All posts by Procurious HQ

What will the Enterprise Bill mean for SMEs?

Tracy Ewen, managing director of IGF Invoice Finance, has provided Procurious with her comments on the announcement of a new Enterprise Bill in today’s Queen’s Speech.

Enterprise Bill announced in 2015's Queens Speech

“Measures will also be introduced to reduce regulation on small businesses so they can create jobs.”

The purpose of the Bill is to:

  • Cement the UK’s position as the best place in Europe to start and grow a business, by cutting red tape and making it easier for small businesses to resolve disputes quickly and easily.
  • Reward entrepreneurship, generate jobs and higher wages for all, and offer people opportunity at every stage of their lives.

Tracy says: “The announcement in the Queens speech today introducing a new Enterprise Bill – giving additional support to SMEs to settle payment disputes – ought to be welcomed by businesses across the UK. To have this Bill included in the speech should give hope to many struggling businesses that the government is serious about the need to protect SMEs and bring an end to the issue of late payments. 

The current payment terms that many suppliers in the UK are subjected to mean that goods delivered today wouldn’t need to be paid for until long after summer is over; a practice that isn’t sustainable, but it is a reality that, until now, SMEs have had very little power to change. The implementation of a Small Business Conciliation Service should protect SMEs against larger and more powerful entities, and should reduce the number of SMEs that fold due to intense cashflow problems.

Whilst acknowledgment in the Queen’s speech has symbolic importance, businesses have been waiting for support from Government to tackle this issue for a long time, so will be watching the progression of this Bill with care and limited expectation.

In the meantime, there are options available that cover the gap between work completed and money in the bank. It’s therefore important for firms to thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations.”

How to Re-Energise Your Procurement Strategy In 100 Days

Steen Karstensen, CPO – Maersk, on re-energising your procurement strategy.

Maersk CPO Steen Karstensen

Steen was speaking at Procurement Leaders World Procurement Congress 15 in London.

At Maersk there is a vision, and that vision is represented by the following mantra: “Every dollar spent is spent professionally”.

Maersk believe that in order to be competitive and stay ahead of your contemporaries you need to constantly reinvent yourself. To that end the conglomerate follows a bi-yearly strategy: every second year it takes a long-term view of the business. Steen says that it’s imperative to keep momentum going – you’re either ahead of the game or dead in the water…

Maersk needed to ask “What would my successor do differently?” So we approached Rick Hughes, Procter & Gamble’s Chief Procurement Officer, to create a ‘CPO 100 day plan’. Rick would assess the organisation and come up with a list of actions.

Rick conducted a study that gathered a 360-degree view from Maersk management figures (CEO, COO, Group Strategy Officer), 30+ procurement staff and key suppliers. He brought with him a fresh, candid and apolitical mindset – he was the sort of person that could leverage insights from his vast experience, and had the appetite to change the business.

Maersk also approached the University of Bath to get a theoretical reading of the procurement strategy.

And what did they learn?

There were definite signs of “big corporate syndrome” – Maersk would need to take some of its own cost medicine. How? It would need to simplify work processes as well as organisation.

With the CAPEX Procurement model, the right structure was in place, but now was the time to deliver results.

In terms of category management there was a requirement to upgrade processes, roles and capabilities. Plus a call for investment of senior resources in SRM.

And finally it was noted that important procurement prerequisites were not properly in order, thus an obvious need to standardise and document all core processes going forward.

Success in all of these areas would only be truly possible with deep business integration. Having both the technical function and procurement community reporting into the same place encourages both alignment and innovation.

The challenges re-energised their strategy process and in-turn generated three main (actionable) take-aways:

1. Take a 360-degree view on the organisation

2. Be open to reveal and discuss weaknesses

3. Be bold on actions – also in previously failed areas.

Leniency for Corrupt Petrobras Suppliers?

Petrobras, a Brazilian state owned oil company

Earlier this year Petrobras, a Brazilian state owned oil company, became involved in court action over questionable activities within its supply chain. Executives at the company were accused of accepting bribes, rigging bidding processes and facilitating overcharging in return from kickbacks from suppliers.

The resultant actions have had a marked effect on Brazil’s economic fortunes. After the scandal broke Petrobras elected to freeze all activity with the suppliers involved in the controversy. This decision has sent ripples through Petrobras’ supply chain resulting in bankruptcies and staff layoffs at a number of Brazilian firms. To put some scale to the project, it is estimated that Petrobras accounts for 10 per cent of all capital spending in Brazil. The slowing of work at Petrobras is thought to be one of the key factors contributing to Brazil’s economy shrinking by 1 per cent this year.

In response to the slowdown, the Brazilian government is considering a path of courtroom leniency for the embattled suppliers. In a bid to re-spark the country’s flailing oil and gas industry and kick-start its economy, the comptroller general is in discussions with five of the 30 suppliers caught up in the scandal. It is thought that should these firms accept responsibility for their wrongdoing, pay fines and commit to compliance measures, their exclusion from participating government contracts will be lifted.

It’s important to note that the proposed moves will not have any impact on the criminal trials faced by the executives of Petrobras and its suppliers. One of whom, Nestor Cervero, was sentenced to five years in prison yesterday for allegedly using money received from bribes to purchase an apartment. Cervero is the second Petrobras executive to receive a jail sentence for his role in scandal. Last month, Paulo Roberto Costa, former Petrobras director of refining and supply, was sentenced to seven and a half years in prison. However, after signing a plea bargain he will serve only one year under house arrest.

CIPS teams up with Procurious to drive social media knowledge

CIPS David Noble speaking at Procurious Big Ideas Summit 2015
CIPS David Noble speaking at Procurious Big Ideas Summit 2015

The Chartered Institute of Procurement & Supply (CIPS) has partnered with Procurious, the world’s first online business network for procurement and supply chain professionals, to form a social media knowledge partnership that will deliver enhanced learning and networking opportunities for Procurious and CIPS members in the digital realm.

The knowledge partnership will highlight how the growth of social media will impact the procurement and supply profession and encourage the wider community to embrace the new way of networking and information sharing [www.cips.org/procurious].

For CIPS members, the alignment with Procurious will greatly increase the opportunity to expand their network of like-minded professionals globally. Also, it will help them access best practice social media advice, webinars and interviews that will help them stay better connected with suppliers, mitigate risks and prepare for potential disruptions in the supply chain.

CIPS members will also benefit from being able to sign up for social media workshops in addition to the host of procurement and supply chain online learning modules already available on the site.

The agreement helps cement Procurious as the place to go for the best advice, discussions and online learning relating to social media. Specifically, the knowledge partnership will give Procurious members additional content including webinars, interviews, events and access to CIPS experts online.

Commenting on the partnership David Noble, Group CEO, CIPS, said: “Social media growth has been phenomenal over recent years and is having an increasing impact on the procurement and supply profession. Partnering with Procurious is enabling us to leverage the opportunities these platforms provide from both a networking aspect but also a knowledge and educational perspective for our members and the wider community.

Procurious Founder Tania Seary explained: “Procurious was set-up to help procurement professionals get connected and get ahead, and our partnership with CIPS is a terrific proof point of how we’re delivering on this promise.

“We live in an increasingly globalised world so those who master the opportunities such as Procurious offer will be at a huge advantage to those that don’t,” Seary added.

Procurious currently has over 5,500 active members across 100 countries who can use the platform to connect and engage instantly. Members come from organisations including Shell, Apple, HSBC, Rio Tinto, Qantas Airways and General Electric.

To find out more visit www.cips.org/procurious

Why is eSourcing adoption and utilization still so low?

The eSourcing alternative

By Jeff Gilkerson, Manager at The Hackett Group thglogo500

 

You would be hard pressed to find a TV viewer that would argue watching a show in standard definition is better than watching in High Definition. Similarly, it would be difficult to find a procurement executive that would argue a manual (excel/word/email) based sourcing process is better than utilising an eSourcing tool. It’s almost universally accepted that eSourcing is more efficient, improves quality/standardisation, and generates better results. Yet, eSourcing tool utilisation and adoption is still lagging. Approximately 70 per cent of large organisations have eSourcing tools. While at first this may seem encouraging, it begs the question: why do 30 per cent of organisations not have eSourcing tools when the benefits are widely known and accepted, the technology has been around for decades, and the tools can be obtained for a relatively low investment?

The picture gets even worse when you look at the actual adoption and utilisation of eSourcing tools in the 70 per cent of organisations that have them. Many of these organisations have “implemented” eSourcing tools, but what that really means is they have purchased the tools and have them available to use. It does not mean that the tools are embedded in the sourcing process, that the staff is adequately trained to use the tools, or that the tools are frequently and consistently used for sourcing projects.

We recently helped a mid-size manufacturing client in the midst of a procurement centralisation to design and implement an eSourcing program. While eSourcing was new to this organisation, some of their challenges and learnings are just as relevant to more mature organisation trying to understand why eSourcing utilisation and adoption has not reached its full potential.

Most eSourcing tool providers will tell you they are easy and fast to implement (some say it can be done in only a few days). However, true implementation of an eSourcing tool is more than just making sure the technology works.

The limits of adoption and utilisation go beyond the actual tool, and lay in a range of organisational and people issues:

  • Change is difficult: Former president Woodrow Wilson once said, “If you want to make enemies, try to change something.” Even if you know it’s for the best, change is difficult. Think of moving, even if it is to nicer house in a better neighbourhood, the process of packing, moving, and unpacking is difficult and not something most people look forward to. Similarly, moving from a manual sourcing process to an eSourcing process requires change on the part of users.
  • Required change: As mentioned, change is difficult, and transitioning to an eSourcing tool is change. Just like all change it requires effort and work. Users have to re-learn how to do things they have been doing for years, explain to direct reports, suppliers, and internal stakeholders why they are changing, and often times modify the process they have become accustomed to. Additionally, many of the things that make eSourcing tools efficient (e.g. templates, auto-scoring) have to be built or configured. This work is required upfront before users start to realise the benefits that eSourcing tools provide. It’s not just about having the technology, it needs to be embedded into the process and this requires work and change.
  • Lack of process standardisation: eSourcing tools provide a great resource to improve consistency in your sourcing process. However, in order to do this there must be a generally accepted sourcing process that is consistently followed throughout the organisation. In our experience, many organisations don’t actually have a standard sourcing process. Even in organisations that do have a documented sourcing process, it is common to find that the process is infrequently followed or applied inconsistently when it is followed.
  • eSourcing provides more visibility: A robust eSourcing tool and program gives management more visibility into the status, progress, and results of sourcing projects. While this is great in management’s view, users may not see this as a positive.

To address the organisational and people issues, procurement executives can:

  • Standardise the sourcing process: Ensure there is only one sourcing process for the organisation and that it is consistently and broadly followed. Just as teaching a young child two different ways to tie his shoes is certain to lead to confusion and frustration, designing an eSourcing program around an inconsistent sourcing process will inevitably lead to confusion and partial adoption.
  • Ensure proper training: eSourcing tools have become significantly easier to use, but for most users it is still change. A comprehensive training should be three-pronged:
    1. Basic Functionality: A “how to” use the tool. This is typically done as a classroom style training (in person or via webex) and focuses on the technical aspects of how to do things in the tool.
    2. Best Practices: Another classroom-style training that focuses on best practices for eSourcing (e.g. questionnaire design, eAuction design & set up)
    3. Hands on: The final piece of the training should be a hands on training in the form of pilot projects. The pilots reinforce the functional and best practice trainings.

Note: When planning the pilot projects, it is important to select the right projects and users. If the project is too simple it will not provide enough depth for the project team and if the project is too complex it may distract from learning the eSourcing tool. Users selected should also be carefully chosen as the early users of the tool will have a significant impact on overall adoption.

  • Develop comprehensive documentation: Ample documentation will ensure that when users have questions after the initial training and pilot phase they will be able to easily find answers and complete their projects. The documentation should be widely available and focus on both the functional “how to use the tool” as well as the business processes.
  • Track the outcomes: Too often an eSourcing program is rolled out with much fanfare, only to quickly fade into the background. To ensure successful adoption of eSourcing tools, it must be tracked and reported. In addition to tracking and reporting the results (i.e. savings) form eSourcing widely across the company, it’s just as important to continuously track and report to the procurement organisation on the use and adoption of the tool.

Comprehensively addressing these organisational and people issues will significantly improve the utilisation and adoption of your eSourcing tools.

UK Automotive Sector To Leave Other Supply Chains In The Dust

Healthy UK Automotive Industry

New investments, economic recovery, overseas demand and continued technological advances, all point to continued substantial increases in UK vehicle production in the coming years.

This means significant opportunities for those domestic suppliers able to respond.  (Currently only 40 per cent of components are sourced from the UK).

To ensure the industry is equipped with the right skills to support this growth, the Automotive Industrial Partnership – the recently formed body that brings the industry and government together to secure the sector’s skills pipeline – is conducting the biggest ever survey of its kind aimed at vehicle manufacturers and the 2,0002 UK based supply chain employers.

Jo Lopes, Chair of the Automotive Industrial Partnership is calling upon the industry to grasp this opportunity and participate to the full.

“This initiative is unprecedented,” said Jo.

“There have been many other surveys covering the engineering and manufacturing sectors as a whole – but none that drill down to this level of detail and meet the unique needs of automotive manufacturing industry.

“It’s vital that we know the views of employers of all sizes if we are to take the right action now to ensure an effective pipeline of future talent – from new entrant technicians through to the specialist engineers and managers we will need.

“By working together we have the opportunity to mould the future of our industry – and address the very real challenges that we face.”

The findings will be used by the Automotive Industrial Partnership to determine where, when and how future skills investment should be prioritised. In turn, this will inform the development of learning solutions that are relevant and accessible to the whole industry, including smaller employers.

Among the household names driving the Automotive Industrial Partnership are; Bentley, BMW, Ford, GKN, Honda, Jaguar Land Rover, Nissan, Toyota and Vauxhall.

Interested? Take part in the survey by visiting automotiveip.co.uk

The logistics of supplying humanitarian aid in the earthquake-ravaged Nepal

DHL Disaster Response Team extends stay to aid in the aftermath of the devastation that has rocked Nepal.

Aid being delivered in Nepal
Aid being delivered in Nepal

As earthquakes continue to rock the region and wreck lives for thousands, DHL has pledged to extend the deployment of its Disaster Response Team until the end of May.

The group comprises 18 highly-trained volunteers hailing from Singapore, Malaysia, Dubai, Bahrain, India, Hong Kong, Pakistan, Belgium, and UK.

The DRT was deployed less than 48 hours after the first earthquake struck on 25 April. As the country’s only international airport in a landlocked country, the airport is the main gateway for the international aid community to send relief goods into Nepal.

The volunteers – deployed in three waves – are all trained in disaster management to help coordinate relief aid and improve logistics operations at Tribhuvan Kathmandu International Airport. To-date over 2000 tons of relief aid has been distributed to the victims, including: food, shelter, medicines, water, solar lamps, tools for rebuilding, plastic sheeting, and a 35-ton inflatable hospital from Medecin sans Frontieres,

Faced with an increasingly demanding situation and with limited equipment, the volunteers move goods into centralised airside warehouses run by the United Nations World Food Programme for further distribution by international non-governmental organisations (NGOs).

Gagan Mukhia, Country Manager, DHL Express Nepal, commented on the challenges facing the relief effort: “Some of the huge air cargo pallets initially had to be dismantled before we could move them because there just wasn’t the equipment to unload them as a whole. With the latest earthquake on 12 May, we are still able to continue with our DRT operations as we now have the equipment and systems in place to deal with the ongoing relief effort that Nepal will desperately need for many months ahead. Planes can now be unloaded quickly and aid distributed more efficiently to the Nepalese community.”

In addition to the ongoing voluntary work of the Disaster Response Team, DHL’s Aid and Relief commercial service has moved over 100 tonnes of relief goods for organisations like ShelterBox and Norwegian Church Aid. Additionally, bookings for over 90 tonnes have already been received for the coming weeks.