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Top Ten Global Supply Chain Risks Infographic

Riskmethods have published an infographic that illustrates the Top 10 Global Risks to Supply Chains.

The infographic breaks the risks down into two categories, assessing both the likelihood and impact.

According to data obtained from the Global Risks Perception Survey 2014 at the World Economic Forum, four of the risks cross into the two categories. The risks shown below are deemed to be the ten most dangerous.

Ten Global Risks in Terms of Likelihood

Top ten global supply chain risks infographic
These ten risks are the most relevant supply chain risks globally in terms of likelihood on a scale of 1 to 10 (where 10 is the most likely one).

 

 

 

 

 

 

 

Ten Global Risks in Terms of Impact

Ten Global Risks in Terms of Impact

Four of the risks are featured in both charts. Namely: water crises, interstate conflicts, failure of climate-change adaption and unemployment.

Riskmethods also looked at information supplied by Allianz Global Corporate & Speciality – here 58 per cent of people polled considered natural catastrophes the top risk when it came to supply chain disruptions.

Greek Debt Crisis: What Impact Will UK Supply Chains Feel From A ‘Grexit’?

After months of  fruitless negotiations, Greece stands less than 24 hours away from defaulting on its debt repayment to the IMF.

Greek banking crisis

With reports stating that Greece’s government is running out of money, announcements that banks will be closed all week and billions withdrawn from the banks by Greeks in the past few weeks, it seems virtually impossible that the country will find the €1.5bn ($1.7bn) that it owes.

Grexit – Yes or No?

A referendum is to be held on the 5th of July in Greece to establish public support or rejection for the IMF’s latest deal offer. But, should the Greek public reject the deal, it seems increasingly likely it will signal this first exit by a country from both the Euro and the Eurozone.

With the default and huge financial impact on Greece’s own economy, many analysts believe this will also lead to Greece’s exit from the Euro – but what impact will this have on businesses and supply chains around Europe?

UK Exports and Business

The UK exported approximately £2.82bn worth of goods and services to Greece in 2013, with figures estimated to be the same for 2014. This only represents 1.2 per cent of UK exports in Europe and places Greece in 37th for UK global exports.

The UK’s main export to Greece is pharmaceutical products, with GlaxoSmithKline and AstraZeneca two of the largest exporters. Other organisations such as Marks and Spencer, Dixons Carphone, Vodafone and Unilever all have major operations in Greece.

Vodafone, who acquired a controlling stake in Hellas Online, a broadband and fixed line provider in Greece, see around 2 per cent of overall revenues from Greece. The company risks exposure, but has publicly committed to the market and customers in Greece

Most organisations have kept details of any contingency plans in the event of the ‘Grexit’, although Dixons Carphone has revealed they have a ‘detailed plan’, without revealing whether or not they would be pulling out of the market.

There are also worries that continuing difficulties for Greece could have a major impact on UK food and drink exports. Experts believe that UK organisations would be left with a choice of dropping prices to remain competitive, or keeping them high and risking a loss of business.

Impact in the Eurozone

While the loss of business to the Greek economy will probably be covered by the organisations in question, this knock-on effect across the rest of the Eurozone is seen as the key issue. The Eurozone is the UK’s single biggest trading partner, with an additional £55bn held in trusts investing in Europe.

However, with the European Central Bank (ECB) putting approximately €60bn (£43bn) per month into the Greek economy through a quantitative easing programme, the overall impact might be limited to a slide in share prices.

Outside of the UK, there are similar concerns for organisations, with high potential impacts to the German shipping industry through lower freight demand and rates and financial impacts to banks in Germany and France (as well as the USA).

Whatever happens, the next fortnight will be pivotal for both the Euro and the Eurozone and the impacts may be wider reaching than many expect.

Are you a procurement or supply chain professional in Greece? What impact are you seeing in your role? We’d love to hear your side of the story, so get in touch with Procurious today.

Meanwhile, here are the other key headlines from the procurement world this week.

Unilever to crowdsource solutions to global sustainability challenges

  • Unilever has announced plans for a major new online crowdsourcing platform, dubbed Foundry IDEAS, which aims to get customers involved in its efforts to combat environmental and social problems.
  • The multinational consumer goods giant is to run the platform through its Unilever Foundry innovation initiative and will invite people to share their solutions to a range of ‘grand challenges’, such as climate change.
  • The project is designed to help speed up the delivery of the company’s Sustainable Living Plan, which was first launched in 2010 and aims to halve the environmental impact of its products, as well as improve the health, wellbeing and livelihoods of people across the world, by 2020.
  • The first of the initiative’s ‘grand challenges’ will ask people to present their ideas to combat issues relating to sanitation, hygiene and nutrition. The best proposed solutions may be piloted and implemented, while one-on-one mentoring will be offered to companies or organisations coming forward with viable proposals.
  • Unilever has already made significant strides towards reducing its carbon footprint in recent years, having reached its million tonnes saved milestone earlier this year thanks to a wide range of renewable energy and energy efficiency projects, including a recent programme to use waste materials from the production of Marmite and Flora to generate low-carbon energy.

Read more at Business Green

 

Food supply chain needs protection in Calais crisis

  • Food manufacturers should protect their supply chains from the “warzone” created by the strike action and illegal migrant crisis unfolding at the port of Calais, warns a leading risk management consultant.
  • Queuing lorries and cars ran the gauntlet of hundreds of illegal migrants, as they strove to board vehicles bound for Britain. The migrants sought to take advantage of disruption at the port caused by striking French ferry officials.
  • The chaotic scenes at the port – described by one driver as being like a “warzone” – underlined the need for planning, said risk consultancy firm Aon Risk Solutions. “These events have highlighted a genuine need for scenario planning,” said its head of business continuity practice Vince West.
  • “While it is unlikely businesses can negate the entire impact of that type of event, arrangements on shipping, contractual protections and flexible commercial relationships with hauliers can be the difference between a bottleneck causing asphyxia [to a food manufacturing business] or allowing your company to breathe easy.” Strike action was one of the most “singularly uninsurable perils” and is excluded on most insurance policies, Vince added.
  • “With memories still fresh of French truckers blockading motorways on both sides of the English Channel in 1997 and 2002, the potential for distribution to come to a standstill is real.” Capacity can quickly become exhausted when there are few alternative freighting options. Some manufacturers in markets, such as electronics, have switched to air freight, but, for many businesses the costs are prohibitive, he said.

Read more at Food Manufacture

Zambia adopts e-procurement system to curb corruption

  • Zambia has joined the growing list of countries in Africa that are adopting electronic procurement systems in an effort to curb rampant corruption in bidding for public contracts, especially in the telecom and construction sectors.
  • Kenya was the first country in Africa to implement an automated, end-to-end procurement and payment system in an attempt to enhance transparency, accountability and fairness.
  • The World Bank, a major funder of telecom and construction projects in Africa, is providing financial and technical support for e-procurement initiatives in several African countries including Zimbabwe, Nigeria, Mauritius, Cameroon, Uganda and now, Zambia.
  • Zambia and Kenya have recently been forced to cancel telecom tenders worth millions of dollar because of corruption in the manner in which senior government officials awarded contracts to suppliers. The central problem is that government officials take kickbacks from vendors to award contracts and inflate project costs.
  • Zambia Public Procurement Authority (ZPPA) Director General Chibelushi Musongole said the country’s e-procurement system will reduce malpractice and improve efficiency in monitoring bids and contracts. Interested bidders, Musongole said, will be able to submit their offers from anywhere in the world through the ZPPA website. Bidders will have automated compliance validation during bid submissions.

Read more on PC Advisor

Healthcare Supply Chain Transparency May Save Billions in Waste

  • Steve Kiewiet, Vice President of Supply Chain Operations at BJC HealthCare, spoke withRevCycleIntelligence.com to provide an expert overview of the current state of healthcare supply chain and its greater implications on revenue cycle.
  • Steve commented the healthcare supply chain industry is currently not at the same level as many other industries in terms of efficiency, collaboration, transparency, and connections. “We have a lot of ground to cover to make the changes necessary to live in the new healthcare economy growing out of healthcare reform and the Affordable Care Act.”
  • To help cover more ground, Steve says the healthcare supply chain must focus on end-to-end visibility. Supply manufacturers are disciplined in their supply chain efficiency as raw materials progress towards finished goods. However, once a finished good is produced, “from that point up until it’s used for a patient, we haven’t focused on efficient tracking like we need to,” he explains.
  • “Due to vertical internal structures, supplies and supply data historically have been siloed and firewalled so that information important for efficient business operations is fragmented. We end up spending billions of dollars of inventory within these various silos because we live in a world where you can never run out of anything ever, in the interest of what is best for the patient.”

Read more at RevCycle Intelligence

And Finally, Take Part in Social Media in Procurement Survey

  • Social media is everywhere in the 21st century, with customers and companies using it to communicate, share ideas, seek for information, build brand images or sell products.
  • The importance of developing, managing and maintaining business networks is, next to other tasks, seen as a key task for procurement, but the use of public social networks for work (and not for private reasons) is rarely researched.
  • This study, by Maastricht University, aims tries to analyse two concepts related to social media – how does social media use at work affect a procurement professional’s performance and why some managers are using social media for work in procurement intensively and others not.
  • The results of the survey could open up some interesting areas of research into the use of social media across procurement and how professionals can leverage and benefit from its use.

Read more and take the survey here

Your shameful email sending habits have been revealed in a new survey

An independent study into email user habits has revealed that a worrying number of professionals find it hard to drag themselves away from work email.

Email sending habits revealed in new survey

A new study has found that work-related email is disrupting everything from holidays to funerals as employees struggle to cope with volume and culture of ‘always-on’ working.

GFI Software (the masterminds behind the study) wanted to gauge how employees interact with email and the main obstacles to effective workplace email use.

Of those surveyed, some 47 per cent admit to checking work email at least once a day in their personal time, up six per cent, while 33 per cent admit checking multiple times a day or in real-time through pre-work mornings, evenings, weekends and days off. Furthermore, 43 per cent regularly check their work email after 11pm at night.

Key findings from the survey include:

• Monitoring of work email outside of work hours is inescapable, with 73 per cent of those surveyed regularly checking their work email at weekends.
• A further 58 per cent admit to checking work email while on holiday.
• Almost one quarter (24 per cent) feel compelled to reply to work emails within 15 minutes of receipt.
• In total, 72 per cent of respondents reply to work emails in under one hour, while just under three per cent take more than a week to reply.
• Down five per cent from 2014, the survey found that 23 per cent of workers surveyed use their work email account for personal activities. The drop suggests increased concern over company monitoring of workplace email and Internet use.
• Nearly 29 per cent of work email users surveyed do nothing to organise their email, including archiving, leaving all incoming mail in their Inbox.
• Just under 18 per cent have had an argument at home due to them checking work email during family time.

“Setting and maintaining realistic boundaries between work and personal life is important to health, happiness and productivity. This balance is becoming harder than ever to accomplish due to the growth of tablets, smartphones, and now smart watches and in-car communications – all of which keep people wired into work even after they go home of an evening,” said Sergio Galindo, general manager of GFI Software.

The survey revealed a substantial level of work leaking into personal and family occasions. For example:

• Almost five per cent have checked email during a wedding
• Nearly three per cent have gone through work email while attending an event at their child’s school
• More than one per cent have actively checked email while either they or their partner was in labour
• … and just under one per cent have checked email during a funeral

The research was also conducted among the same survey sample in the US, with broadly similar results. Differences of note did include a higher proportion of users preferring instant messaging (eight per cent), a higher proportion of email checking during funerals (three per cent) and during child birth (four per cent), while fewer (12 per cent) have argued at home over checking work email out of hours.

The cost of maintaining a supply of ethically sourced coffee

Starbucks contributes $30M to supplier development fund

Starbucks contributes $30M to supplier development fund

Global coffee chain Starbucks has announced it will contribute a further $30M USD to its Global Farmers Fund, more than doubling the company’s investment in this initiative. The fund, established back in 2008, is designed to provide support for farmers in the company’s supply chain.

In the announcement Starbucks claimed that its investment aligned directly with the firm’s global sourcing strategy. Starbucks purchases coffee from more than 30 countries across the globe. Many of these suppliers are located in the developing world and do not have access to the infrastructure and financial support to secure the longevity of their operations.

“By providing access to capital, farmers have the ability to make strategic investments in their infrastructure, offering the stability they need to manage ongoing complexities so that there is a future for them and the industry.” Said Craig Russell, executive vice president of global coffee for Starbucks.

Recent years have seen the coffee industry undergo a series of supply shocks due in large to adverse weather conditions. This year’s prediction of an el Niño weather pattern could potentially impact the output of coffee producers. Starbucks investment should better prepare farmers for these sorts of events.

It is thought that by investing its supply base, Starbucks will not only improve its security of supply, but also the quality of its product, its environmental impact and ultimately its profitability.

Richard Rhinehart, Executive Director SCAA Specialty Coffee Association of America made this statement following Starbucks announcement; “Traditionally smallholder coffee farmers depend on a single payment at the end of the harvest season to cover their expenses for an entire year. They are most often viewed as too high risk or lack access to any conventional loan facilities, and are captive to a cycle of sustained poverty. In order to break this cycle, these producers need to be able to make investments in their farms, households and communities that will deliver long-term benefits. Such investments require credit, and buyers who are willing to extend credit and share risk with farmers are not only stabilizing their own supply chains but contributing to the resiliency of coffee production globally.

2014 Best Year for Supply Chain and Logistics since Great Recession

The revelation comes from the Council of Supply Chain Management Professionals (CSCMP) 26th Annual “State of Logistics Report.

This year's State of Logistics Report

This year’s State of Logistics Report revealed that the supply chain industry experienced its best year since the Great Recession. The report examined the economic vitality and associated challenges facing each segment of the logistics industry. It also tracked and measured all costs associated with moving freight through the U.S. supply chain since 1988.

According to the research the transportation sector grew by 3.6 per cent in 2014 due to stronger shipment volumes rather than higher rates. The U.S. economy was on solid ground. New job creation was consistent, real net income and household net worth inched up, inflation was low-to-moderate and gas prices tumbled, providing consumers with additional buying power.

The report revealed total U.S. business logistics costs rose to $1.45 trillion in 2014, a 3.1 per cent increase from the previous year. However, the growth rate for logistics costs was lower than the U.S. gross domestic product (GDP), resulting in a slight decline in logistics as a percent of GDP from 8.4 per cent to 8.3 per cent.

Costs for the water sector rose 8.9 per cent, the second highest growth sector in 2014. Inland waterway traffic rebounded due to successful agricultural harvests, higher demand for coal and an expansion of petroleum transportation by barge. Shipments through the nation’s ports increased, with East Coast ports seeing the largest percentage of gains due to congestion and delays at West Coast ports caused by protracted labour issues.

And in 2014 air cargo sector costs declined 1.2 per cent as competition from other modes kept rates down; however, in 2014, a record $968 billion of high value merchandise was moved by air—$443.8 billion in exports and $543.3 in imports.

“Today’s market-leading companies use their supply chains to drive innovation and competitive advantage,” stated Marc Althen, president of Penske Logistics. “This in-turn drives demand for logistics providers. While demand for logistics is increasing, the industry faces a talent shortage and needs more logistics engineers, technology professionals, warehouse workers, and truck drivers to meet the needs of current and evolving freight fulfillment models businesses and consumers rely on for their goods and services.”

What Does It Mean To Be An Authentic Leader?

Watch the Procurious Big Ideas Panel Discussion on Authentic Leadership

In the first of the panel discussions from the Big Ideas Summit, Sigi Osagie, Sarah Trota, Helen Mackenzie and Andrew MacAskill discuss what it means to be an authentic leader in procurement.

Watch a sample below

From the power of public sector procurement and the figure of the leader clearing the path through the procurement jungle, to the brand of the profession and setting the belief, the discussion created some fascinating points.

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

Uncovering The Truths Behind Supplying The Supermarket Giants

Supplier Rebates to be Discussed at Tesco Shareholders Meeting

Tesco supplier rebates under scrutiny

This Friday, Dave Lewis has the unenviable task of addressing the Tesco shareholders at the firm’s annual meeting. As the firm’s new CEO, the responsibility for explaining the company’s fall from grace over the past 12 months falls at his feet.

There is a lot to talk about. But it’s likely that the majority of the shareholder’s concerns will revolve around the £6.4 billion in pre-tax losses that were reported for the year ending February.

Who audits the auditor?

Serious concerns have been raised around Tesco’s relationship with its previous auditor, PwC. This relationship (which was terminated last month) appeared to have turned septic and has been used to explain some of the accounting discrepancies that contributed to company’s recent woes.

While it is easy to focus on the firm’s recent poor performance, perhaps the greatest challenge for Lewis will be explaining that the worst is potentially still to come.

The UK’s Serious Fraud Office has opened an inquiry into the supermarket chain over an accounting scandal that saw the retailer inflate its reported profits by £263m through incorrectly logging supplier rebates. Not only has this scandal cast doubts over Tesco’s reporting standards, it has brought the company’s ethics and supplier relationships into question.

Dodgy accounting brings dodgy supplier relationships into focus

Supplier rebates are nothing new in the supermarket space. In fact, it’s believed that this behaviour has existed since the 1970’s. However, in recent years the practice has been stepped up significantly. Suggestions have been made that UK supermarkets make as much money from supplier rebates as they do from operating profits.

Supplier rebates, which see suppliers making compulsory contributions to supermarkets in return for prime shelf space (or the allocation of marketing effort), have faced scrutiny for the way they are reported. These payments have traditionally not been well defined and recognised through financial reporting systems. In the wake of the Tesco rebate fiasco, the Financial Reporting Council has announced it will look more closely at the way rebates are managed from an accounting point of view.

The supplier rebate scandal not only carries implications for the firm’s reporting credibility; it has been a public relations nightmare. The mass media has jumped on the issue of supplier rebates and customers are now fully aware that supermarkets insist on large payments from suppliers, not only to market their products but also to secure in-store shelf space (this stuff fills column inches). In an era of increased supermarket competition (firms like Aldi are stealing significant market share from Tesco) these PR scandals are crippling.

Lewis’s moment of truth will come this Friday. Tune into Procurious on Monday, as we’ll be providing a review of the shareholder meeting, including an analysis of the way Lewis responded to the supplier rebate scandal.

Celebrating National Women in Engineering Day

National Women In Engineering Day is hoping to change perceptions and inspire more women engineers.

Supporting National Women in Engineering Day

What is it?

National Women in Engineering Day (NWED) was launched in 2014 by the Women’s Engineering Society (WES), as an inaugural event to celebrate the achievements of women in engineering and encourage more girls to consider engineering as a career. 

Who’s involved?

Approximately 400 schools and colleges across the UK are expected to take part in NWED celebrations this year with over 100 events listed on the NWED website www.nwed.org.uk. The organisations hosting the events include universities, schools, engineering societies, and multinational organisations, such as Ford Motor Company, Amec Foster Wheeler, Qinetiq, Atkins, DECC, BT, Pepsi, Selex ES, Dyson, Arup, DuPont, BP, Siemens, BAE Systems, TFL, Crossrail, and many more.

Is it just a UK initiative then?

Nope.

This year NWED has also gained interest on an international level with events happening all over the world to celebrate achievements of women engineers on a global level. For example, the Institution of Engineering and Technology in Kuwait are hosting a conference on NWED with talks from guest speakers, networking activities and awards.

How did it come about?

The Women’s Engineering Society (WES) is a not for profit organisation which was established in 1919 after the First World War to inspire and support women in engineering. For more information visit www.wes.org.uk.

Dawn Bonfield, Founder of National Women in Engineering Day and President of the Women’s Engineering Society said ‘We were absolutely amazed by the enthusiasm for National Women in Engineering Day last year, but this year the day has grown even more and we have seen an enormous number of organisations getting involved with the celebrations. This really is testament to the change in perception of women in engineering, and we need to do all we can now to maintain this activity throughout the year to ensure that girls see engineering as a real career choice for them.’

How many female engineers does it take to set a world record?

Among the events, a Guinness World Record has also been planned to coincide with NWED with the aim to have the largest gathering of women engineers on NWED 23 June at Horse Guards Parade.