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Telstra director honoured with prestigious procurement award

Richard Allen receives The Faculty’s ‘CPO of the Year’ title.

Chief Procurement Officer (CPO) at Telstra, Richard Allen, was last night announced CPO of the Year by leading procurement consultancy The Faculty.

Awarded at the Asia-Pacific CPO Forum’s annual gala dinner held at the Eureka89, Melbourne, Mr Allen was chosen from a shortlist of top performing CPOs in the region.

Sponsored by WORKWEAR Group, part of Wesfarmers Industrial & Safety (WIS), the award highlights the importance of the CPO role in organisations by recognising CPOs who hold strong functional and technical expertise, realise commercial outcomes, demonstrate leadership influence and leverage the value of procurement across their businesses.

Responsible for all outsourcing decisions at Telstra, encompassing both local agencies and overseas partners with a procurement spend in excess of $12 billion, Mr Allen is credited with making a significant contribution to the telecommunications company’s customer-focused strategy over the past four years.

Richard was nominated by Robert Nason, Group Executive, Business Support and Improvement at Telstra, who said: “Richard has been instrumental in Telstra’s transformation over recent years, and his commercial leadership has helped Telstra strengthen its customer service offering,”

“He’s introduced innovative service evaluation, to measure and increase advocacy within Telstra’s suppliers, recognising that they are often our customers, too,”

“Richard’s also led a widespread rationalisation of our supplier base, reducing it by 30 per cent, which benefits both our business and our customers.”

Another innovation introduced by Richard was his ‘reverse sourcing’ initiative where he achieved a 90 per cent change in payment terms from suppliers, which has unlocked a significant incremental cash benefit to the business.

Mr Allen’s ability to lead the procurement function through an extensive domestic change program and make a significant contribution to Telstra’s transformation is what captured the judging panel’s attention.

Judging Panel Chair it is Dr Karen Morely said: “The change Mr Allen has made at Telstra is a perfect example of how procurement can support a company’s value proposition whilst also keeping a close eye on costs.”

“Richard’s ability to broaden the role of procurement across the business and reap such strong rewards is the result of his functional excellence, leadership, commercial capabilities and personal drive.”

The Faculty’s Founding Chairman Tania Seary said: “Making a tremendous impact on one of Australia’s largest corporations and driving real change across the business is far from simple – yet Richard has shown that his technical skills and leadership combined are a perfect formulae for success.

“The Faculty congratulates Richard and the procurement team at Telstra for all their achievements over the past four years, and hope that others in the industry learn from their excellent results.”

Established in 2012, the CPO awards program, a flagship initiative of The Faculty, was created to recognise and celebrate the achievements of procurement professionals across Asia Pacific.

WORKWEAR Group General Manager, Chris Jones, said that while procurement is one of the fastest growing professions in Australia, awards like CPO of the Year recognise the crucial impact procurement can have on business outcomes.

“The CPO role is not just about sourcing and purchasing, but includes building or protecting brand reputation, mitigating risks and help companies deliver on their value promise.”

For more information on the Faculty’s CPO of the Year Award, please visit here.

How the UK General Election will affect digital trade

Katie Gallagher, managing director at the North’s leading independent digital trade association comments on the result of the UK General Election and how it is going to effect the digital sector in the North.

Polling_station_6_may_2010

“The coalition certainly brought in some good initiatives for tech and digital businesses, most of which until recently were focused on London. However this changed dramatically in the run-up to the election where there was borderline hysteria from all political parties about tech and the North.

“I hope that the Tories will continue to invest in the North and understand just how vital our technology sector is to job growth and the wider economy. It’ll be interesting to see how the Tech North initiative pans out, considering it was a Lib Dem initiative all along.

“While the last Government did introduce computer science into the curriculum, they also introduced several controversial reforms which were actually at odds with the desire to create work ready students with vocational, hands on experience.

“David Cameron has said his party will create more apprenticeships, and whilst we admire this ambition, digital technology apprenticeships have not been as successful as hoped, particularly in the SME community. The infrastructure still isn’t right to get enough quality talent from schools into digital apprenticeships, so I hope the new Government will look to change this. We really need to get digital education right this time and tackle this skills gap once and for all.

“I’d also like to see additional investment in promising start-ups. While we did see the introduction of some helpful finance products under the coalition, there’s still number of decent tech businesses that are struggling to access the finance they need to grow. Cameron has been known to champion UK start-ups, so I hope this remains a priority.  

“It was a challenge for us to make sure industry voices were heard in the right places with the last Government. I hope that the new Government listens this time and realises its approach to digital, skills and economic growth needs to be joined up, and the best way of doing that is from a business-led, bottom up approach.”

Learn more about Manchester Digital

Why Do Procurement People Leave Their Jobs?

A report released by the Corporate Executive Board in May of this year has highlighted the key reasons procurement professionals leave their roles.

Despite a number of great success stories depicting the fantastic opportunities the function presents and positioning a career in procurement as a ‘job for life’, the study revealed that procurement professionals are among the most likely employees to want to leave their jobs. Only 29 per cent of the CEB survey respondents suggested they had a high intent to stay on in their current roles.

The following chart provides some insight as to the reasons that procurement professionals want to leave their roles.

Why Procurement People Leave their Jobs

Increased compensation, benefits and workplace flexibility are motivations to leave that are likely shared regardless of industry, so it is difficult to address these in a procurement specific context. However, CEB has outlined some strategies that procurement managers can follow in order to keep their staff.

“Procurement managers should take time to explain to their employees how and why they are valuable to the company and the function, and seek to show employees how they can fulfil their personal career goals by staying at the company”

CEB also outlined the following characteristics of procurement employees:

  1. Procurement staff are more likely to switch jobs for more senior positions than their counterparts in other parts of the business
  2. The prospect of working with more talented colleagues is a motivator for procurement professionals. This again feeds into the ongoing importance of the need for procurement teams to attract top talent.
  3. Procurement staff are more satisfied with the strategic nature of the work they are doing than staff from other functions. The report showed that procurement employees are less likely to want to change jobs for more engaging day-to-day work than their counterparts from other parts of the business.

Amazon’s Big Idea: drone deliveries direct to you. What next?!

Delivery to your door? That’s all a bit old-fashioned for Amazon it seems, as their plans for delivering customer orders using drones takes shape.

Amazon plans on sending drones directly to you

The common thought was that Amazon had intended to use their drones to deliver packages straight to the customer’s door, but details of a patent lodged in the USA has opened up a whole new range of possibilities.

From warehouse to hand

The patent, lodged in September 2014 and recently accepted, allowing details to be published, proposes to deliver packages straight to the customer, tracking their location using data from their smartphones.

The delivery option falls under the previously announced ‘Prime Air’, something that Amazon has been developing for a while now. However, it goes much further than most people expected. Using the Amazon app, the customer would select the ‘Bring it to me’ option, and then wait for their package to arrive from the closest dispatch location.

The patent also reveals plans for the drones to be able to communicate with each other, exchanging information on the weather and traffic conditions in the area. The drones will be designed in a variety of shapes and sizes in order to manage packages of different weights and shapes.

And if you’re worried about the drones crash-landing in your cappuccino while waiting outside your favourite café for that must-read book, fear not. The drones will be outfitted flight sensors, radar, sonar, cameras and infrared sensors to ensure safe landing zones are found and to constantly monitor the drone’s path to ensure it avoided collisions with human or animals.

Regulatory Disputes

However, the patent’s acceptance does not mean that US authorities will approve the plans. For a while now, Amazon has been trying to convince the Federal Aviation Authority (FAA) to approve widespread use of drones, as well as allowing them to do further testing and development in the field.

Drones are currently limited to a height of 122m (400ft) and must stay in the pilot’s line of sight. Such have been Amazon’s issues with FAA regulations, that it has conducted much of its testing in Canada. The FAA has also been blamed for the US losing out in drone development, most notably to the UK, where a research centre is being built.

It’s not only the FAA that Amazon needs to convince either. A British Airline Pilots Association survey highlighted that just over half of adults think that drones pilots should have formal training, and that prison sentences should be imposed for endangering aircraft.

New Technology

While Amazon’s patent raises a number of questions about safety and privacy, it’s clearly a major development opportunity for the supply chain and logistics industries. Direct deliveries to an exact location could prove to be a considerable time and money saver, particularly for people in remote locations.

We’d be interested to hear your thoughts on this development. Is it going a step too far? Do you really want to have drones delivering packages to people wherever they are? Is the convenience worth the potential disruption?

Technological advancements were a hot topic at the Big Ideas Summit, powered by Procurious, a couple of weeks ago. From driverless trucks on mine sites, to technological disruptors in the supply chain, we’ve heard some great ideas. But we want to hear your Big Ideas too – find out how to share them here.

To access all the great content and discussions from the event, join Procurious for free today and join the Big Ideas Summit Group.

Meanwhile, here are some of the big headlines making the news in the procurement and supply chain space this week.

Apple wants to be entirely carbon neutral… one day

  • Apple wants to create enough renewable energy to power its entire global business, including its supply chain. Chief executive Tim Cook claimed it would take Apple “years” to realise the goal but said it had to happen.

  • “Apple’s goal is to achieve a net-zero impact on the world’s supply of sustainable virgin fibre and power all its operations worldwide on 100 percent renewable energy,” it said in a statement.

  • The firm already generates enough renewable energy to power 87 percent of energy use in its stores, offices and data centres, but that figure doesn’t include the supply chain. Apple said its supply chain uses 60 times as much power as its own operations.

  • Apple has previously been criticised for the environmental impact of its supply chain, most of which is based in China; regulators in China were said to be investigating two Apple suppliers for toxic dumping in 2013, amid other accusations of dumping by industrial partners.

Read more at Wired UK

Wal-Mart builds Supply Chain to meet e-commerce demands

  • Wal-Mart Stores Inc. is one of a growing number of big-box retailers building out their supply chains with distribution centers designed to meet the demands of online shopping. The company expects to open four such giant facilities this quarter, as it aims to triple online sales by 2018, to $35 billion from $12 billion last year.
  • Building fulfillment centers designed to cater to e-commerce, which demands the ability to handle a large number of small orders, can help retailers conduct more profitable online sales, said Brian Kilcourse, managing partner at RSR Research LLC, a retail technology consulting firm.
  • Each of Wal-Mart’s new facilities will be more than 1 million square feet and hold at least 500,000 items—much larger than its traditional distribution centers for stores, which hold 30,000 to 50,000 items. Wal-Mart opened an e-commerce center in Texas last year, and like that one, the new buildings will use both human labor and automation, such as computer-controlled chutes, to move items.
  • The goal of Wal-Mart’s new centers is to provide a single place stocked with a wide variety of products to get shipments collected and sent faster, a Wal-Mart spokesman said. Ultimately, analytics behind the shopping software will determine, on the fly, the most efficient way to fulfill the order, the spokesman said.

Read more at The Wall Street Journal

Jaguar Land Rover honours supply chain firms

  • Vehicle manufacturer Jaguar Land Rover has recognised its top ten direct suppliers at its inaugural Supplier Excellence Awards.
  • Companies from Corby to Cairo were presented with trophies by actress Joanna Lumley, at a ceremony held in the West Midlands, close to the heart of the company’s UK operations.
  • Ian Harnett, Jaguar Land Rover Director of Human Resources and Purchasing, said the awards had been instigated to recognise the role supply chain firms played in helping the company achieve its goals.
  • A total of 10 trophies were presented for performance in 2014:  two gold, four silver and four bronze.  The awards went to individual plants or facilities, rewarding on-time delivery, continuous quality, accreditation to international and Jaguar Land Rover standards and flexibility to meet the company’s developing needs.

Read more at TheBusinessDesk

New partnership to transform healthcare procurement in Asia-Pacific

  • UK and Australia-based company Healthcare Procurement Partners (HPP) has expanded its Asia-Pacific operations with a contract to deliver cost-savings and process improvements for the largest corporate healthcare provider in Asia-Pacific, Fullerton Healthcare Group.
  • Following an initial program of reducing non-payroll spend for Fullerton Healthcare’s Australian subsidiaries, Brisbane-based HPP will now pursue similar procurement projects in Singapore and Indonesia.
  • While the terms of the Project Fusion contract between HPP and Fullerton Healthcare Group remain commercial-in-confidence,  HPP’s local on-site presence in these key Fullerton Healthcare markets is expected to deliver significant repeatable annual savings by mid-2015.
  • HPP’s Managing Director, Daniel Williams said: “This promotes the transparent exchange of knowledge about how and where to unlock savings and improve cost-efficiencies, locally and more widely,”

Read more at NewsMaker

$349 Apple Watch components cost only $83.70

  • A “teardown” of the product by IHS Technology found the components cost $83.70, compared with the retail price of $349, giving it the lowest hardware costs relative to consumer price of any Apple phone researched by IHS.
  • IHS said estimated component cost to retail price ratios for other Apple products it had reviewed ranged from 29 per cent to 38 per cent.
  • The company said its analysis included manufacturing costs of $2.50 but did not include costs such as logistics, capital expenses, research and development, software and licensing.
  • Kevin Keller, senior principal analyst for materials and cost benchmarking services at IHS, said: “It’s fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost.

Read more at Supply Management

Big Ideas: What are procurement’s blind spots?

What are procurement's blind spots?

One of the most incendiary sessions at the Big Ideas Summit saw us gazing into our crystal ball with a view to identifying procurement’s blind spots.

There are known knowns… There are known unknowns. But there are also unknown unknowns.” – Donald Rumsfeld.

This brilliant distillation of what was quite the complex matter can also be attributed to the disruptors likely to affect both business and procurement. We’re already well versed on innovations like 3D printing and social media, as well as water scarcity and climate change – but what of the blind spots, the things that no one is talking about yet?

What are the issues that have the potential to really shake things up? We turned to the Procurious community for answers and this is what you had to say…

Payments and costs seem to be a hot topic… Chris Smith starts things off by asking: “What about transaction costs for undertaking the procurement, for the user, the buyer and the bidders (winners and losers)? Mike Dunlop agrees, and takes the discussion further: How to best calculate the cost of transactions, the benefit of SRM as a tangible return of investment, the risk / cost of compliance of Procurement Payment cards vs loading a new supplier for low value spends?”

This prompts a reply from Cornelius du Preez who comments: “Measuring and procurement, what a headache. I’m currently doing my dissertation in the area of procurement. Al the reading of past research and case studies are really interesting, but the question that keeps coming up is the ‘How to measure….’ One of the questions I ‘m trying to get to the bottom is, ‘How to calculate procurement’s contribution on the bottom line?’ As there are many variable factors that needs to be considered, further upstream as well.”

We encourage lively discussion on Procurious, and this is exactly what we get here! Mike comes back: “My view is that anyone can negotiate. It is inherent in the human DNA and we all do it every day of our lives without realising it. But not everyone is able to – clearly articulate a specification and ensure all tender responses are like for like, create a valued weighted score card for value comparison, understand the cost of resource through the entire end to end process, look at where to reduce waste and enable people to great more value, contract management and risk mitigation (plus many more excellent tasks). 

Mike argues: “In essence Procurement should be able to easily display their value to the company or there is an argument that they shouldn’t be there. With this you can calculate the value benefit from savings, reduced waste and reporting on missed savings. This will then give you a bottom line impact of X that you can compare against the Overhead cost of the department. This would then give you a Return on Investment of the procurement department. You now have your tangible rationale as to the contribution on bottom live vs the cost of return.”

Returning our focus to procurement blindspots, Simona Pop says  “it’s prompt payments and how they could really improve supply chain health and our economy as a whole!”

Samantha Coombs believes more focus needs to be put on checks, saying: “I believe the best driver of prevention is proper checks. Ensuring there are policies in place to tackle a variety of the points you mentioned. By carrying out proper supplier due diligence then protects the company’s reputation, the people and importantly the shareholders who invest based on the appropriate management of risk.”

To round this particular topic off, Mark Johnson wanted to highlight Rogue Spending Activities, having seen this over and over in many different industries.

You can still view and add to the discussion here. Our favourite comments will be featured in a future instalment.

Supply chain transformation: Airbus 3D Prints Aeronautical Parts

Airbus A350 XWB

The new Airbus A350 XWB, an extra wide aircraft first delivered in December of last year, was built using over 1000 parts that were produced with a 3D printer.

The airplane manufacturer began a relationship with Stratsys, a 3D printing and additive manufacturing firm, in 2013 in an effort to increase supply chain responsiveness and simplify its internal processes in order to meet strict project delivery deadline for the new aircraft.

The fact that the firm is now utilising 3D printing in its supply chain, means that replacement parts can be produced on-site rather than at an interstate or overseas manufacturer. This drastically reduces lead times, as the requisite parts no longer need to be produced, processed and shipped to where they are needed.

1000 parts may sound like a lot, but in reality it is a tiny portion of what is needed to build an aircraft. However, Airbus’s move suggests that 3D printing is about to start disrupting our supply chains. These technologies have the potential to vastly change the way modern supply chains operate. If implemented properly 3D printing could slash lead times and transportation costs allowing businesses to become more self-sufficient. Stratsys certainly see it that way, defining their approach as a transformative alternative to conventional manufacturing processes.

Sigi Osagie: The Chefs in Your Procurement Kitchen

“We are born with the capacity to do extraordinary things.” 

Watch our first Big Ideas Summit keynote (part 1 of 4)

Watch Sigi’s keynote in FULL here

Sigi originally arrived in the UK as an African immigrant with holes in his shoes, penniless and no address book. Fourteen years later, he was a global director in a FTSE250 blue-chip multinational.

Today he works as a writer, speaker, business adviser and coach, drawing on insights from his atypical life journey and career success to inform and inspire others.

Procurious members can find Sigi’s full keynote here. Not a member yet? Register for free.

Watch: See more Big Ideas from our 40 influencers