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Businesses See Risky Supply Chains As Top Challenge

New survey says risky supply chains are a challenge for 77 per cent of businesses across North America and Europe.

Xchanging have recently issued the results of the second portion of its Procurement Study.

The survey polled 830 procurement decision makers regarding what they view as the top threats in the Procurement space.

Procurious covered the previous research here.

Xchanging’s research reveals the greatest external challenge for businesses’ operations is supply chain risk, with more than three quarters (77 per cent) of respondents claiming this is a challenge, and 17 per cent an ‘extreme challenge’.

Around two thirds of respondents claim to be challenged by regulation and audit (71 per cent); lack of supplier innovation (63 per cent); and fluctuations in currency (58 per cent) in their business operations.

Owing to the high number of respondents challenged by supply chain risk, Xchanging dug further into the specific supply chain threats faced by European and North American businesses.

Greek debt crisis and oil prices are both causes of concern

More than a quarter of respondents (28 per cent) see currency and exchange rate fluctuations as a significant external threat. This jumps to 35 per cent in respondents from mainland Europe, with the Euro still under pressure against the Pound and other major currencies, and nervousness in the region over Greece’s debt negotiations. 

Similarly more than a quarter of respondents (26 per cent) also cite oil prices as a major external threat to their businesses. Notably global oil prices having fallen sharply in recent months (by more than 40 per cent since last summer), leading to significant revenue shortfalls in many energy exporting nations and concerns about oversupply in some markets.

Coupa Software has acquired Australia’s InvoiceSmash

To the cloud! Coupa acquires InvoiceSmash to drive B2B commerce transformation.

Coupa has acquired InvoiceSmash

Cloud-based spend management provider Coupa last week acquired InvoiceSmash, an Australian company that manages the accounts payable and invoicing process.

The motivation for the acquisition is thought to be the fact that the data extraction capability of InvoiceSmash will facilitate further automation of Coupa’s invoicing and accounts payable offerings.

At the announcement of the acquisition it was claimed that the move was: “Designed to help enterprises of all sizes digitize and automate the often painful accounts payable and invoicing process, the InvoiceSmash innovations will be embedded into Coupa’s organic cloud-based platform to instantly convert emailed invoice attachments into the field formats required by Accounts Payable.”

Rob Bernshteyn, CEO of Coupa, said: “Our acquisition of InvoiceSmash is a huge step forward for the industry. The InvoiceSmash technology will help businesses large and small transact faster and easier than ever before with significantly less manual intervention,” said Bernshteyn.

“The InvoiceSmash technology will be a hugely value-added extension to our organic suite of capabilities and will drive immediate value, supporting the very essence of Coupa’s Savings-as-a-Service approach.”

How does InvoiceSmash work?

According to company’s website (which is now jointly branded with the Coupa logo), InvoiceSmash works in the following way:

  1. Get it to InvoiceSmash – Send invoices to InvoiceSmash via your unique email address or upload it. InvoiceSmash extracts the data and prepares it for posting to your accounting system.
  1. Your Approval – During approval you set the purchase just the way you want it. Contact, General Ledger, Job, Item and Inventory coding is fast and easy. Contact / inventory creation is just one click. Hands free auto-submission is also possible for repetitive invoices!
  1. It Remembers! – After the invoice is posted to your accounting system, InvoiceSmash remembers your choices and will apply them to future invoices. Submitted invoices are archived in the cloud. No more data entry!

The InvoiceSmash system is said to be an intelligent learning solution that can detect changes in supplier invoice formats. New invoice layouts are memorised by the system, so that if they appear again they can be quickly processed.

At the time of writing, the terms of the acquisition had not been announced. Coupa did state however, that it expected to make the InvoiceSmash capabilities available to a select customer group by the end of 2015.

What Do We Really Mean When We Talk ‘Talent’ In Procurement?

Depending with whom you speak, you get very different views on the subject of talent in procurement.

When we say talent, we don’t mean the ability to sing, dance or unicycle down the street whilst juggling flaming swords (although that would be a useful skill to have…), but having the skills and knowledge necessary to cope with the expanding role of procurement in organisations.

In some sections of the procurement profession, authors and business leaders believe that procurement is ‘doomed’, with procurement struggling to attract the right, talented individuals into the profession, while simultaneously limiting itself by not developing the right skill sets to deal with the changing role.

On the other side, some business leaders believe that the next generation is key and that, with a bit of effort, procurement can turn this around and attract the key talent it requires. By using social media, CPOs can understand how to stay ahead of the game and attract good procurement professionals, while strides can also be made by investing time and effort at university level students.

The Bad News

Spend Matters Editor, Jason Busch, argues that procurement skill sets are not changing with the times, or at least not changing as quickly as the skill sets in other parts of the organisation. A further argument is that the people who you have in procurement now, are not necessarily the people you need to take the profession that next step.

It has been widely quoted that 70 per cent of companies in the UK feel they have a shortage of skilled staff. The story is the same across the world, with similar results being posted in Australia and North America.

CPOs are expecting and demanding more from their teams, but have concerns that individuals are missing the crucial skills required for success. Among the ‘missing’ skills are some biggies too:

  • Negotiation
  • Stakeholder Engagement
  • Strategic Thinking
  • Adopting of Technological Enablers

However, for some, the issue is being able to combine all the basic procurement skills with subject matter expertise, something that is becoming less common in an age where the workforce is more mobile and less likely to stay in one place for an extended period of time.

What’s the Problem?

For a while now, associations such as CIPS and ISM, and organisations like Procurious, have been trying to change the perception of procurement as a career. However, old attitudes and perceptions are proving hard to shift.

The next generation coming through education now are looking at procurement and not seeing the potential for advancement and a perceived limited career path is dulling the attraction. It’s only recently that procurement or supply chain heads are taking up executive positions at major organisations in the public eye (think Tim Cook at Apple).

Financial compensation at the top level of the profession is also not keeping with pace with other functions. While CFO compensation has gone up by double digits on average each year, in some cases CPOs have been lucky to see a 3% to 4% increase.

The Good News

If that all sounds pretty bleak, there is light at the end of the tunnel. In the first 6 months of 2015, organisations have been making very public efforts to attract new talent and showcase procurement.

The UK Government has launched a new public sector procurement apprenticeship scheme, highlighting the experience to be gained working on high profile, high-value projects that affect millions of people. You can find out more about the scheme here.

Other organisations, like NHS Procurement and Skills Development Scotland, are actively working with universities, realising that by recruiting these fresh minds, they are also accessing a valuable source of innovation, new strategic viewpoints and thought processes.

How to Do It

There’s no sure-fire way of attracting the ‘right’ talent to your organisation as different people always look for different things. But we’ve pulled together some good tips for you to think about:

  • What is Procurement? – Define it well, offer prospects, tell the wavering students why this is a great opportunity
  • Pass on Skills – Around 60 per cent of procurement uses mentorship; ensure that skills are passed on and not lost
  • Professional Development – A big one for the ‘millennial’ generation, but critical for helping to retain talent too
  • Interesting Roles – Being able to be mobile, work on different projects and gain experience across the function
  • Grow Talent – Make sure you hire the right people. Assess things like cultural fit and personal values
  • Social Media – Don’t underestimate the power of social media and learn how it can benefit you

Procurious founder Tania Seary is travelling through Australasia in the next few weeks and will talk about procurement talent. Why not let us know if Tania is visiting your organisations, or contact us if you’d like to get her to come and talk to you.

Meanwhile, here are the big news headlines that should be catching your eye in procurement and supply chain this week.

Key takeaways from George Osbornes’s summer Budget

  • The government announced plans for a new apprenticeship levy, which would be paid by all “large employers”. Eddie Tuttle, senior policy and public affairs manager at the CIOB, said: “The government has set itself an ambitious target of delivering 3 million apprenticeships over the next five years – equivalent to 600,000 new apprenticeships a year. The introduction of a new apprenticeship levy is a big ask for business, but one that recognises the acute skills shortages industries such as construction will face in the future unless significant investment is made in training. And if the government is to deliver on its ambitions, more needs to be done to promote construction as a viable career path.
  • An increase in the national minimum wage, now branded the “National Living Wage” that will rise to £9 by 2020, should help some low paid workers. Iain McIlwee, chief executive of the British Woodworking Federation, says: “And looking at the direct impact on SMEs in the construction supply chain, while an increase in the minimum wage for the lowest paid is welcome, we cannot ignore the fact that such increases have a knock-on effect throughout a business, creating inflation in a firm’s total wage bill.“Our latest State of Trade survey among Britain’s joinery manufacturing firms already reveals that 73 per cent of respondents had seen a sharp increase in labour costs, and this is fast becoming a constraint on business.
  • The government is inviting bids for a new round of Enterprise Zones, which will encourage towns and districts to work with local enterprise partnerships to develop bids.
  • And finally: Public sector pay will increase by 1 per cent a year for four years from 2016-17.

Read more at Construction Manager

Nordic report calls for less fast fashion

  • A new report which has mapped out a more sustainable road-map for the Nordic textile industries recommends that replacing fast fashion, reducing resource inputs and encouraging local sourcing should become key priorities.
  • The report was commissioned by the Nordic Council of Ministers and includes work from the National Institute for Consumer Research, the Sustainable Fashion Academy, the Nordic Fashion Association/nicefashion.org, the Swedish Environmental Research Institute and the Copenhagen Resource Institute.

Read more at Ecotextile [subscription site]

India’s Snapdeal to invest $200m in strengthening supply chain services

  • India’s largest online marketplace, Snapdeal, is planning to invest around $200m in bolstering its supply chain services including warehousing, logistics and training and sale assistance.
  • The company aims to be able to host around 1 million sellers over the next three years.
  • In March, Snapdeal had acquired a 20 per cent stake in Gojavas that helps it with last-mile delivery. Following the acquisition, Snapdeal had committed to invest between $150 and $200m over the next one year in logistics and supply chain.

Read more at LBR

Uber Is One Step Closer To Realising Its Driverless Car Ambitions

Did Uber just declare war over your future driverless car service?

 We love innovation here at Procurious, and Uber, one of the biggest disruptors of recent times, are never far from our radar…

What’s it gone and done now?

Microsoft has sold its map-generating technology to the transportation kings in a move that will bolster its own mapping efforts, and ignite a spark in the war for driverless car services.

As part of a much-bigger move that saw the Seattle technology giant sell its display ad business to AOL, Microsoft is offloading some of Bing’s mapping assets (along with 100 engineers) to Uber.

It is thought the technology will greatly aid the ride-hailing firm’s autonomous car project.

Uber has been observed testing an early version of its self-driving car. The rival self-driving taxi will inevitably take on the likes of Google and Apple, and is being developed with Carnegie Mellon University.

Pictures show a system comprising of cameras and sensors, capable of mapping nearby objects, installed on the roof of the car.

Speaking on behalf of Microsoft a representative stated: ‘We will transfer many of our imagery acquisition operations to Uber.’

An Uber spokesman further elaborated: “Mapping is at the heart of what makes Uber great. So we’ll continue to work with partners, as well as invest in our own technology, to build the best possible experience for riders and drivers.”

Currently Uber relies on Google Maps for all of its mapping needs, so this acquisition will bring the firm closer to building its own mapping technology and data collection tools. In some territories Uber has its eyes set on other endeavours too, the logistically-themed UberFresh (a food delivery service) and UberPool (its answer to carpooling).

Uber is developing its driverless cars at the ‘Uber Advanced Technologies Center’ in Pittsburgh, Pennsylvania.

Earlier this year at Procurious’ Big Ideas Summit, Uber was referenced on more than one occasion as an example of best practice. The Hackett Group’s Chris Sawchuk reckoned that procurement could learn a lot – citing the agility and flexibility in Uber’s business model. Read what Chris had to say.

Similarly, it is banded into something we call ‘the sharing economy’. Along with services such as Airbnb, Uber is changing the very way we procure – moving us away from outright ‘purchasing’ and instead encouraging more of a ‘borrowing’ economy. We’ll obviously continue to monitor Uber, it’s driverless car ambitions and more. It’ll be interesting to see where it goes from here!

Is Your Organisation’s Sustainability Program As Good As This?

The Fruits Of Nespresso’s Sustainability Program Revealed.

On the one-year anniversary of The Positive Cup, Nespresso’s 2020 sustainability strategy, Jean-Marc Duvoisin, CEO of Nestlé Nespresso, has announced that significant progress had been made towards improving the lives of thousands of coffee farmers.

The Nespresso AAA Sustainable Quality Program was developed with the NGO the Rainforest Alliance to secure the supply of highest quality coffees, protect the environment and improve farmer welfare. Over 63000 farmers are now taking part in the program in 11 countries, benefiting from technical assistance, trainings, price premiums and investments in infrastructures.

Over the past two years Nespresso has been working with its partner TechnoServe to help rebuild the coffee sector in South Sudan, resulting in the country’s first-ever coffee exports in 2013, and its first non-oil export to Europe. Nespresso aims to produce a new rare coffee from South Sudan, while providing alternative sources of sustainable income to local farmers.

The fruits of the Nespresso AAA Program are already being felt, as Joseph Malish Thomas, a South Sudanese farmer, attests: “I have seen that there is great change within the community. We want to produce the right quality. People now have hope. We will be able to pay school fees for children and in the end develop the country.”

Nespresso aims to source 100 per cent of its coffee from its AAA Sustainable Quality Program by 2020. This depends heavily on the extension of the program into Kenya and Ethiopia, to support a more skilled, self-sufficient and sustainable farming community. In the last 12 months Nespresso and TechnoServe have provided training and technical assistance to over 10000 farmers, and will reach 50000 farmers by 2020.

Nespresso has also progressed with its agroforestry plan. The reintroduction of trees in coffee producing regions helps protect natural ecosystems, thereby strengthening coffee farms’ resilience to climate change and ensuring sustainable coffee production for the future. Around 130000 trees were planted in 2014 in Guatemala and Colombia as part of pilot programs. In the first half of 2015, approximately 200000 trees have been planted in Ethiopia and Guatemala, and another 300000 will be planted by the end of 2015 in Mexico and Colombia.

“The Rainforest Alliance has been working with Nespresso and the AAA Program since it was first created in 2003.  Together we have seen great achievements that have delivered tangible improvement to lives of coffee farmers, families and communities, as well as environmental and biodiversity benefits,” said Tensie Whelan, President of the Rainforest Alliance. “The progress being delivered by Nespresso, the Rainforest Alliance and Pur Projet through the agroforestry plan is building on that success, helping farmers to improve their resilience to the real and present threat that is climate change.  Working together we are showing that care for the environment and for coffee farmers is a fundamental part of supplying the highest quality coffee to Nespresso’s consumers around the world.”

Are Business Costs Too High or Too Low?

Watch the Procurious Big Ideas Panel Discussion on Business Costs.

In the third of the panel discussions from the Big Ideas Summit, Dr Jules Goddard chairs a ‘fishbowl’ discussion where participants are asked to argue both sides of the question, ‘Are business costs too high or too low?’.

Watch a sample below

The panel started with Chris Lynch, Theano Liakopoulou, Chris Sawchuk and David Noble, gradually interchanging the other thought leaders as the discussion progressed. In an often heated environment, a number of hot topics were raised and some great insights released.

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

ISM Reports US Manufacturing Has Risen To Five-Month High

The Institute of Supply Management sheds some light on the current state of manufacturing in the United States.

The Manufacturing ISM Report On Business is based on data compiled from purchasing and supply executives nationwide

In general respondents were upbeat about the economy. Some of the key insights from its June report include:

  • “Avian flu is having a huge effect on egg pricing and items manufactured with eggs.” (Food, Beverage & Tobacco Products)
  • “Automotive industry remains strong and is expected to stay that way through 2015.” (Fabricated Metal Products)
  • “Business continues to hold in the U.S., [but is] soft in Europe and in decline in Asia.” (Transportation Equipment)
  • “Manufacturing business has improved slightly.” (Chemical Products)
  • “Slight improvement in defense spending on future business.” (Computer & Electronic Products)
  • “Most prices are stable and business is stable.” (Nonmetallic Mineral Products)
  • “Downturn in oil and gas markets impacting demand.” (Miscellaneous Manufacturing)
  • “Stable. Extra capacity available if more orders come in.” (Textile Mills)
  • “A bit slow. Sales down from last year.” (Machinery)
  • “Business continues to be strong, with housing starts being up in our markets driving cabinet sales.” (Furniture and Related Products)

Barclays economists distributed the following note to clients following the release: “Looking ahead, the recent pickup in the forward-looking survey components suggests a modest improvement in output and employment for domestic manufacturing… We do not expect a robust rebound given the lingering effects of a stronger dollar and lower oil prices; however, we view a modest H2 manufacturing rebound as increasingly likely.”

Procurious Big Idea #29 – Buying The Right Expertise

Murray Chenery, Executive General Manager of Brand for CPA Australia, highlights the importance of having procurement onside as a partner.

Murray, having purchased over $1.8 billion of marketing communication, talks about the importance of procurement as a partner to marketing, but also ensuring that the best marketing expertise is bought, not necessarily the cheapest.

See more Big Ideas from our 40 influencers

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?