cash flow (55 per cent), leading to additional administration (33 per cent) and putting a strain on client relationships (29 per cent).

The knock on effects can be huge, forcing suppliers to borrow money at a high cost, or to cut costs in production and investment. These issues ultimately drive up prices or impact quality, potentially reducing efficiency and sales, while increasing risk all along the chain.

Supply Chain Finance

Procurement professionals are now waking up to this dichotomy and looking at a more holistic solution to the problem. This means building greater collaboration with suppliers, fostering mutually beneficial relationships, and minimising the risk for the supply chain in the long term.

One key aspect to this more holistic approach is supply chain finance, a financing tool that enables businesses to offer their suppliers early payment, while retaining their own longer payment terms. This is possible through third party financing based on the credit rating of the larger buyer organisation.

Until recently, supply chain finance platforms have been limited to supporting the largest, investment grade businesses. However, innovative online and credit insurance backed solutions mean that it is now an option for thousands of mid-market, non-investment grade companies. This can offer a working capital ‘win-win’, while also helping to streamline processes for all involved.

With the economy on strong footing, many businesses are in growth mode, with ambitious plans for investment and expansion. But these plans won’t be possible without a comprehensive and strategic approach to working capital management. Procurement has a central role in making that happen. The tools and technology now available mean it has never been easier to optimise working capital, across both individual businesses and the broader supply chain.

Supply Chain Finance from PrimeRevenue and AIG frees up significant funding for mid-market (£100m+ turnover), non-investment grade companies and their suppliers, providing low cost access to working capital on both sides of the transaction. More information can be found here.

[1] AIG and PrimeRevenue research carried out by YouGov. Total sample size was 250 adults with responsibility for invoicing and payment terms within businesses which provide goods and services to large organisations (with revenues of £100m or more).

Businesses were asked how much of their revenue is currently tied up in invoices with payment terms longer than the standard. If these results were replicated across all businesses in the UK which provide goods or services to large organisations they suggest that around £29 billion is tied up in this way.

Can Procurement Set an Example on KPIs?

Metrics, Key Performance Indicators (KPIs), Performance Management – whatever your organisation calls them, it’s almost certain that your procurement team are both measuring and being measured on performance. But are organisations measuring the right areas?

Metrics

Every week in the procurement and supply chain news, we read reports and headlines focusing on savings and supply chain practices, often highlighting the work organisations are doing to measure these performance areas.

Knowing which elements to measure is tricky, as no two sources will agree on what the ‘best’ metrics are to use. A quick Google search for ‘Procurement KPIs’ comes up with over 400,000 results, with a variety of links to organisations, articles and journals with different views on what constitutes ‘best practice’.

What is clear is from what we read, see and encounter in organisations is that there is a huge volume of resources (time, people, money) being devoted to managing these metrics, but frequently the data produced is poor or the metrics themselves are flawed from the outset.

Defining a Purpose

Anyone in procurement will be able to tell you that the purpose of KPIs is to measure internal and supplier performance across a number of areas. Most of these elements stem from the classic concepts of cost, quality and service. Each indicator focuses on a specific aspect of a contract, has defined what success and failure look like, and should service an organisational need or requirement.

The ‘SMART’ acronym (Specific, Measureable, Achievable, Realistic and Timely) is frequently used in conjunction with the creation of KPIs. Following these steps, the theory is that the KPIs will be both useful and successful and, what’s more, encourage behaviours that drive value.

The Reality

Far too often, however, KPIs in organisations fall short of this. Sometimes it’s because they are poorly defined, other times that they are unrealistic, and frequently that they are measuring the wrong thing entirely. From a procurement point of view, this generally means the focus is on savings and little else.

Externally, suppliers can be given huge lists of KPIs that they are expected to report on as part of their contract. This in turn makes meeting and reporting on KPIs onerous, putting the supplier off focusing on them, and potentially driving behaviours that are carried out to ‘tick off’ the KPIs in order to get paid.

Measuring Intangibles

But examples of good practice are out there. When Ben & Jerry sold their ice-cream brand to Unilever, they were eager for their brand to continue to be associated with the environmental and social activities for which they had gained a great reputation for. This involved the creation of “Social Metrics” – aimed at measuring the social and environmental performance of the brand under Unilever’s auspices.

A difficult task, but one that the organisations stuck with, ultimately creating the concept of “multicapitalism”, a performance accounting system measuring economic, social, and environmental impacts in an integrated way. So far it has been a success, and is setting the bar high for the use of metrics.

This is a good example of performance metrics being used to measure an area that often has intangible outputs.

Taking the Lead

So how can procurement take the lead on creating metrics and measuring performance? If procurement departments are keen to be measured on more than savings, then the organisations need to get their own house in order and create better KPIs for their suppliers.

A recent discussion on Procurious asked about other KPIs to use beyond tracking savings for high value projects. One key point made was to workshop metrics with internal customers to increase engagement. This holds true for suppliers too, and should help to ensure that the right areas of the contract are being measured.

We are not saying that savings trackers should be dropped, but procurement needs to focus on other value areas with suppliers. Once the profession leads by example and stops putting such a high importance on savings externally, the chances are good that this will also happen internally.

Is your organisation setting a good example on KPIs? Tell us what you think and get involved with our discussions.

We’ve scoured the headlines this week and picked out the main ones for you to digest with your morning coffee.

Nations Sign Historic Climate Agreement

  • The COP 21 event in Paris drew to a close last week, with nearly 200 countries signing a new agreement to reduce global emissions
  • The agreement sets a new goal for all countries to collectively reach net zero emissions in the second half of the century
  • The deal includes provision for rich countries agreed to raise $100bn (£66bn) a year by 2020 to help poor countries transform their economies and reduce emissions
  • The deal has been hailed as a significant step in the right direction by global leaders and environmental campaigners

Read more at The Guardian

Jaguar Land Rover Sees Resurgence

  • Jaguar Land Rover reported its best ever November sales, with volumes up by 27 per cent on the same period last year
  • The UK has taken over from China as JLR’s main market, with sales up 70 per cent, but also partly due to the slowdown in China’s economy
  • The high sales in Europe and North America have helped to offset the slower Chinese market, which had been responsible for a weak start to the 2015/16 financial year
  • The organisation is expanding production facilities into Slovakia, with the new plant expected to open in 2018 in order to help meet increasing demand

Read more at Forbes

Twitter fined in Turkey

  • Turkey’s communications technologies authority, the BTK, has fined Twitter 150,000 lira ($51,000.) for not removing content it says is “terrorist propaganda”
  • Although there were no further details on the content in question, it is not the first time Twitter has fallen foul of the Turkish Government
  • In the past, the site has been temporarily banned after failing to remove content following requests, although this is the first time a fine has been levied

Read more at Reuters

Tokyo Police to Launch “Drone Squad”

  • Police in Tokyo are to launch a specialist squad tasked with locating and, if necessary, capturing drones in the city
  • The squad has been set up following a number of incidents involving drones in the city, including a drone landing on the roof of the Prime Minister’s office carrying radioactive material in April
  • The police will use drones themselves to track down possible threats and nuisances, and will patrol high-profile buildings in Tokyo
  • The police drones will be equipped with nets in order to bring down other drones if required

Read more at the BBC

Catalytics – The Next Generation of Procurement

Catalytics® is a business concept that powers Proxima’s new suite of procurement services, delivering triple bottom line outcomes: people, profit and planet.

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45 per cent of consumers have revealed that they would stop spending with a company whose supplier practices are called into question. With so much at stake, Proxima the procurement services provider, today announces the launch of Catalytics®, a refreshing approach to managing a complex network of suppliers. 

Working with leading minds in business and academia Proxima has constructed a framework for Catalytics® built on five pillars – Strategy, Structure, Mastery, Culture and Enablers. The Catalytics® framework changes the conventional approach to managing supplier relationships, moving away from the heavy focus on financial metrics and instead focussing more on long-term value-creation.

Risk in the Supply Chain

Jonathan Cooper-Bagnall, Executive Vice President, Commercial Director at Proxima, comments: “Wider forces such as risk, innovation and sustainability critically influence the success or demise of businesses today. Seemingly indestructible brands have shown themselves extremely vulnerable in recent years.”

“Following horse meat scandals, uncapped oil-wells and garment factory disasters; even major European car manufacturers can witness their reputation and finances holed by the risks buried in the chain of command or hidden in the supply chain.”

The reliance on external suppliers for goods and services shows no sign of slowing down. Additional research conducted by Proxima found that the average FTSE 350 organisation spent 69.9 per cent of its revenue with outside agencies, and only 12.9 per cent spent on the in-house workforce in salaries and benefits.

Further, 46 per cent of risk managers in global businesses say supply chain failure is their number one risk. A Catalytics® approach will help to mitigate against supply led risks and, conversely, help businesses drive more value out of their supplier relationships.

 Triple Bottom Line

Catalytics® allows businesses to rethink how they manage complex supply chains in line with Triple Bottom Line (TBL) outcomes – looking beyond the transactions of buying goods or services.

With almost 70 per cent of operational activity performed by suppliers, businesses stand to receive significant benefits from taking a more strategic approach to their supplier ecosystems. 

Catalytics® accepts that companies today cannot isolate themselves from financial, operational and reputational risks in their extended supply ecosystem, and that those same suppliers are a valuable source of competitive advantage.

Cooper-Bagnall concludes, “Organisations must look beyond profit to evaluate their performance and direct their operations. Long-term value creation – for shareholders and other stakeholders – requires leaders to deliver on triple bottom line outcomes: people, profit and planet. Failure to align operations with the principles of TBL outcomes can have serious effects on brand reputation and market position. Thinking differently about supplier ecosystems will allow business leaders to reshape their entire business to meet the new realities of modern business.”

For more information about Proxima’s Catalytics® framework, visit www.proximagroup.com/what-is-catalytics  

Procurious Big Ideas Keynote #3 – How Procurement is Elevating its role

Looking to the future in the Big Ideas Summit third keynote was Chris Sawchuk, Principle and Global Procurement Advisory Practice Leader at The Hackett Group.

Chris spoke about organisational agility and the need for organisations to adapt and move quickly in a constantly-changing business environment.

From a procurement standpoint, Chris argued that it means learning from the likes of UBER and being more customer centric and delivering value beyond cost savings, while being more active in promoting itself as a function.

Watch the full keynote here.

See all the keynotes and panel discussions from the Big Ideas Summit, plus Big Ideas from our 40+ Influencers.

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

Marketing Procurement – The Most Popular Concepts

Darren Woolley, CEO and founder of marketing consultancy TrinityP3, freely admits that 15 years ago he had no idea what marketing procurement was. Now, curator of a renowned blog on the subject, he is here with a great offer for Procurious members.

Top50_Stack

When I started TrinityP3 Marketing Management Consultants in January 2000 I had never heard of marketing procurement and only had the most peripheral understanding of the procurement function. What led me to starting my own marketing procurement consultancy 15 years ago was a Bachelor of Applied Science degree, five years in medical research and then 15 years as a copywriter and then a Creative Director in advertising agencies.

So I guess, as I have since discovered, probably the typical career path into procurement, meaning typically atypical.

Efficiency and Effectiveness

In April 2006 I started a blog as part of our website. Mostly the posts were opinion pieces based on observations about the industry. If you look back to those days, the articles were short, not particularly in-depth or, for that matter, insightful. It was also irregular and inconsistent. But it was nine years ago. If you are interested, check out the early posts on the TrinityP3 blog here.

Around this time was also when we discovered the marketing procurement function within some of our larger multinational clients. It was interesting to meet people whose job it was to identify ways to ‘assist in managing the marketing process for greater efficiency and effectiveness’.

I use that phrase as it is how we describe what we do at TrinityP3 and what we have found the best marketing procurement people do within their own organisations. It is also why we call ourselves Marketing Management Consultants and not Marketing Procurement.

Strength to Strength

In 2011 we noticed a growing interest in the content on the blog and so made a strategic business commitment to make the blog the centrepiece of our content marketing efforts. This included making sure we regularly published, in fact three times every week, all year round. Okay, we take a week or two off for the holidays.

Within a year the number of people visiting the blog increased 300 per cent and today there is more than 12,000 people reading the blog every week and they come from every continent, except Antarctica of course.

In the early days I was writing most of the posts, but quickly the TrinityP3 consultants began to offer posts on their core competencies such as media, agency remuneration, roster management, digital and data and production. And such is the reputation of the blog, we also have an increasing number of industry thought leaders offered guest posts.

In 2012, we noticed that some articles were getting a much higher readership, sharing on social media and comments. When we looked at the topics that were the most popular, they reflected the issues that were either high profile news or trend in the industry or offered a significant insights or a fresh perspective to common issues. In amongst these were gems on pitches, pitch practice, agency remuneration, including value based, incentive and performance based, scope of work, billable hours and so much more.

Into Print

We decided to capture these popular posts by publishing it as a book. In paperback and e-book, it provided particularly popular. So the following year we did the same. And this year we have done it again. The Top 50 Marketing Management Posts of the Year captures the best and most popular.

But don’t take my word for it. Here is what some of the industry leaders think of the Top 50 Marketing Management Books of the Year:

“Darren Woolley’s Top 50 Marketing Management Post of the Year is a remarkable mosaic of must-read articles and expert opinions that will open your mind, offer new perspectives and challenge you in the process.” – Bruno Gralpois, Author of “Agency Mania” and Co-Founder and Principal, Agency Mania Solutions

“Trinity P3’s Top 50 Marketing Management Posts is a wonderful collection of well-written, insightful blog posts by Darren, his team, and guest writers. They deal head-on with some of the most timely and on point challenges in the industry. Whether you’re a client leader, an agency leader, or industry consultant, this book is a “must read”. – Debra Giampoli, Director, Global Strategic Agency Relations, Mondelez International

“The posts by Darren Woolley and the TrinityP3 team are critical insight. First of all, they provide a glimpse from a unique place in the world — Asia – and yet are truly universal. The collection of top posts gives professionals in our industry fantastic “food for thought” as we go about our hectic lives. He and the team are truly well respected experts and their intelligence is world class.” Sopan Shah, VP Procurement, InterContinental Hotels Group

Exclusive Offer

If you want to lay your hands on this highly-regarded book, follow this link and a free copy is yours when you use the code: Procurious15 (only open to Procurious members).

Happy reading!

Darren Woolley is a scientist by training and a former creative director of JWT. Woolley is the CEO and founder of marketing consultancy TrinityP3.

TrinityP3 is a marketing management consultancy. We challenge our clients, and ourselves, to continuously evolve in thought and approach.

What are the 7 Challenges Keeping PSCM Managers Up at Night?

As the modern procurement division advances to become a part of the whole organisation innovation process, so does the expectations around supply chain and procurement professionals’ performance.

overcoming-challenges

Having a deep understanding of the challenges facing executives who are ascending the procurement ladder is the first step to find strategies and inspiration to overcome them.

Research completed ahead of the Women in Procurement 2016 conference, with Purchasing and Supply Chain Managers from across a variety of sectors, has identified 7 main challenges the modern supply chain and procurement professional must break through in order to achieve the department expected results. Here is a list:

  1. Aligning procurement’s vision with the organisation’s strategy and communicating its value to the entire company
  2. Understanding how technology and processes support supplier relationships and how to lift enterprise innovation
  3. Identifying how to deliver more value to your organisation through strategic procurement
  4. Developing a winning strategy by creating a value oriented procurement department
  5. Inspiring leadership and building meaningful capabilities and skills for your team
  6. Developing the competencies to do business with international partners in challenging cultures
  7. Retaining your best talents

If some, or all of these challenges are keeping you up at night, then you are not alone.Purchasing and Supply Chain Managers managers across the country are looking for solutions to these issues right now.

The Women in Procurement 2016 conference is bringing together a panel of experts to give all in attendance some insights into how leading organisations are addressing these issues. To find out more, download a brochure here.

New FSB Service Could Help SMEs Cut Energy Bills

Small businesses can reduce average energy bills by almost a quarter with the new FSB Energy service.

Gas Bill

  • FSB launches new service where members could reduce the cost of gas and electricity bills by 23 per cent, shaving nearly £1,000 per year off the average company bill
  • 70 per cent of businesses experience difficulty comparing energy tariffs and 43 per cent have never switched supplier
  • Main obstacles to businesses becoming energy efficient are working from leased or rented premises, lack of concern around energy costs and lack of capital for energy efficiency investment

Experts in business, the Federation of Small Businesses (FSB), is launching a new service to help its members reduce their gas and electricity bills. Members using the service could cut approximately a quarter (23 per cent) off their annual energy bill.

FSB’s new Energy Service (www.fsbenergy.org.uk) is part of a concerted drive by FSB to help smaller businesses reduce their energy costs. The organisation is also representing the interests of smaller businesses by responding to the Competition & Markets Authority’s (CMA) investigation into the energy market and creating a resource hub on its new website offering advice on energy efficiency measures.

Making Energy Easier 

The new service enables FSB members to obtain advice on competitive rates for their utilities, identify the annual saving achievable by switching tariffs and even have new contracts arranged for them if requested. It is born out of research suggesting that smaller businesses are being failed by the energy market, with 70 per cent of these businesses experiencing difficulty comparing energy tariffs and 43 per cent saying they have never switched supplier.

The new service will be run on behalf of FSB by business cost saving champion ‘Make it Cheaper‘.  It could generate annual average savings of 23 per cent for new customers switching their gas and electricity provider, equivalent to £973 off the £4,243 average annual energy bill of an FSB member. 

FSB Energy will also take care of the paperwork involved in switching – such as terminating existing contracts on behalf of members – saving them time and hassle in the process. And the service reminds members when their fixed price periods end to make sure they never ‘default’ on to more expensive rates.

SMEs Suffer Higher Costs

The CMA, which is preparing to conclude its investigation into the energy market, says SMEs in the UK pay around £500 million more a year than if competition was functioning effectively. It has voiced concern that 45 per cent of SMEs have been placed on a default tariff – one that has not been actively negotiated – which can be more than twice as expensive as a negotiated tariff. 

Dave Stallon, Operations Director at FSB, said: “Energy is an increasingly important issue for smaller businesses. There are many ways they can make substantial savings through the implementation of energy efficiency measures as well as ensuring they get the best tariff they can on their gas and electricity. Many smaller businesses, however, either don’t believe they can make substantial savings or haven’t trusted the market and the system enough to engage in the process.

“Our new service is designed to give smaller business owners easy to use advice they can trust, to enable them to make savings with the minimum of fuss. We are also very actively engaged with the CMA to improve the energy market for smaller businesses and are offering resources and advice on energy efficiency. In combination, we are confident that our initiatives can help to make a significant difference to smaller businesses’ energy bills.”

Energy Efficiency

In parallel with the establishment of FSB’s new Energy service, the organisation is promoting the benefits of smaller businesses introducing energy efficiency measures. The Department of Energy and Climate Change (DECC) estimates that the average SME could reduce its energy bill by 18-25 per cent by installing energy efficiency measures with an average payback of less than 1.5 years. 

However, while FSB research demonstrates that 90 per cent of businesses want to be energy efficient and 58 per cent of businesses surveyed have already made changes to improve their energy efficiency, there are major obstacles that need to be overcome. 

Almost half (45 per cent) of businesses identified operating from leased or rented premises as one of the biggest obstacles preventing companies becoming energy efficient.  Other barriers identified include a lack of concern around energy costs (45 per cent) and a lack of capital for energy efficiency investment (29 per cent).

The most widely reported energy efficiency measures already taken were: the installation of more efficient lights, lamps and bulbs (40 per cent); the introduction of switch off/turn down policies (23 per cent); and improved insulation (23 per cent). 

For the high level details on the research, check out the infographic below:

20151201 Energy Efficiency infographic FINAL

Established over 40 years ago to help its members succeed in business, FSB is a non-profit making organisation that’s run by members, for members.

FSB offers membership packages from £130. Members get an exclusive package of great value business services including advice, financial products and support. These cover a wide range of benefits such as tax, legal and HR, local network groups, business banking and mentoring.

Paris Climate Conference Emits Cautious Optimism

As the twenty-first session of the Conference of the Parties (COP) rolls into its second week, there is a sense of cautious optimism that the meeting in Paris may produce a global agreement on climate change.

UN-Climate-Change-summit-graphic

The meeting kicked off last week with 190 countries in attendance, with the aim of coming to a universal agreement on climate change and how to handle it. This might seem like a big, if not impossible, ask, but it’s important to remember that this is a world problem and ten years of collaboration has produced some positive results.

Positive Steps

In the past, outputs from the Climate Conference have suffered due to the high number of diverse interests from different countries. When the meeting was held in Copenhagen in 2009, strong differences between the US and China on commitments to minimise rising global temperatures caused a breakdown in negotiations.

However, many observers have said that the countries are in a much better position this year than in many previous years, but also that there is greater collaboration between cities, collectively known as the C40, who are sharing information and achieving outcomes on issues such as food waste collection and urban climate change.

Michael Bloomberg, former Mayor of New York City and UN Special Envoy for Cities and Climate Change, stated, “We’re in better shape going into Paris than we were going into Copenhagen, largely because of the progress cities have made, and C40 cities have helped lead the way. It’s a great example of the power of cooperation.”

And this spirit of collaboration has been seen in the talks between the key countries, with representatives already issuing a first draft of the agreement, leaving a full week for negotiations to take place and the agreement to be finalised.

The ministerial negotiations are where the real challenge lies, as each country approaches them with different goals in mind. Negotiations will focus on helping poorer countries reduce their emissions, how richer countries can contribute financially to make this work, and how global temperature rises can be capped or reduced.

Action Stations

What has been agreed upon is that it is time to act. The meeting has representatives from Kiribati and the Marshall Islands, both countries where rising sea levels have submerged large areas of land. With a focus on the future, it’s now down to see what the actions need to look like.

Alexander Howard, Senior Editor for Technology and Society at The Huffington Post,  notes that much of the focus thus far has been on ‘response’ (e.g. developing crisis management systems), rather working towards low-carbon cities. He acknowledges that this is a difficult goal which could potentially mean, amongst other things, spending a fortune to incentivise the public to alter their lifestyles.

This week will be vital in ensuring the future of countries’ actions against climate change, as any agreement will still have to be implemented. And this is where procurement should come into play.

Howard goes on to explain how “…tech giants like Apple have worked to shift to renewable energy sources. Cities can do the same. Mayors and city councils can use procurement reform to ensure that vendors compete to host the next generation of digital city services in greener data centres powered by clean energy sources instead of coal-fired plants.”

There is potentially a major role for procurement organisations to play in any implementation. It’s now time for procurement to be looking fully ahead to the future and ensuring that sustainability is embedded in processes, helping to support ongoing initiatives.

What are your thoughts on the issue of Climate Change and how it relates to procurement? Get involved on Procurious today!

We’ve also compiled a short selection of the top headlines in procurement and supply chain this week to share with your friends over morning coffee…

Trinidad and Tobago Under Pressure to Reform Procurement Laws

  • Purchasing legislation introduced by Trinidad and Tobago’s government less than a year ago has already faced criticism due to its perceived loopholes and limitations
  • The law, which aimed to create a “comprehensive database of information on public procurement” and “set training standards and competence levels for procurement professionals” was implemented by former Prime minister Kamla Persad-Bissessar, but has since been challenged by the People’s National Movement
  • The amended bill will be put to a committee, with revisions seeking to establish a Public Procurement Review Board, with the role of reviewing decisions made by the Office of Procurement Regulation
  • It is hoped that changes will help to strengthen the existing laws

Read more at Supply Management

LAX Announces $5 billion Procurement Programme

  • The procurement programme seeks to modernise the Los Angeles airport, the fifth busiest in the world
  • The Landside Access Modernisation Programme will include an automated people mover covering 2.25 miles, which will connect the central terminal area with a car rental area and a station connecting the airport to the LA Metro
  • The eight-year programme aims to relieve traffic congestion within the terminal area and on surrounding streets
  • It is hoped that using a strategy of “Design, Build, Finance, Operate, Maintain” (DBFOM) will help with efficiencies in running the project

Read more at Airports International

Department for Transport (DfT) Receives CIPS Certification

  • The DfT recently transformed their procurement function which has seen procurement’s profile raised across the DfT
  • A “Procurement Centre of Excellence”, which operates across the entire department, was also created and procurement governance processes were strengthened, with new guidance issued across the organisation.
  • Melinda Johnson, director of group commercial services at the department said the ‘achievement of this certification has enabled us to assure our ‘best practice’ guidance, make changes as necessary and given us pointers for further improvement.’

Read more at Supply Management

Samsung/Apple Patent Dispute Continues

  • Samsung has agreed to pay Apple $548 million in court ordered damages in their long-running patent dispute
  • It is the first meaningful transfer of money as part of the dispute, which began when Apple sued Samsung for perceived copyright infringements relating to the iPhone
  • Following a jury ruling in Apple’s favour, the US-based organisation were awarded over $1 billion in damages
  • There is a further case pending next year, worth $400 million, relating to the same charges

Read more at The Wall Street Journal