All posts by Procurious HQ

Who are procurement‘s most influential thinkers?

 

Are these the most influential people in procurement?We’ve just announced the world‘s first digitally-led event for procurement and supply chain professionals. Missed it? You can get up to speed with all of the details here.

During this one-of-a-kind event we’ll be talking and exploring Big Ideas around three core topics – namely, risk, people and technology.

We’re bringing together some of the smartest Procurement thought leaders for a packed day full of interviews, debates and panel sessions.  Don’t worry, we’ll be capturing all of the day’s events on video so you’ll be able to see how all the discussions unfold.

You can submit your questions now, along with your own Big Ideas by becoming a Digital Delegate. Do so by joining this group, and Tweet your Big Idea using #BigIdeas2015

Who will be attending Big Ideas Summit 2015?

Peter Smith – Spend Matters

Peter is Managing Editor of Spend Matters Europe, part of the world’s leading family of procurement websites. He has an MA in Mathematics from Cambridge University, and worked for the Mars Group, where he first held procurement management positions, then was Procurement Director for Dun & Bradstreet Europe, the Department of Social Security, and the NatWest Group.

Chris Sawchuk – The Hackett Group

Mr. Sawchuk has nearly 20 years of experience in supply management, working directly with Fortune 500 and midsized companies around the globe and in a variety of industries to improve all aspects of procurement.

Mr. Sawchuk is a regular contributor to business publications, a frequent presenter at industry events and co-author of ePurchasingPlus. He has been recognized by Supply & Demand Chain Executive magazine as one of its “Pros to Know.”

David Noble – CIPS

David Noble was appointed Group Chief Executive of The Chartered Institute of Purchasing & Supply on 1 June 2009. Previously he was Group Supply Director at IMI plc, a FTSE 250 UK multinational company specialising in advanced engineering technology and responsible for c£1billion spend.

Although the majority of his career has been in manufacturing, he also has experience of the public sector, the distribution industry and large scale turnkey power station projects.

Sigi Osagie – Author

Sigi Osagie is a leading expert on effectiveness in Procurement & Supply Chain Management. He helps organisations and individuals achieve enhanced performance growth to accomplish their business and career goals. Sigi has extensive leadership experience across most Operations and Supply Chain areas, and previously held senior executive and board roles with several blue-chip multinationals and SMEs. He is the author of the highly-acclaimed book Procurement Mojo – Strengthening the Function and Raising Its Profile.

Giles Breault – The Beyond Group

Co-founder and Principal of The Beyond Group, a specialised advisory firm providing transformation guidance to commercial and procurement teams, developing learning conferences, and convening industry specific Think Tanks aimed at improving relationships between buyers and sellers.

Before founding The Beyond Group, Mr. Breault was a career productivity, supply chain, sourcing and procurement executive with strategic and operational experience in the pharmaceuticals, electronics, and aviation industries.

Tania Seary – The Faculty, The Source, Procurious

Tania is the Founding Chairman of three companies specialising in the development of the procurement profession – The Faculty, The Source and Procurious.

The Faculty is recognised as one of Australia’s leading advisors on procurement development. Established twelve years ago, The Faculty works with leading organisations to transform and elevate the role of procurement, build high performance procurement teams and create professional knowledge networks.

Tim Hughes – Oracle

Tim Hughes works for Oracle where he owns the Go to Market in the UK for the Cloud Accounting and Procurement solutions. 

He has a passion for Social Media and has a community of 100,000 followers on Twitter.  That enables him to work with customers to gain business outcomes and competitive advantage by using Social, Mobile, Big Data and Cloud across their Accounting and Procurement processes.

Jules Goddard

Dr. Jules Goddard is a distinguished academic and commercial innovator, and is the Big Ideas Summit facilitator for 2015.

He is the the Creator of Strategy, Innovation and Leadership Programmes for a wide variety of global companies, including Rolls-Royce, Roche, Rio Tinto, Vinci, Prudential, Microsoft, BG Group and Hewlett-Packard.

Chris Lynch – Rio Tinto

Chris has nearly 30 years experience in the mining and metals industry. He has been Director of Rio Tinto since 2011 (non-executive) and has served as chief financial officer since 2013.

He spent 20 years with Alcoa Inc. where he was vice-president and chief information officer based in Pittsburgh, and chief financial officer Alcoa Europe in Switzerland. Chris spent seven years at BHP Billiton, where he was chief financial officer and then executive director and group president – Carbon Steel Materials.

Olinga Ta’eed – Professor

Olinga is an entrepreneur, investor and social activist who has worked in over 50 countries, and is committed to global perspectives in blended solutions across public/private/third/community sectors.

In January 2013 Olinga founded and became Director of the Centre for Citizenship, Enterprise and GovernanceSince the age of 40, Olinga has led a number of high profile social enterprises which led to his appointment as Impact Investment Advisor to Big Society Network,  the UK government strategic partner.

What’s your Big Idea? Discover more at www.bigideassummit.com, join our Procurious group, and Tweet your Big Idea using #BigIdeas2015

The digital delegate and rise of the virtual summit

Much has been said about the rise of the digital economy continues, with organisations such as Airbnb and Uber cited as major disruptors in their industries. In business eLearning and social media are changing the way we learn and network. Are conferences next in the digital revolution?

The rise of the digital conference

As organisations become more geographically dispersed and look to reduce costs associated with meetings and conferences, webinars and virtual meetings have become much more common. Websites like Go To Meeting and Any Meeting allow anyone in the world to set up a webinar and connect with others without having to leave their desk.

Upgrade your presentations

And it’s not just meetings either. Presentations can be given a new lease of life by having them in a virtual environment. Presenters don’t have to stand up in front of a room of strangers, polls and surveys can be done in real time to provide instant feedback and by linking a hashtag to the meeting, the conversation can continue on social media.

Are Conferences Next?

So we come back to our original questions – are conferences next in the digital revolution? The technologies exist to allow this to happen. Google+ Hangouts on Air is just one of them. The service allows individuals and organisations to schedule content for broadcasting and subsequently publish the videos on YouTube.

Add to this the ability to have interactive conversations in real time, control who sees what and add banner advertising, and this becomes a real opportunity for reaching a wider audience. And to top it all off, the service is free.

It makes sense for conferences to investigate how to leverage technologies like this to expand their audience. Conversations can start before the event, speakers can get all the questions in advance (saving the awkward silence as everyone lets others go first in the Q&A) and social media can track thoughts and opinions long after the event has finished.

And this is what Procurious intends to do in April this year.

Big Ideas Summit 2015

Procurious is throwing open the doors to the world’s first digitally led conference for the procurement profession – Procurious Big Ideas Summit 2015. Planned as a unique think tank event, our Big Ideas Summit will draw on 40 of the world brightest minds from established thought-leaders, senior business leaders and commentators to discuss outside-of-the-box cost solutions.

The aim of Big Ideas is to inspire a new generation of business intrapreneurs to drive innovation and change in large organisations. Structured around three topics – RISK, PEOPLE and TECHNOLOGY – the event aims to change the world’s mind about cost and tease out solutions that will drive competitive advantage, agility in unstable markets and long-term value for organisations.

All the ideas and content will be amplified through Procurious. We’re welcoming more than 4,500 procurement professionals from across the globe to submit questions to speakers in advance as well as tune in, learn and participate in real time.

How you can take part

It doesn’t matter where you are in the world – we want you to help shape the agenda – register your attendance at our Procurious Big Ideas Summit Group.

You can also submit your questions on Twitter by tweeting us here: @procurious_ #BigIdeasSummit2015.

As a ‘digital delegate’ you’ll also be able to access a rich collection of supporting material including; articles, interviews and video content post 30 April.

For more information about the day head on over to our bespoke event site: http://www.bigideassummit.com.

Meanwhile, here’s what’s happening elsewhere in the world (we promise you it’s conference-free!)

Fast-fashion retailer Cotton On gears up for expansion

  • Cotton On Group has revealed plans to add 227 jobs in Australia and overseas this year as the Geelong-based value fashion retailer embarks on another expansion phase aimed at maintaining its five-year record of 20 per cent-plus sales growth.
  • Cotton On Group’s sales are forecast to rise 22.5 per cent in 2015 to $1.51 billion and the privately owned company is budgeting for 20 per cent-plus growth in 2016 by opening more than 100 stores and expanding e-commerce with new online sites, improved digital content and click and collect options.
  • COG, wholly-owned by Mr Austin and Ashley Hardwick, usually shuns publicity however have agreed to ‘lift the lid” and answer what they feel is unwarranted criticism of its supply chain and employment practices. It has a fully vertically integrated direct sourcing model and fast replenishment systems that rival those of global fast-fashion chains such as Inditex’s Zara, Sweden’s H&M and the Arcadia Group’s Top Shop.
  • Products are designed by a team of more than 60 designers and trend forecasters based at the global headquarters in North Geelong and at four hubs overseas. Products are manufactured by 170 suppliers at 330 factories, mainly in China and Bangladesh, and are sent two to eight weeks later, depending on the category, to seven distribution centres in Melbourne, Brisbane, South Africa, China, Singapore, California and New Zealand.

Read more at BRW.com

Supply chain threatened by ‘perfect storm’ as talent leaves industry

  • The global supply chain is heading for a perfect storm of rising demand, an ageing workforce, expanding skillset requirements, faculty shortages and an image problem, according to a white paper sponsored by DHL Global Forwarding.
  • Similar to the acute shortage of truck drivers blighting the US and Europe in particular, the gap between demand and availability of supply chain professionals is only going to get worse, states the report, with between 25 per cent and 33 per cent of the workforce “at or beyond retirement age”.
  • The white paper, entitled ‘Solving the Talent Crisis’, is based on research by Lisa Harrington, a senior research fellow at the Supply Chain Management Center, University of Maryland. It is specifically focused on the burgeoning automotive sector, where the problem is arguably more acute, but should be required reading for every supply chain executive.

Read more and download the white paper at The Loadstar

Scotland’s oil and gas supply chain sees ‘record’ sales

  • Sales from Scotland’s oil and gas supply chain grew by 11 per cent to a record £22.2bn in 2013, according to figures released by Scottish Enterprise. The sector recorded sales of about £7bn through international subsidiaries, up from £6.3bn in the previous year.

  • Direct exports from Scotland grew by 13 per cent over the same period, reaching a total of £4.2bn. Domestic sales for Scottish-based supply-chain firms were also up, from £9.9bn to £11bn.

  • North America continued to be the top region for international sales, followed by the Middle East and Asia Pacific.

  • Singapore, Qatar, the Netherlands, Iraq and the UAE all joined the top 10 country rankings for international sales during the year.

Read more at BBC.co.uk

Sports Direct responsible for fifth of all zero hour contracts in retail sector

  • Sports Direct is responsible for employing nearly one in every five workers in the retail and wholesale sector on a zero hours contract, official data suggests.
  • The revelation comes as a senior employment lawyer warned that the company, owned by the billionaire Mike Ashley, may have broken rules on consultation by giving staff at its USC fashion house only 15 minutes’ notice before they lost their jobs on 13 January.
  • The retailer’s chairman, Keith Hellawell, was grilled by MPs last week over the collapse of USC, which left 83 redundant.
  • He was also questioned about the company’s use of zero hours contracts. Sports Direct employs  nearly 15,000 on terms that guarantee no set hours each week. Mr Hellawell claimed that Sports Direct uses the contracts no more than any other retailer, but data from the Office for National Statistics (ONS) appears to cast doubt on this.

Read more at Independent.co.uk

‘Made in UK’ electrics firm hits £5m mark

  • Tapping into the new found popularity of ‘Made in the UK’ is boosting the fortunes of an Aldridge electronic components specialist. One-LUX, which designs, assembles and supplies LED lighting control solutions, is on course to hit the £5m mark for the first time in its seven year-history after reshoring the manufacture of two new products.
  • “We’ve always designed our products in-house but previously offshored high volume lines to the Far East to ensure we remained competitive against our rivals,” explained Glynnis Murray, who founded the business in 2008. “However, in the last year we had noticed a desire from our customers to buy British made products and this, when combined with demand for shorter lead times, made us consider exploring manufacturing closer to home.”
  • She continued: “Working with the Business Growth Service’s Manufacturing Advisory Service (MAS), we mapped out our supply chain requirement and then got signposted to a number of firms who could meet our requirements. “We were pleasantly surprised at how competitive local suppliers were and, combined with the greater control we now have over lead times and quality, is going to be a major bonus as the demand for OMNI-LED and UNITY-LED will be significant.

Read more at Business Quarter

Join the world‘s first digitally-led event for procurement professionals

Procurious Big Ideas Summit 2015

Announcing the Procurious Big Ideas Summit 2015

We‘re throwing open the doors to the world’s first digitally-led conference for the procurement profession: The Procurious Big Ideas Summit 2015.

Planned as a unique think tank event, our Big Ideas Summit will draw on 40 of the world brightest minds from established thought-leaders, senior business leaders and commentators to discuss outside-of-the-box cost solutions.

What’s the Big Idea behind it?

The aim of Big Ideas is to inspire a new generation of business intrapreneurs to drive innovation and change in large organisations. Structured around three topics – RISK, PEOPLE and TECHNOLOGY, the event aims to change the world’s mind about cost and tease out solutions which will drive competitive advantage, agility in unstable markets and long term value for organisations.

The face-to-face component of the event will take place in London on 30 April 2015, however, with ideas and content amplified through Procurious, we’re welcoming more than 4,500 procurement professionals from across the globe to submit questions to speakers in advance as well as tune in, learn and participate in real time.

Who will be speaking?

We’ve secured a high calibre of thought leaders and keynote speakers, including:

  • David Noble, Group CEO, CIPS
  • Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader, The Hackett Group
  • Professor Jules Goddard, London School of Business
  • Professor Olinga Ta’eed, Director Centre of Citizenship, Enterprise & Governance
  • Giles Breault, Founder and Director, The Beyond Group

How you can take part

The Big Ideas Summit is open to all Procurious members. It doesn’t matter where you are in the world – we want you to help shape the agenda – register your attendance at our Procurious Big Ideas Summit Group.

On Twitter? You can also submit your questions by tweeting us @procurious_  #BigIdeas2015

For more information about the day head on over to our bespoke event site www.bigideassummit.com

Why take part?

As savvy social networkers you’ll already be of the mind that social media can be used to create a global stir. We want to amplify these Big Ideas throughout the global procurement community, connect with one another, start meaningful conversations, and ultimately drive change.

All keynote sessions will be captured on film and offered exclusively to registered attendees.  As a ‘digital delegate’ you’ll also be able to access a rich collection of supporting material including; articles, interviews and video content post 30 April.

Who’s sponsoring it?

For an event that explores the biggest trends impacting procurement we thought it only necessary to bring onboard similarly hot-ticket sponsors. The Big Ideas Summit 2015 is proud to be sponsored by the Chartered Institute of Procurement & Supply (CIPS) and The Hackett Group.

Register your attendance today

Time Zones and Advanced Planning – What’s Procurement Like in Russia?

With the revelation that Russia’s dreaming of constructing a superhighway that will span the circumference of the globe – Procurement consultant Natalia Urazova and FMCG Procurement Specialist Vladislav Mandryka have got together with their fellow professionals to tell Procurious about procurement in Russia.

What's procurement like in Russia?

How do you think procurement differs in Russia, as opposed to elsewhere in the world?

Commercial procurement only came into being in Russia in 1991, with purchasing previously based on central planning activities. Procurement in Russia is now growing rapidly due to the increasing numbers of multinational corporations in the domestic market. Comparatively, it’s fair to say that procurement in Russia is at the same stage now as it was in the USA in 1999-2000.

Only around 10 per cent of all Russian companies have a defined procurement strategy, nearly all of which are large companies. Small and medium-sized companies tend to view procurement as a ‘passive administrator’ of production orders. As a result of this, these companies tend to lose 25-45 per cent of their spend value in procurement activities.

Leading Russian companies, those with active procurement strategies, are able to save billions of rubles annually through a number of initiatives like reconfiguration of procurement departments, P2P optimisation, category management, tenders and SRM programs.

These organisations have also understood that centralisation of procurement function provides benefits, so, in most cases, the procurement of key commodity categories with sufficient spend is centralised. However category management, Total Cost of Ownership and standardisation are not widely used concepts.

There’s a bit of a mix too when it comes to Supplier Relationship Management and supplier development. Some companies have made an effort to master lean thinking and create cross-organisational cross-functional teams to reduce losses in the value chain. However, there are many that still view supplier management as a method of aggressive negotiations, in order to achieve their own short-term aims.

Some organisations have a level of automation in their procurement activities, although this tends to be a ‘patchwork’ of ERP and MRP systems. Where systems have been implemented, there have been positive results. The same can be said for e-Procurement and e-Auctions for the most part, although in some cases, the focus on minimum prices has caused major mistakes. In one example, an organisation managed to lower the price of an auction item by 42 per cent, but left themselves with 15-years worth of stock!

Procurement is also complicated by the size of Russia and the extended time zones in the country. For example, if you have a regional office in Ust-Ilimsk (essentially in the centre of the country), it requires 2 flights and a 5-6 hour car journey to get there from Moscow. Equally, if you have an issue in a subsidiary in Khabarovsk (nearly the Eastern most city in the country) that requires an answer from a business unit in Voronezh (in the far West), at 9 a.m. you only have two hours for a solution, because there is a 7-hour time difference.

How did you get started in procurement?

In 1999, I was asked by my business to find a specialist to train the procurement department. There was a lack of such specialists in the market at the time, so I designed a small workshop myself. I have adored procurement since then – it’s the most interesting and best part of the business!

I’m now involved in the implementation of lean thinking in procurement activities across all my research and consulting projects.

What do you see in procurement’s future in your country and how can social media play a role?

Procurement professionals are increasingly becoming change leaders in organisations and have the ability to dramatically increase the efficiency of the entire value chain.

Social media isn’t used as much in procurement at the moment. But I hope that we can use it to get involved in conversations with procurement professionals from around the world and share information and experience about procurement best practice.

Why did you join Procurious?

I rarely use social media in my day-to-day procurement activities and to share procurement best practices and I saw Procurious as an opportunity to change that.

What are you hoping to get out of the network?

To get involved in conversations with other procurement professionals and share information and procurement best practice.

How are you going to get your peers involved?

By inviting them via my network, particularly those who shared their experiences in order to help me write this article!

Carnival Corp announces new CPO

Carnival Corp announces new CPO

The world’s largest cruise company has announced that Julia M. Brown will become the company’s CPO. The role of CPO is a newly created one for Carnival and it’s hoped that Brown will be able to strengthen strategic partnerships with the company’s network of suppliers around the world.

Brown will be tasked with improving efficiencies and driving strategic sourcing across the company’s nine brands, which are spread across the globe. It’s thought that combining the purchasing power of these brands will lead to significant costs and efficiency savings.

On the announcement of the new CPO Arnold Donald, president & CEO for Carnival Corporation & plc said: “We are excited to have Julia join us as part of our global management team and take on this new role that will be critical in helping us further leverage our scale, accelerating our drive to double-digit returns on invested capital.”

Brown comes into the position with a solid background in procurement having previously held the role of CPO at Mondelez and Kraft, as well as strategic roles with Diageo, Gillette and Clorox.

Speaking on the need for the new role of CPO Carnival Corporation’s Chief Operations Officer Alan Buckelew said: “As we have become increasingly global, the role of coordinating our procurement and supply chains has become more and more complex. At the same time, our global sourcing function creates opportunities for us to improve guest experiences onboard our ships and collaborate across our brands to operate more efficiently. Julia brings a depth of leadership and experience that will help us capitalise on those opportunities, as we build on the success our teams have already achieved.”

Lost at sea: 4 big risks facing the maritime sector

Shipping losses lowest for 10 years but mega-ships and cyber-attacks pose new threats for maritime sector.

How many shipping containers were lost at sea?

Shipping losses continued their long-term downward trend with 75 reported worldwide in 2014, making it the safest year in shipping for 10 years, according to Allianz Global Corporate & Specialty SE’s (AGCS) third annual Safety and Shipping Review 2015.

The British Isles, North Sea, English Channel and Bay of Biscay has been the location of the most shipping casualties since 2005 (4,381). Nearly one in five of all incidents (18 per cent) have occurred in this region. It was also the scene of the second highest number of casualties during 2014 (465), up 29 per cent year-on-year. The East Mediterranean & Black Sea region was the top hotspot (490), up 5 per cent year-on-year. Total losses in the British Isles and surrounding waters doubled year-on-year during 2014.

Over reliance on electronic navigation aids has caused a number of incidents in 2014. Captain Rahul Khanna said: “Inadequate training at grass roots level is to blame for this overdependence on e-navigation tools. The minimum standards have been met, but this is not good enough. We need to go above and beyond them to give robust training.”

The most common cause of total losses is foundering (sinking/submerging), accounting for 65 per cent of losses in 2014 (49). With 13 ships wrecked or stranded, grounding was the second most common cause with fires/explosions (4) third, but significantly down year-on-year.

According to the report, there were 2,773 shipping incidents (casualties) globally (including total losses) during 2014. December is the worst month for losses in the Northern Hemisphere and August in the Southern Hemisphere. For every total loss in the Southern Hemisphere there are 7 in the Northern Hemisphere.

The most significant risks identified in the 2015 Safety & Shipping Review include:

Increased threat from cyber-attacks

Cyber risks are another new threat for a shipping sector which is highly interconnected and increasingly reliant on automation.

“Cyber risk may be in its infancy in the sector today, but ships and ports could become enticing targets for hackers in future. Companies must simulate potential scenarios and identify appropriate mitigation strategies,” said Khanna. “A cyber-attack targeting technology on board, in particular electronic navigation systems, could possibly lead to a total loss or even involve several vessels from one company,” said Gerhard.

Other scenarios include cyber criminals targeting a major port, closing terminals, or interfering with containers or confidential data. Such attacks could also result in significant business interruption costs, notwithstanding liability or reputational losses.

Condition of ship and crew

While the long-term downward trend in shipping losses is encouraging, recent casualties such as Sewol and Norman Atlantic have once again raised significant concerns over training and emergency preparedness on passenger ships three years after the Costa Concordia disaster. Seven passenger ships were lost during 2014, accounting for almost 10 per cent of total losses. “In many cases construction of the vessel is not the only weak point. These two incidents underline a worrying gap in crew training when it comes to emergency operations on ro-ro ferries or passenger ships,” says Sven Gerhard, Global Product Leader Hull & Marine Liabilities, AGCS.  

The general shipping trend for smaller crews means seafarers are being asked to do more with less. Minimum manning levels reduce the ability to train people onboard, which can provide invaluable insight and should not become the normal day-to-day level for safe operations.

Rise in geopolitical uncertainty

The recent rise in geo-political tension around the world is concerning. The increase in human trafficking of refugees by sea creates search and rescue issues. More than 207,000 migrants crossed the Mediterranean in 2014, driven by the civil war in Syria.

The International Maritime Organization estimates at least 600 merchant ships were diverted in 2014 to rescue people, stretching resources and rescue infrastructure. Conflicts in the Middle East also put increasing pressure on the supply chain. Ships should not underestimate the security risks.

Piracy risks move from Africa to Asia

Although there has been good progress tackling activity in Somalia and the Gulf of Guinea, ensuring global attacks (245) are down for a fourth year in a row, piracy thrives elsewhere. Attacks in South East Asian waters are up year-on-year, as are incidents in the Indian subcontinent, with Bangladesh a new hotspot.

What’s the real impact of the UK 2015 budget on procurement?

Last Thursday, UK Chancellor George Osborne outlined his fifth and final budget for the current parliament. Many analysts viewed this budget as pivotal as it helps to highlight the state of the economy in the run up to the General Election in May.

George Osbourne delivering the UK Budget

For many others, however, the pre-election budget amounts to no more than political positioning and posturing – a chance to take a free swing at opposition policy. The policies are subject to the outcome of the election and many are never implemented.

However, taking the Budget at face value and assuming that some of these policies will be implemented, what does it mean for procurement and supply chains? Procurious aims to talk you through some of the detail here.

The Budget – Key Points

First we need to summarise a selection of the key announcements. For a more detailed run-down, click here.

  • UK economy grew 2.6 per cent in 2014, faster than any other advanced economy
  • Record employment in the UK, with jobless rate to fall to 5.3 per cent this year
  • Trade deficit figures “the best for 15 years”
  • Inflation projected to fall to 0.2 per cent in 2015
  • Borrowing set to fall from £97.5bn to £12.8bn in 2017-8
  • Beer and cider duty cut; spirits and petrol duty both frozen
  • The tax-free personal allowance to rise to £11,000 in 2017-8

From a business point of view, the news somewhat mixed.

  • Tax on “diverted profits” to come into effect next month
  • Annual bank levy to rise to 0.21 per cent, raising an extra £900m
  • Supplementary charge on North Sea oil producers to be cut from 30 per cent to 20 per cent while petroleum revenue tax to fall from 50 per cent to 35 per cent.
  • New tax allowance to encourage investment in North Sea
  • Review of business rates but no details

Behind the Figures

Experts were largely positive in response. James Sproule, Chief Economist at the Institute of Directors, stated that although the economic recovery was taking longer than anticipated, “the immediate news was encouraging with employment rising to record levels”.

Also, despite concerns about the UK’s debt position, Sproule said, “the degree to which government and businesses are beginning to pay down their debt is an encouraging trend”.

However, it would be naïve to assume that it was all good news for the UK. Despite a more positive outlook and plans to end the public spending ‘squeeze’ a year earlier than planned, an additional £30bn in savings still needs to be found over the course of the next parliament. This means austerity measures and spending cuts will have to continue.

From a business point of view, this mean less business in the private sector, tighter budgets and the requirement to look further afield for new opportunities.

George Osborne pointed towards this when highlighting China as a major export market in the coming years. With an export target of £1 trillion by 2020, an increase in funding to the UKTI is a good start. But Allie Renison, Head of EU and Trade Policy at IoD, argues that a focus on one economy is not necessarily a good idea.

“Focusing the extra funds on China raises questions about the wisdom of prioritising one geographical market over another. The Chinese economy is changing, and consumer preferences are shifting with it. We have not yet seen the expected boom in demand for services materialise, at least not in the financial and associated business services sector.”

Impact on Procurement and Supply Chains

What does this all mean for procurement and supply chain in the long run?

Mentions of procurement were mostly limited to the public sector and increasing efficiency requirements. Without any details provided, there was talk of cuts to NHS procurement, something that is currently under examination by Lord Carter, the chair of the NHS procurement and efficiency board.

The long-term future may also hold more autonomy on spend in public sector procurement. Councils in Greater Manchester are being given more administrative power over income, with many seeing this as a test case for more regional powers.

The freeze on fuel duty will provide relief for logistics organisations too, as well as removing cost from many supply chains. This should provide more opportunity for supply chains to focus on increasing efficiency and diversity, assessing appropriate routes for both import and export, as well as where further improvements can be made.

The government has been challenged to help supply chains more when it comes to identification of these opportunities. Allie Renison argues “much more emphasis is needed on specific sector supply chains, to help identify where gaps exist, both in terms of research and practical support.”

In the coming weeks, we will return to this debate as policy announcements are made by the leading political parties. Procurious will look to assess these policies, their impact on procurement and what the overall impact of the General Election will be.

In the meantime, here are some of the other major procurement stories making the news this week.

Supply chain changes could cut food waste

  • Changes to the supply chain could save millions in food waste by increasing the life of products, according to a study. WRAP estimated an increase of one day on product life across a range of foods could prevent around 250,000 tonnes of food waste each year.
  • The study, Reducing food waste by extending product life, examines how ‘use-by’ and ‘best before’ dates are set by food manufacturers, brands and retailers, for foods that typically have a high level of waste. They included sliced ham, potatoes, apples, minced beef, juice, chilled pizza/chilled ready meals, bread, chicken breasts, bagged salad and milk.
  • It estimated the potential overall tonnage and financial savings by scaling-up data from these products to all food groceries.
  • It also urged manufacturers and retailers to challenge the safety quality ‘buffers’ to find opportunities to extend product life. It calls for a standardised approach to ‘open life’ guidance – the time food is deemed safe or retains its best quality once opened – and that it should be used only for food safety rather than quality.

Read more at Supply Management

OPEC won’t take fall for low oil prices

  • Oil producers outside OPEC must cooperate to boost falling crude prices as the cartel refuses to take responsibility alone, the Saudi oil minister has said. “We refuse to take responsibility alone because (OPEC) produces 30 per cent of market output and 70 per cent comes from outside,” Ali al-Naimi said in remarks carried Monday by the Saudi Press Agency (SPA).
  • Crude prices slumped by about 60 per cent between June and February, weighed down by a glut of global supplies and concerns about stalling demand. The slide was exacerbated in November when Organization of the Petroleum Exporting Countries (OPEC) refused to cut production to rescue falling prices, saying it wanted to maintain its market share.
  • The 12-member group, led by top producer Saudi Arabia, pumps around a third of the world’s oil but other major producers, such as Russia, are not tied by its decisions. Asked whether OPEC would be willing to work with non-members, Naimi pointed to the crash of 1998 when the cartel cooperated with other producers to cut output and support oil prices.

Read more at Industry Week

PC supply chain has weak order visibility

  • With Intel having recently lowered its revenue forecast for the first quarter, sources from the upstream supply chain have pointed out that channel demand remains weak and order visibility until the third quarter is still unclear. Despite the fact that Microsoft is planning to release Windows 10 in August and offer free upgrades, the sources are concerned that the move may not boost PC sales much in the third quarter.
  • Demand for PCs has been weak in the first quarter as related players have not been able to come up with attractive new features for their products, causing a slow digestion of channel inventory and forcing Intel to reduce its financial forecasts.
  • Although PC players are expected to reduce their inventories to safe levels by the second quarter, weak demand from the channel, especially in Europe is expected to continue impacting PC sales in the quarter

Read more at Digitimes

UK government publishes details of new public sector procurement apprenticeship

  • The UK government has published details of a new public sector procurement apprenticeship. The two-year apprenticeship standard covers “all three aspects of the commercial life cycle: pre-procurement, sourcing and contract management”, with an assessment at the end and a requirement to achieve the CIPS Level 4 Diploma in Procurement and Supply.
  • The apprenticeship covers early market engagement, sourcing, contract agreements, supplier management and category management. A description of the role of “public sector commercial professional” said: “In the public sector a commercial professional’s role is to support the transformation of the way that the best quality public services are delivered, while securing value for taxpayers’ money. Experience will be gained working on high-profile, high-value, high-risk projects that affect millions of people and are worth billions of pounds each year.”
  • The government said the standard was not yet ready to use but will replace current apprenticeship frameworks by 2017/18.Read more at Supply Management

How do you define trust in the supply chain?

Following on from our examination into the Siemens bribery scandal,  we’ve compiled some of the excellent community discussion on the subject of trust in the supply chain.

Trust in the supply chain

How do you define trust in the supply chain?

Trust is a major factor when choosing suppliers, as well as staying with them for years. In a prior discussion on Procurious, trust, follow through and understanding of your industry were some of the top factors you all shared choosing and staying with your suppliers. 

So how do you define trust? And what components of trust are most important when it comes to setting up your supply chain?

Thanks to Hannah Broaddus for this question, following up on one previously asked (and wrapped) on Procurious. Trust as a concept is hard to define, can take months or years to build up within relationships, and can be destroyed by one stray comment or action.

As seen in the recent situation in Australia with Nanna’s Frozen Berries, consumer trust can be lost through issues in a supply chain and will take time to be earned back.

The idea that trust had to be earned on both sides was cited more than once. Trust is built through interactions and discussions over a period of time. At the beginning, there needs to be the belief that both parties are working towards the same goals and that the other party has your company’s or customers’ interests in mind.

Trust is built by being open and honest. Companies that are good at generating trust will share information freely. This can be sales and operations data, forecasts or critical data that will ultimately benefit both sides.

One answer highlighted Mari Sako, professor at the University of Oxford. Sako states that there are three types of trust that we must all go through & earn from the other party.

  • Contractual Trust – prove you can do what you say you can (we both look for failure here)
  • Competence Trust – when I believe that you can do what you say you will
  • Goodwill Trust – we both do things for the good of the relationship

Finally, we’d like to leave you with the immortal words of Ernest Hemingway, “The best way to find out if you can trust somebody is to trust them.”

Wise words to live by, even if this is perhaps easier said than done in business.

Here’s something else the community has discussing at length:

Is your company’s procurement department strategic, or purely operational?

What is the best way to add value and make your Management aware of its strategic importance?

The question of whether procurement has a seat at the executive table is often asked. What is less apparent is whether procurement departments are conducting purely operational work in organisations. This question from Pedro Semprine asks just that.

A widely held belief is that most senior executives spend less than 3 per cent of their time on strategic tasks. One answer in this discussion highlighted an 80/20 split in time – where procurement leaders spend 80 per cent of their time on strategic matters and 20 per cent on the daily tasks, while juniors were the opposite.

A common thought was that procurement, depending on the task, had to be both strategic and tactical. Day-to-day materials would require a tactical approach, whereas critical or bottleneck items would require a more strategic focus. Tactical procurement activities contribute towards the overall strategic goals of both the procurement department and the organisation.

There was also the idea that all activities might be viewed as operational, unless procurement was seen as a strategic advisor in the organisation. One option to counter this was to be proactive, writing strategy documents and quantifying examples with data, for example cost savings or production times, so management would be able to see the value added.

Procurement could utilise a results oriented approach, publicising successes where value had been generated for the organisation. Organisation impacting activities, such as core product changes, cost reduction and process improvement could be laid out with future plans in order to show continuing value generation.

The tips were nicely summed up into three points:

  1. Speak to influencers and key senior management figures – ask them what are their pains are
  2. Conduct a group presentation to all of them to demonstrate how your plans can help meet their goals
  3. Leave the emotive categories alone for now. These include stationery, car leases and most of all, travel.

Coca-Cola announces new CPO

coca-cola new CPO

There is movement at the top of the Coca-Cola procurement organisation.

The company announced earlier this week that Darlene Nicosia will take over the role of CPO of the Coca-Cola Company from Ronald Lewis who is moving into a new role as the senior vice president of Coca-Cola Enterprises (a subsidiary of the Coca-Cola Company). The changes will take effect on April 1st.

Speaking on the appointment of Nicosia, Ed Hays, who was recently named Coke’s next chief technical and innovation officer said:

“Darlene brings a deep understanding and appreciation of procurement strategy and execution within our Company and across our system. In her most recent role, Darlene was responsible for leading the procurement COE with a focus on capability development and execution of Global Sustainable Procurement’s Collaborative Procurement Model, and the implementation of Procure To Pay in collaboration with GBS.”

Ronald Lewis re-joins Coca-Cola enterprises having previously held roles as the organisation’s CPO and vice president of North American supply chain.

John Brock, CEO of Coca-Cola Enterprises, said: “Ron has an excellent track record of delivering results, extensive experience in the Coca-Cola bottling system, and an intimate understanding of the complexities of leading large supply chain operations in Europe and globally.”

Is the electronic market the answer to procurement headaches?

Are e-auctions the future for procurement?

Procurious is in Cardiff for Procurement Week 2015.

Answering our call of ‘what are other countries doing to innovate in procurement?’ We were given the opportunity to hear from Michal Ohrabio from Anasoft.  In Slovakia procurers are looking towards the Slovak Electronic Market (or the ‘Gov eBay’ as it’s more commonly referred to ). This online portal functions as an alternative buying hub, and encourages procurers to think about the buying process in an innovative and refreshing way.

How can we make the processes more efficient and automate them?

The challenge this project tries to address is the procuring of common goods and services below the threshold, while maintaining good prices. Authorities and state institutions (ministries, state-run business, local governments) can bid at this portal for the purchase of smaller goods and services and construction work.

So what we’ve got is a catalog of subject matters: simplified procedure, anonymous CA, and suppliers during the tender. After closing the contract everything is made public and process is published.

The new portal will reduce the procurement process from 3 to 4 months to one week. Furthermore, it is an important anti-corruption instrument due to the fact that national and local governmental organisations will be purchasing live and online.  It is hoped that this will help to improve the fairness to suppliers as well as government purchasers.

For state procurers, the value range of available goods and services is from 1,000 EUR to 134,000 EUR; for other procurers, the range is from 1,000 EUR to 207,000 EUR. The upper limit for construction work is 5,186,000 EUR. Registered companies can offer their goods, services and construction work.

The pilot was launched in September 2014, and roll-out began in earnest in Feb 2015. To-date the portal has signed-up 6500 suppliers.