All posts by Procurious HQ

IT Spend – Do You Know Who’s Calling The Shots?

Do you know who’s responsible for your organisation’s IT spend?

Spiceworks - IT decision makers report

As you well know, Procurious is the home of the procurement and supply chain functions on the Internet. We’re not alone in the world of niche social networks however. Spiceworks is a vertical social media site for IT professionals. It functions in much the same way as a Procurious does. A repository for knowledge sharing, a place to get questions answered and somewhere to connect with the global IT community.

Spiceworks recently released a report that we believe the Procurious audience will find interesting. The report is pitched at those marketing to IT decision makers and details who has the final say on IT purchasing decisions at different sized organisations. Perhaps naïvely, there is no reference procurement’s role in the IT purchasing cycle, but its findings (listed below) are none the less interesting.

Home office market

1-10 Employees.

Generally in organisations of this size, either office managers or company owners themselves make IT purchasing decisions. Purchasing processes tend to be unsophisticated or non-existent. Purchasing tends to take place at retail stores and is based on driving events like a new employee starting or current equipment breaking down.

The ’S’ in SMB (Small to medium businesses)

10-250 employees.

Organisations of this size will tend to have at least one IT generalist that is responsible for making IT sourcing decisions. These organisations don’t posses the bulk buying power of larger companies and hence, are very careful with their IT budgets. Decision making power likely still lies with non-IT management, but close attention is paid to the advice provided by IT staff members.

The ‘M’ in SMB

250-500 employees.

As companies grow in size, so too does the complexity of their IT requirements. Firms of this size will generally have a small but highly skilled IT team, led by an IT director (or equivalent). Purchasing power will tend to reside with the head of the IT function. These companies are purchasing IT products and services on a regular basis and are generally looking to establish close, ongoing relationships with suppliers. The relationships these firms have with their suppliers tend to be collaborative, with the IT team often asking suppliers for information and advice on IT investments.

The Large SMB

501 – 1000 employees.

The sheer size of these organisations requires a well structured IT team. It is not uncommon for IT functions in businesses of this size to run to 20 people. Generally, a sound hierarchy of responsibly and purchasing authority has been established. The team will often be led by an IT director or VP that is viewed as a senior executive within the business. This IT director, will still likely maintain a hands-on role in delivering IT solutions within the business.

The Enterprise Market

Over 1000 employees.

Enter the CIO. Throughout the report, Spiceworks touches on the fact that many marketers target the CIO as the key to unlocking IT spend. At the smaller firms, this isn’t exactly true as many wont even have a position of CIO. However, at the enterprise level the CIO is well and truly present.

A good CIO will have strong relationships with the supply market, both with his current suppliers and the external market. He will understand what is current in the IT space and will have final say on any major IT purchases. He should not be the only point of contact for IT marketers however. IT decisions in these large organisations are often made by staff a few rungs down the IT corporate ladder.

What are your thoughts about this split? In your experience, is this where the decision making power lies within IT departments? And the big question, where does procurement fit in to all of this?

H&M Struggle with Strong US Dollar

Fashion retailer H&M’s profits miss forecasts thanks to might of US dollar.

H&M hit by strong US dollar

The world’s second largest fashion retailer, H&M, is facing a significant reduction in its profit outlook. The bleak outlook is due largely to changing currency valuations and their impact on the firm’s supply chain.

Despite rapidly increasing sales figures, the firm has warned of a “very negative” impact to its bottom line based on the growing strength of the US dollar.

H&M has suggested that the strengthening US dollar will cause second quarter profit figures to take a significant hit. It’s also likely that these troubles will continue into the second half of the year as analysts suggest the value of the US dollar will continue to improve against most other currencies.

The currency exposure the firm is facing is due to the structure of its supply contracts. H&M sources the majority of its products from Asian markets. The contracts for these garments are agreed and signed in US dollars. However most of the retailer’s sales take place in the European market and are conducted in either Euros or Pounds.

It therefore follows that as the value of the US dollar increases against the Euro and the Pound, the cost of H&M’s garments and raw materials experience a relative increase. This means that unless the firm elects to increase in-store pricing, the margin it makes from selling each garment reduces. Clearly, this has a detrimental impact on the firm’s profitability.

One would imagine that the procurement and supply chain departments at H&M identified this currency exposure some time ago and have established a form of currency hedging as means to minimise its impact. But, it should certainly prompt questions in the minds of procurement and supply chain managers with cross currency operations to take a closer look at their currency exposure.

New Runway Offers Freight Potential, While US Investigates ‘Collusion’

The airline industry is a popular news topic, appearing on two fronts this past week. The decision on a new runway for London got people talking about airfreight, while in the US, an investigation was announced by the Department of Justice into alleged collusion.

All eyes on Heathrow expansion plans

New Runway Plans

Last week, a UK Government commission selected Heathrow as the preferred location for a new runway to be built in London. Following the publishing of the report, UK Prime Minister, David Cameron, confirmed that a final decision would be made by the end of the year.

The plans for Heathrow, already the busiest passenger airport in Europe and third busiest in the world, appear to have beaten competition from London Gatwick and a proposal for a brand new airport in the Thames estuary.

While it appears that the debate will rage on until the final decision is made at the end of the year, business leaders and UK organisations have welcomed the decision. With Heathrow currently operating at 98 per cent capacity, many think that this is directly impacting business and freight.

‘Importance of air freight’

The freight industry believes that additional runway capacity at Heathrow is required in order to service new markets in Asia, South America and the Indian sub-continent.

The Chief Executive of the UK’s Freight Transport Association (FTA), David Wells, stated that, “80% of freight is carried in the holds of scheduled passenger aircraft using Heathrow Airport.”

“Whereas passengers could be persuaded to use a different airport, the diminution of Heathrow as an international air cargo hub favours neither the country nor the economy,” Wells concluded.

Future Exports

The commission report highlighted future exports for the UK as a reason for their decision. The report stated, “By 2030 advanced manufacturing industries such as pharmaceuticals or chemicals, whose components and products are predominately moved by air, are expected to be among the top five UK export markets by their share of value.”

Sir Howard Davies, Chairman of the Airports Commission, who compiled the report, went on to say that the Heathrow option provided the “greatest benefits for business passengers, freight operators and the wider economy”.

While it remains to be seen if the UK Government will go along with the Commission recommendation, it does appear that business might benefit from a new runway at Heathrow.

Collusion Investigation

Over in US, the industry is in the news for less positive reasons, with the Department of Justice (DoJ) announcing a new investigation into alleged collusion between some of America’s biggest airlines.

United Airlines, Delta Air Lines, American Airlines and Southwest Airlines have all confirmed that they are part of the investigation, which will focus on whether the airlines have been coordinating to keep tickets available at a steady number, artificially increasing demand and driving up prices.

The four airlines account for 85 per cent of the domestic routes across America, partly due to two high-profile mergers in the past year. The investigation also comes at a time when airlines are posting huge profits due to the falling oil prices.

Questionable Outcomes

However, many commentators believe that the investigation will not produce outcomes that will be of benefit to consumers. For one, it is hard to prove that airlines are actually colluding to keep availability low, as with better technology, information on both capacity and pricing can be found easily and immediately.

There is also an argument to say that it would be just as effective to let markets sort out collusive behaviour on their own. There are other ways to ‘collude’ beyond pricing, but ultimately, if inefficiencies appear in the market, new competitors will emerge or consumers will look elsewhere to satisfy their needs.

Whatever the final outcome of the investigation, it looks as though there will be greater scrutiny on the airlines in the coming months. While it may not lower prices in time for the busy summer holiday period, there is a chance it may push the airlines to be more transparent and act in a favourable way for consumers.

Do you live near Heathrow or commute through there regularly? What do you make of the decision for a third runway? Do you think the DoJ investigation will make any impact? Let Procurious know what you think.

While you think about that summer sunshine, have a read through the headlines from the procurement and supply chain world this week.

BP agrees to $18.7 Billion payout for deadly 2010 oil spill

  • BP agreed on Thursday to pay $18.7 billion for damages caused by its oil rig explosion in the Gulf of Mexico in 2010, an accident that resulted in the deaths of 11 people and the largest marine oil spill in history.
  • The settlement covers lawsuits filed by parties including the U.S. government, five U.S. states that were affected by the spill, and several hundred local government organisations. It also includes a civil penalty of $5.5 billion under the U.S. Clean Water Act.
  • The settlement, which comes in addition to the hefty sums that BP has already had to pay in legal and clean-up fees over the last few years, will be paid over 18 years and is expected to end the majority of BP’s litigation wars over the accident, though the company still faces shareholder lawsuits and some outstanding costs from a 2012 class action settlement.
  • With this new settlement, BP’s total bill for the spill climbs to $53.8 billion—a number that exceeds the company’s profits in the last three years.
  • Carl-Henric Svanberg, BP’s chairman, said in a statement that the agreement offers “a path to closure” for BP and the Gulf. “Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise,” he said.

Read more on Slate.com

Fast fashion retail market trends and opportunities 2015-2019 shared in new research report

  • The report titled “Fast Fashion Retail Market: Trends and Opportunities (2015-2019)” analyzes the potential opportunities, challenges, demand drivers and significant trends representing fast fashion industry in the world.
  • The report gives valuable insight into various types of brands of fast fashion such as ZARA, H&M, Uniqlo and GAP.  It profiles and analyzes the leading five companies operating in this industry with an overview of their business and finance structure along with a brief discussion of their future business strategies.
  • The report also studies the growth pattern in the fast fashion retail market and the latest trends concerning fast fashion. Further, the report analyzes the current market size and project future market size of the overall fast fashion retail business for the years to come.

The complete report is available to download here

From trash to treasure: Adidas designs shoes made of ocean garbage

  • German sportswear brand Adidas has joined forces with Parley for the Oceans, an organisation formed in 2013 dedicated to undertaking projects to protect and conserve the Earth’s oceans.
  • To raise awareness about ocean pollution, Adidas has designed a prototype pair of sneakers with an upper made entirely from recycled ocean waste and illegal deep-sea gillnets.
  • These gillnets were retrieved by Parley for the Oceans partner Sea Shepherd, which spent 110 days tracking an illegal poaching vessel, finally catching it off the coast of West Africa.
  • “We are incredibly excited to join Parley for the Oceans as they bring the cause of the oceans to the attention of the United Nations,” said Adidas’ Eric Liedtke. “Adidas has long been a leader in sustainability, but this partnership allows us to tap into new areas and create innovative materials and products for our athletes. We invite everyone to join us on this journey to clean up the oceans.”

Read more at CNET

Supply chain workers urge Walmart to act on supplier standards

  • Walmart must do more to improve supply chain transparency and hold its suppliers accountable, according to a study from the Food Chain Workers Alliance. The report includes research on 11 different food-related industries in the retail giant’s supply chain, as well as on the corporation’s impact on local farmers.
  • The alliance said the retailer should do more to hold suppliers accountable to labour and environmental standards. The report, Walmart at the Crossroads: the Environmental and Labor Impact of Its Food Supply Chain, calls on the company to enforce its existing labour and environmental standards and fulfil its goals for local food purchases.
  • The report also contains a raft of recommendations for the supply chain. It said Walmart should improve its supply chain transparency by requiring suppliers to identify the names and addresses of all factories, farms, fishing vessels, or other entities that contribute to the product being purchased before a supplier contract is awarded. This information should be made public, the organisation which represents workers in the food supply chain said.
  • The study also called for an independent, third party body to monitor and verify supplier compliance with Walmart’s labour and environmental standards. Suppliers should have long-term contracts and be paid fairly, and should pay workers fairly.

Read more at Supply Management

Procurious Big Idea #28 – Meeting Suppliers Face-To-Face

Marisa Menezes, Managing Director for The Source, believes that there’s a lot to be gained by conducting face-to-face meetings with your suppliers.

Here Marisa focuses on the hot topic of Supplier Relationship Management and how spending face-to-face time with suppliers and getting to know each other’s organisations can help to build closer relationships.

See more Big Ideas from our 40 influencers

Amazon Prime Now Will Shake-Up Logistics Strategies

Amazon Prime Now will force retailers to reassess existing delivery strategies.

Amazon Prime Now will change the logistics industry

The success of Amazon’s new one-hour delivery service will depend on a number of factors, notably product availability, as well as the customer’s willingness to pay inflated delivery prices to secure a product and have it in their hands within 60 minutes. However, if it proves popular, it will up-the-ante on fellow retailers and put pressure on competitors to reassess their existing delivery strategies. The warning comes from Jon Gibson, Head of Logistics at global supply chain consultancy Crimson & Co, in comments supplied to Procurious.

Jon believes the key to the service, will be the retailers ability to balance additional delivery costs alongside speed of service. Critical to this will be the need to forge new relationships with unconventional partners, which can ultimately deliver the products to the consumer faster, more conveniently and at an affordable price.

Following success in the US, Amazon has recently announced that it would be launching Amazon Prime Now, a one-hour delivery service for UK Prime subscribers in designated London postcodes. If successful, further rollout will follow across the country. The launch is expected to raise the stakes amongst other online retailers keen to grab market share from bricks and mortar competitors.

Jon states that in order to compete with the new service retailers will be forced to rethink current delivery strategies. Over the last year the growth in click & collect services has seen many consumers favour convenience over speed. The move by Amazon could buck this trend and it will be the job of the retailers to react accordingly:

Speaking to Procurious Jon commented: “Historically, delivery strategies have always been a challenge for retailers. The proliferation of tablets and smartphone devices puts the emphasis very much on speed of service giving consumers instant visibility over a far wider range. Visibility of the range has driven a desire for quick access. Reacting quickly and efficiently has always been difficult for retailers, either because they are often serving the online market from retail outlets, which puts pressures on stock, or the massive peaks in online demand surges that have recently been driven by events such as Black Friday being too great for traditional transport methods to cover.  

“The emergence last year of click & collect changed that, (although, Black Friday was still a challenge many retailers failed to cope with effectively), with greater emphasis on convenience for the consumer. They can choose a destination point close to their home or work and collect their item at their leisure, often a lot quicker then if they had arranged a home delivery. This is both more convenient and cost effective for the retailer, as it leads to consolidation of delivery and fewer occasions when a delivery cannot be completed because the intended recipient is not available. Amazon’s launch of a new one-hour delivery service, however, could flip that trend.”

He continues: “For a consumer, the opportunity to buy a product online and have it in your hands within an hour is hugely appealing. The biggest barriers for uptake of this service will be the associated costs. Products will be delivered by Amazon Logistics, its own delivery business, from an east London warehouse, at a premium delivery price. Savvy retailers should therefore look at how they can compete with this.

“Key will be addressing relationships with existing suppliers as well as forming new ones with unconventional partners. Local transport businesses such as taxi firms, and even fast food delivery services could all potentially be used to maximise speed of service for the consumer at a price which is competitive against other retailers. The pressure will very much be on the retailer to ensure this is carried out effectively – those that don’t are at risk of being left behind by their more progressive competitors.”

Three-quarters of business leaders think Greece will leave Euro within the year

In the heat of the Greek banking crisis, an overwhelming majority predict Greece will leave the Euro behind.

Will Greece leave the Euro behind?

in a survey conducted by the Institute of Directors (IoD), business leaders were quizzed on Greece’s monetary troubles. Three in four IoD members think it’s likely Greece will be forced to leave the European single currency within the next twelve months, against only 2 per cent who think it is very unlikely.

Procurious asks: What impact will a “Grexit” have on the UK economy?

The most probable outcome of “Grexit”, IoD members say, is a messy default which negatively affects financial markets and creates pressure on other Euro members. This outcome was considered likely by nearly two-thirds of the business leaders surveyed, while 45 per cent also think there was a risk of widespread bank runs in other southern European countries. Longer-term, 45 per cent of members say there is a good chance “Grexit” will be followed by other countries leaving the Euro. 

three-quarters of business leaders think Greece will leave Euro within the year

While the direct exposure of IoD members to Greece is limited, with 77 per cent having no business interests in the country, nearly half think that a Greek exit from the Eurozone would have a negative impact on the UK.

Commenting on the results, Simon Walker, Director General of the Institute of Directors, told Procurious:

“British businesses are nervous about the potential knock-on effects of “Grexit” on the UK economy. They have reduced their direct exposure to Greece in recent years, but are worried that a messy divorce from the single currency would shake markets across the continent and destabilise the already fragile economies of other southern European countries. IoD members do not expect the chaotic situation in Greece they see on the evening news to end anytime soon. 

“There is a heated debate going on about whether it would be better for the Greek people if they left the Euro, but it’s clear that their decision at the referendum on Sunday has significant implications for the whole of Europe.”

three-quarters of business leaders think Greece will leave Euro within the year

Procurious asks: What impact will a “Grexit” have on the UK economy?

Where Are Procurement’s Blind Spots?

Watch the Procurious Big Ideas Panel Discussion on Procurement’s Blind Spots.

In the second of the panel discussions from the Big Ideas Summit, Tim Hughes, Olinga Ta’eed, Chris Lynch, Giles Breault, Nic Walden, Jason Busch and Lance Younger commented on the risks the profession will face in the coming years.

Watch a sample below

With hot topics like social value, procurement transformation, procurement moving away from Finance and leveraging external innovation, the conversation got a little heated… But suffice to say this is one discussion you don’t want to miss out on!

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

Top Tips For Using Procurious

Looking to make more of an impact on the Procurious network? Eyes down for a handy set of tips to help you make the most out of our community.

So if you’ve ever caught yourself asking “How do I…?” Read on for our top Procurious tips.

How to use Procurious

How to join using Facebook, Twitter or LinkedIn

We’ve now opened registrations to Facebook and Twitter (previously we only supported LinkedIn). Just head to the sign-up page to use your preferred method.

How to add a profile picture

Procurious is a place to share your knowledge, grow your network, learn from your peers and make meaningful connections. Surprisingly enough, one of the easiest ways to do this is by adding a picture to your profile. Learn how.

How to complete your Procurious profile

Nobody likes to leave a job half-done… This also rings true on Procurious where profiles are sometimes being left incomplete.
Do it now
.

How to grow your network and invite people

Whether it be inviting people using the ‘Build your network’ tool, LinkedIn, or personalised email link – you’ll be expanding your Procurious network in next to no time. Get building.

How to choose which updates you see

Procurious provides you with a choice of viewing modes; choose to view updates from the ‘Whole Network’ or ‘My Network’. Make a decision.

How to add a question on the  Discussions page

The ‘Discussions’ area on Procurious is buzzing with inquisitive minds. Go ahead and ask the community! Riddle me this.

How to learn a new skill

Procurious isn’t just a place to network – you can delve into our learning resources and teach yourself a thing or two in the process. We offer both free and paid learning materials, take a look.

How to tag Procurious members in your status and posts

You’re probably already familiar with tagging from using it on the likes of Facebook and LinkedIn… Well here’s how to use tags on Procurious. See how.

How to add additional email addresses to your Procurious account

Signing-up to Procurious to grow your professional network is all well and good, but what happens when you change your contact details, land a new role, or leave a company? Find out how.

How to RSVP to an Event

Our Events page contains both upcoming and past engagements. Here you’ll find essential info like the programme, speakers, fee, and other Procurious members who might be thinking of attending. Get your diary in order.

How to post your own Event

We’ve now made it possible for any Procurious member to post their own Event and have it displayed in our Event listings. Go here to start telling the world!

How to start your own Group on Procurious

Anybody can create their own Group on Procurious (provided it doesn’t exist already!) Groups are the ideal place for people to gather and share around a core interest. See how.

How to use Procurious on your smartphone or tablet

If you’re just visiting Procurious via your PC, laptop, or Mac, you’re missing out… Discover how to go mobile.

How to subscribe to the latest procurement and supply chain news

We want to make Procurious part of your daily online routine, so we’ve added a curated ‘News’ service . Get your daily news fix.

How to control your email notifications

If you’ve found that you’re receiving too many email notifications from Procurious (invitations, messages etc.) then follow these steps to curb the flow.

How to change your Procurious privacy settings

You can choose which details you want made available to other Procurious members on your ‘Settings’ page. This includes everything from personal details to your accounts on other social networks. Choose now.

How to find all of the Big Ideas Summit videos

We’ve collated all of our videos from the Big Ideas Summit in one place. So whether you’re after the keynotes, panel sessions or individual ‘Big Ideas’ just head here.

How to delete your Procurious account

We hope you find Procurious useful, but all good things inevitably come to an end. If you really want to leave then please send us an email – you can reach us at procurious@procurious.com.

For more tips and tricks check out our expanded Frequently Asked Questions page.

Why Cyber Security Needs To Be On Your Board’s Agenda

The Confederation of British Industry has offered-up some tips to help keep your company safe.

Cyber security tips to keep your business safe

Like any other large-scale threat to a company, cyber security must be dealt with at board level, the CBI said at its inaugural Cyber Security Conference in London.

Cyber security is nothing new, but (as Procurious was told at a recent CIPS workshop) it’s a risk that’s risen to the top of many a government’s agenda.

Matthew Fell, CBI Competitive Markets Director, offers the following says this of the threat:

“Getting cyber security right is critical for modern businesses, whatever their sector or size… With our IP, finances and our customer relationships all inextricably linked to technology, we must take steps to protect our online assets.

“Awareness of this critical business risk has risen in recent years, especially as the number of prominent cyber hacks hitting the headlines has sharply increased. Unfortunately, even as awareness in the business community has increased, with a small uptick in action, there is still a disconnect between awareness and action – especially for our high growth small and medium sized businesses, who are at just as much at risk as global brands.”

There’s no silver bullet

Matthew echoes the words of other experts in his field and reasserts the importance of businesses needing to act now in order to mitigate the scale of the impact.

“Nearly all businesses suffer cyber-attacks – 81 per cent of large businesses suffered a security breach last year alone, with the figure for small businesses at 60 per cent.

“Whilst the number of these attacks is going down, as hackers have become more sophisticated and targeted, the cost of these attacks almost doubled last year. That puts the average cost for large businesses between £600,000 and 1.15mn and for small businesses between £65,000 and 115,000.

“Like any other large scale threat to your company, the issue of effective cyber security should be firmly on the agenda of the board.

“Yet only about half of large businesses and a third of small businesses have adequate insurance cover for their online assets in the event of a breach. As the nature of liability changes in the digital age, businesses will need to rethink the assurances they have in place to mitigate financial loss.”

What you can do now

The UK government has issued ‘Cyber Essentials’ – an industry supported scheme to help organisations to protect themselves against common cyber security threats and identify risks.

The full scheme is open to UK organisations and allows them to gain 1 of 2 new ‘Cyber Essentials’ badges to show they are taking steps to protect themselves. If you’re not in the UK that’s OK, as the guidance and recommendations laid out in the ‘Cyber Essentials’ pack will help you on the right path.

What do we mean by risks?

Simply put, a risk is determined as anything that will have an impact on something we value. Don’t overly confuse yourself with lingo, instead take cyber security at face value and ask what losses would be acceptable to you?

In our case, at Procurious we want to ensure that your data is safe (membership details consisting of email addresses, password etc.), all of our content (videos, articles), social networking and online accounts, and making sure that our domain remains online. As an online business network these are all core elements to what we’re trying to achieve. We’d recommend you assess your own security needs, and in doing so tailor your approach to identify where you really need the protection.

For more information on the sources cited in this article please visit:
CBI
Cyber Essentials