Category Archives: In The Press

Boeing Acquires Robotic Aircraft Maker

Imagine an aircraft that can take off and land vertically, but isn’t a helicopter. It has an intelligent pilot, but there’s no human being sitting at the controls. Boeing has propelled itself into the world of futuristic aircraft with its acquisition of Aurora Flight Sciences.  

Boeing announced on Friday that it will acquire Aurora Flight Sciences Corporation, a company that specialises in advanced robotic aircraft. Aurora already has an impressive portfolio of autonomous aircraft, including vehicles it has been working on with Uber for its flying taxi project.

Much of Aurora’s business in the past has been with the U.S. Military, namely DARPA (The Defense Advanced Research Projects Agency) and NASA. Its aircraft have attracted interest (and funding) mainly due to its advanced Vertical Takeoff and Landing (VTOL) technology, with the small company beating out Boeing and Lockheed Martin last year to build the VTOL X-Plane for DARPA.

What does Boeing plan to do with this technology? The organisation’s press release doesn’t reveal much, but there’s speculation that the acquisition will help bolster Boeing’s own expertise in autonomous aircraft and VTOL tech, with most of that knowledge being funnelled into military aircraft. On the civilian side, the combination of autonomous piloting and VTOL technology are ideal for finally developing the drone taxis we’ve been hoping for. It is unclear whether Aurora will continue to work with Uber on this project.

A report in the Wall Street Journal notes that the acquisition is likely to have an impact on the jet maker’s supply chain long before it produces self-flying planes: “The technology includes … machine learning capability, which could be used to make industrial operations more efficient. Aurora produces composite parts for aircraft and other vehicles, potentially a big attraction to Boeing as it looks to take greater command of its supply chain.”


In other news this week:

Air France Testing Blockchain Technology

  • Air France KLM’s engineering and maintenance division is evaluating the potential for Blockchain to become its new digital ledger for managing replacement parts on in-service aircraft.
  • A spokesperson noted that Blockchain’s resilience, traceability, integrity and disintermediation are well suited to the aviation supply chain.

Elon Musk On Track To Win Solar Battery Bet

  • Elon Musk has announced that Tesla has reached the halfway point of construction on the “world’s biggest battery” in South Australia.
  • The company has a 100-day deadline to complete the construction of a 100-megawatt battery array, or it will build it for free.
  • The batteries, expected to power 30,000 homes, were commissioned as an innovative solution to an ongoing energy crisis in South Australia.

 Image credit: Aurora Flight Sciences

The Supply Vulnerability That Could Kill The Electric Car

Nearly all the pieces are in place for the long-overdue surge in electric car production. But before the automotive industry can finally transform itself, there’s one supply challenge that remains to be solved.  

Prices for rare earth elements are rising. China holds one third of the world’s reserves, and – alarmingly – 97% of global production. Meanwhile, the demand for electric cars and other green technology has led to dramatic surges in prices. A recent report from the Nikkei Asian Review found that spot prices for neodymium (used in magnets found in electric motors) hit $95 per kg in mid-September, a 90% spike from the 2016 and an 80% jump from the beginning of 2017. Similarly, terbium is 36% up from November last year, sitting at around $600 per kg.

Reasons for the price surge include:

  • Rising demand from the U.S., Europe and Japan, particularly by manufacturers of green cars.
  • A Chinese crackdown to enforce environmental regulations at substandard rare-earth smelting works, leading to suspension of operations.
  • Traders stockpiling rare earths in anticipation of higher prices.

Concern is also rising that rare earths are now a major bargaining chip for China ahead of any potential trade war or deterioration of its relationship with the United States.

In the hybrid and electric car space, rare earth metals are typically incorporated into the magnets used in DC motors. Car-makers such as Chevrolet, Nissan and Toyota are actively working to reduce their reliance on the metals, yet will face a steep challenge as the global fleet of electric cars is estimated to grow from around 2 million today to over 14 million by 2025.

Tesla – as usual – appears to be steps ahead of the problem with their use of an AC induction motor, which doesn’t require magnets and therefore has no rare earth elements. Other parts of Tesla’s vehicle, such as the high-end sound system and specialised glass, reportedly do contain rare earth elements.

Electric car batteries are not the only items at risk. Rare earth elements are used in industrial robots, hard disk drives, cordless tools, magnetic hold-downs, jewellery clasps, wind turbines, smart phones and even smart bombs.

The good news is that although China controls 97% of production, two thirds of the world’s estimated reserves lie elsewhere. The US itself is thought to have around 13 million tonnes (the most promising area being the Mojave Desert), while Russia has around 19 million. Other large deposits can be found in Australia, India, Brazil and Malaysia, while Greenland and some parts of Africa also have untapped sources.

Japanese firm Hitachi has responded to the supply challenge by launching a recycling effort to recover rare earths from hard drives and other materials.


In other news this week:

Tech giants hit by CCleaner malware

  • An estimated 2.27 million users of CCleaner, a free software tool for optimising system performance on PCs, have been affected by malware which “piggybacked” on the software.
  • Investigators believe the attack was designed to target PC users working for specific tech firms, including Samsung, HTC, Sony, Singtel, Vodafone, Cisco, Intel, Google and Microsoft.
  • It is unclear whether the malicious code, described as “relatively complex” and “aggressive”, was designed for commercial or state-level espionage.

Read more at Tech Crunch.

Gartner releases European Supply Chain Top 15

Gartner has identified 15 supply chain leaders that have demonstrated strong growth, along with high scores in corporate social responsibility and opinion score performance. Trends across the 15 leaders include digital experimentation, speed to adaptability and a focus on sustainability.

  1. Unilever
  2. Inditex
  3. H&M
  4. Nestlé
  5. Nokia
  6. BASF
  7. Schneider Electric
  8. L’Oréal
  9. BMW
  10. Diageo
  11. Reckitt Benckiser
  12. GlaxoSmithKline
  13. Adidas
  14. Roche
  15. Siemens

Assessing the Impact of Hurricane Harvey

A special report from ISM on the impacts of Hurricane Harvey has found there will be ongoing challenges around pricing, speed of delivery and certain commodities due to the storm’s destructive path through Houston, Texas.  

Facts, not fear. Back in July 2016, ISM’s CEO Tom Derry told Procurious why his organisation had put out a special report on the impact of Brexit in the U.S. “…There has been an enormous amount of speculation … fed by a sense of unease and uncertainty. ISM was in a position to gather real data and put the information out there so businesses can make informed decisions based on facts, rather than fear, concern or emotion.”

ISM has once again demonstrated leadership when disruption hits by producing a special paper addressing the potential economic impact of Hurricane Harvey, replacing existing speculation with data-based information to help affected business plan their response and recovery.

Houston, Texas, is home to the sixth largest import terminal in the world and a nexus for shipping lanes in the gulf coast. Strong economic linkages between the gulf coast and the U.S. as a whole mean that Harvey’s impact will extend far beyond the storm-hit area.

ISM’s survey of purchasing and supply executives nationally (not just in the affected area) found that the biggest challenges are expected with pricing, supplier deliveries and commodities such as fuel and plastics. Encouragingly, the data indicates that the effect on production, new orders and employment will be minimal.

Most impacted metrics: Prices and speed of delivery

  • Two-thirds (67%) of responding supply managers believe input materials pricing will be negatively impacted to some degree over the next three months.
  • 27% anticipate input materials prices will be negatively or very negatively impacted.
  • Over half (56%) feel supplier deliveries will be negatively impacted to some degree over the next three months.
  • 19% expect deliveries to be negatively or very negatively impacted.

Moderately impacted: Production, new orders and inventory level

  • A majority feel Harvey’s impact on production, new orders and inventory will be neither positive nor negative.
  • One in five are concerned about somewhat negative impacts, but only 1 in 10 foresee more negative impacts in the next three months.

Low impact: Employment

The good news is that business will not be laying off staff as a result of the Hurricane’s impact. Over 80% of respondents feel that employment will be neither positively nor negatively impacted by Harvey.

Commodities potentially in short supply

With the Houston area known for its fuel and petrochemical production, the following commodities could be in short supply for the next three months: fuel; plastic resins; chemicals; electronic components; feedstocks, chemicals (raw); gasoline; polypropylene; resin-based products; building materials; electrical components; LDPE; plasticizer; caustic soda; ethylene; HDPE; LLDPE; methyl methacrylate; petroleum based products; and isocyanate. 27 of 36 industries report that they expect to be impact by potential shortages of the above commodities.


My Brilliant Procurement Career Survey: we have a winner!

  • Over 500 procurement professionals took Procurious’ survey on career management in the profession.
  • Congratulations to our prize-winner Steven Reddish, a commercial supply coordinator based in Waikato, New Zealand. Enjoy your quadcopter!
  • Findings from the report will be published here on Procurious in mid-October.

Negotiation Skills? Going Once, Going Twice…Gone!

Does the rise of eAuctions mean the professions’ hard-won negotiation skills are now irrelevant? 

On Procurious, we’re keeping a close eye on the rise of procurement-related technology and what it means for roles and skill-sets across the profession. One such technology – the eAuction – has proven itself to be a highly efficient way of conducting a sourcing event and driving prices down. But does the advent of eAuctions mean that procurement professionals’ negotiation skills are no longer required?

This was one of the topics discussed at a Negotiation Roundtable organised by CABL (Conti Advanced Business Learning) and facilitated by its Founder, Giuseppe Conti.

Keep your options open

Thierry Blomet, Kemira’s Senior VP of Global Sourcing, told the roundtable that in his experience, the contract cannot always be awarded immediately after the eAuction. “We had an eAuction where it became clear that there were so many moving parts and questions that could not be answered during the event itself. We realised there’d be the need for additional discussion, so we used the outcome of the eAuction to narrow the bidders down to a small group of preferred suppliers, and continued the conversation from there.”

In other words, if you want to keep your options open, it’s important to communicate to suppliers that you may make the decision not to award at the conclusion of the eAuction. Instead, you may move the leading suppliers to a next-step status.

The nature of the eAuction itself presets your ability to negotiate during the event. There’s a bewildering array of eAuction formats – Dutch, Japanese, Brazilian, English to name a few – so it’s important to do your research. Blomet comments, “If you try to condense the event to 30 minutes, for example, you leave very little room to negotiate. A longer event leaves more room for something to happen and for you to react accordingly.”

Play fair

Francesco Lucchetta, Director of Strategic Supply at Pentair, says the ability to play with the visibility of quotes – so participants in the same eAuction can see each other’s bids – can be very helpful in encouraging competition. He warns, though, that the contract should have been established and its terms accepted by the bidders well before the eAuction takes place. “Make sure your suppliers have accepted your contractual terms, so no more discussions need to happen once the award is in place.”

Blomet notes that there are a lot of ethical aspects that need to be clearly communicated and understood before an eAuction. “You need to be able to define any red lines, and make sure participating suppliers understand. During the eAuction, ethical breaches could include inviting a fake vendor, or having a hidden way of scoring. It’s a matter of credibility.”

Tamara Taubert, Procter and Gamble’s Global Capability Purchasing Leader, comments that purchasing teams always need to behave in ways that are consistent with their values, and this includes running an eAuction. “Think about how you will behave as a company during the event. If the information about the event became public in 5, 10 or 20 years from now, would you be comfortable with that? You need to guarantee fair and ethical treatment of all participants.”

In fact, unethical behaviour by some corporations using eAuctions means that many suppliers are uncomfortable with the concept. Blomet notes that some large corporations have established that they do not participate in reverse auctions as a rule. “There have been a lot of issues in the past caused by poor communication, poor management, unethical behaviour, or suppliers simply being uncomfortable with the technology.”

This suggests there’s work to be done to improve the reputation of ethically-driven eAuctions.

Interested in attending a CABL Negotiation workshop? Click here  to find out more. The founder, Giuseppe Conti, has over 20 years of Procurement experience with leading multinationals and over 10 years of negotiation teaching experience at leading Business Schools (including Oxford, HEC Paris, IMD and ESADE).

Is the era of the fence-sitting corporation over?

Corporate CEOs have historically remained silent on politically divisive issues to avoid a potential backlash from consumers and their own employees. Last week, this rule was turned on its head.

Three high-profile advisory councils were disbanded by U.S. President Donald Trump last week after a cascade of CEO resignations over his response to the Charlottesville “Unite the Right” rally.

Mr Trump dissolved the American Manufacturing Council and the Strategic and Policy Forum after it was leaked that the remaining members of the two councils were planning a press announcement on Wednesday 16th August about disbanding the groups. High-profile resignations up to that point included Kenneth Frazier (Merck CEO), Under Armour CEO Kevin Plank, Intel Chief Executive Brian Krzanich, ADL-CIO’s Richard Trumka and Thea Lee, the Alliance for American Manufacturing president Scott Paul, Campbell Soup’s Denise Morrison and 3M’s Inge Thulin.

A similar revolt in the President’s Committee on the Arts and Humanities took place two days later, with 16 out of the 17 members quitting, leading to the White House stating that the committee’s executive order would not be renewed.

Is the line between politics and business dissolving?

Michael Maslansky, the head of a language strategy firm that advises major companies, told the BBC last week that “the era of the fence-sitting corporation is over”.

In an unprecedented situation, the moral compass has now been placed in the hands of business leaders, who are coming under increasing pressure to comment on political events. Donald Trump’s tweet about “pressure on the businesspeople of the [councils]” gets this absolutely correct.

Many of the CEOs who resigned from the advisory councils made statements along the lines of having “no choice” about the matter. In other words, Trump’s response to Charlottesville put them in a situation where their connection with the president contradicted their company’s corporate positions on race, diversity and equality.

Even CEOs without a formal position on an advisory board, including Apple’s Tim Cook, spoke out in condemnation last week. In the past, it was seen as safer to remain silent, or risk the wrath of customers (and employees) from the other side of the political spectrum.

Why is this happening? “If you’re silent about an issue, then each side will assume you’re on the wrong side. You end up really having to choose”, says Maslansky. Another sentiment that was frequently expressed after Charlottesville was the idea that silence in the face of injustice (including racism) is tantamount to complicity.

Ideally, every company would have a Values Statement which would dictate the CEO’s response to any relevant issue. This means the “choice” doesn’t come down to the personal whim or leaning of any individual business leader.

Where will this end? With political divisions only increasing, will we see consumers do business only with companies that reflect their political views? This is already happening on the fringes, with regular calls going out from both sides to boycott various companies (think #DeleteUber, or #AnywherebutTarget). Terms for this include “dollar voting”, “ethical consumerism” and “moral boycotting”.

For procurement and supply managers, daily buying decisions could become so fraught with larger implications that it will become hard to keep track. But if the end customer expects organisations to make purchasing decisions that are in line with their own values, this is certainly a space to watch.

As for CEOs, the era of carefully-worded, politically-neutral statements may be over. When a new CEO steps into a role, their customers, their employees and the Board will want to know where they stand politically and how this will influence the corporate culture.

To quote a meme that’s currently doing the rounds on social media: sitting on the fence only gets you one thing: splinters.

The vanishing line between business and politics will be one of the topics under discussion at the Chicago Big Ideas Summit on Thursday 28th September. If you’re a CPO and located in or near the Chicago area, there are still some seats available (limited to 50 attendees). If you’re not quite CPO-level (yet) or based on the other side of the globe, don’t worry – we’ve got you covered. Simply register for free as a digital delegate on Procurious, and we’ll bring all the Big Ideas from Chicago to you! Click here to find out more.


 In other news this week:

Australia to develop anti-slavery legislation

  • Australia’s Turnbull government will soon require companies with an annual turnover of at least $100 million to publish “Modern Slavery Statements” on a publicly accessible central repository.
  • The statements will include measures companies are taking in their supply chains to combat modern slavery, including human trafficking, debt bondage and forced labour.
  • The government is also considering drafting a Modern Slavery Act and an independent anti-slavery watchdog to investigate complaints and educate businesses.

Read more in The Age.

 The City of Los Angeles is looking for a CPO

  • The city of LA is seeking a CPO to fill a newly-created position created as part of a wider local government remodelling.
  • The new CPO “will be responsible for the development of a plan to strategically leverage the city’s spend, identify cost savings, employ long-range operational policies and procedures that align with industry best practices, increase transparency, and reduce time to contract with the city”.

Read more at Supply Chain Digital.

Big Ideas From The Procurement Capital of the World

Procurious’ flagship event, the Big Ideas Summit, is landing in Chicago in September – and we want YOU to be involved!

The Big Ideas Summit is landing in the Windy City, and this is your chance to be a part of it! If you can’t join us in Chicago in person on Thursday 28th September (seating is strictly limited to 50 CPO-level attendees), don’t worry – now’s your chance to register as a Digital Delegate!

Why Chicago?

From McDonald’s to Walgreens, Boeing to Motorola, Greater Chicago is home to dozens of Fortune 500 brands. Because it’s the third-largest economy in the U.S., it’s no surprise that it’s also a major hub from American procurement activity. Chicago has more purchasing professionals than most American regions, and has proven to be a magnet for innovative CPOs.

That’s why we’ve chosen Chicago as the first U.S. location for our digitally led procurement think-tank, the Big Ideas Summit! After three successful years in London, the Summit is an interactive, online event where up to 50 senior executives, industry thought-leaders and CPOs come together to connect with digital delegates from across the globe via our social media platform to discuss and test strategies and solutions for real world change.

What’s on the agenda?

Big Ideas Chicago will debate the latest, game-changing issues: global economic and geopolitical shocks, Industry 4.0, harnessing innovation and cognitive technology.

“We are bringing together the top 1%, who are on the leading edge of the profession. We want to crowd-source ideas and push procurement and supply management from the past and into the future,” says Procurious Founder, Tania Seary.

Big Ideas Chicago will feature keynote presentations from:

  • Urbanist, futurist and Author Greg Lindsay will uncover why innovation today is fundamentally social and often the result of engineered serendipity.
  • ISM® CEO Tom Derry, will talk through the five traits you need to be a truly agile and forward-thinking digital CPO.
  • Sibylline CEO Justin Crump will build the case for procurement teams to transform into crack intelligence gatherers.
  • Former Navy SEAL Andy Stumpf will provide strategies for making complex decisions under great pressure and without a full data-set.
  • Basware Vice President Purchase-to-Pay Eric Wilson will discuss why data is the alpha and omega of Artificial Intelligence.

To quote Uncle Sam…

We want YOU! If you’re a CPO or equivalent and within hailing distance of Chicago, be sure to secure one of the 50 seats available at The Wit Hotel on Thursday 28th September by registering here.

If you’re not quite CPO-level (yet) or based on the other side of the globe, don’t worry – we’ve got you covered. Simply register for free as a digital delegate on Procurious, and we’ll bring all the Big Ideas from Chicago to you!

As a digital delegate, you’ll be able to access all of the content for free, and at your leisure; whether it’s from your desk, on the go, or in at home with a glass of wine.

By registering as a Digital Delegate, you can …

  • Gain access to insightful discussions via our Big Ideas Summit Chicago group
  • Connect with our influencers and ask questions live on the day of the events
  • Share big ideas for procurement with the Procurious community
  • Follow the day’s events live via our social media channels
  • Access video content from our speakers and attendees on-demand, after the event.

So, what are you waiting for? Register now free of charge as a digital delegate for Big Ideas Chicago!

Attention All Employees: Report For Microchipping

Does the idea of a corporate microchip implanted into your body make you squirm, or are you fascinated by the possibilities?  

“Hold your breath – one … two … [stab].”

A Wisconsin-based marketing company (Three Square Market) recently hired a piercing professional to inject microchips into 50 of its staff. The radio-frequency identification (RFID) chips are encased in glass capsules about the size of a large grain of rice. They were injected into the fleshy part of participants’ hands, between the forefinger and thumb.

Sounds like something from a corporate dystopia, doesn’t it? Don’t worry, all of the microchipped individuals were entirely voluntary – along with a handful of journalists who were eager to see what it was like.

What can the microchips do?

At present, not much. It’s entirely internal to Three Square Market’s office, where microchipped staff can wave their hand to open doors, unlock computers and pay for items in the kiosk, provided the systems have the software installed and a contactless chip reader.

But in the future, the possibilities of human microchips are only limited by the scale of the technology’s implementation. Scannable items such as passports, drivers’ licenses and credit cards would no longer be necessary. Car keys could become a thing of the past, and of course home automation systems would be operable with a wave of the hand.

There’s a good example of microchips in play in Sweden, where a company named BioHax has implanted nearly 3000 customers with chips that enable them to ride the national rail system without having the show the conductor a ticket.

For data analysts, the potential flood of information from microchip use within a company is alluring – data could be collected every time an employee makes a purchase, enters the building, or uses a photocopier.

Can microchipped people be tracked remotely?

Not yet. The microchips aren’t a GPS device, but are entirely passive until they come within a few centimetres of a compatible reader, just like a bank card. Pet owners familiar with the technology know that microchipped pets can’t be located remotely if they go missing – instead, owners must wait until their pets are handed into a vet with a chip scanner.

Will employee microchips one day be compulsory?

At Three Square, over 60% of the company volunteered to be microchipped. The remaining 40% had a range of reasons for demurring, including a dislike of needles, a fear of having foreign objects in their bodies, and privacy concerns.

The concern is that if this technology becomes mainstream, a refusal to allow your company to embed you may lead to losing out on a promotion, raise, or simply being seen as “not a team player”. Forward thinking legislators in Pennsylvania have already introduced a bill to outlaw mandatory chip embedding, with a spokesperson saying: “If the tech is out there, what’s to stop an employer from saying either you do this, or you can’t work here anymore?”

Another issue is that with an increasingly mobile workforce, a chip that only works within the walls of a single organisation would become useless once that person leaves. One day, perhaps you would simply have your chip deactivated upon your exit interview and re-calibrated by your next employer, but this isn’t yet the case. Of those 50 volunteers at Three Square Market, it’s likely that a handful will move on to other roles within the next few months, but what becomes of their chips? The company won’t be happy with non-employees being able to open doors with a wave of their hands, so will the chips be (painfully) removed? Perhaps they will simply be deactivated, meaning users are left with a useless piece of “abandonware” technology embedded in their hands.


In other procurement news this week:

Are emerging professionals being paid more than experienced hands in procurement?

  • Based on 3808 responses across the United States, ISM’s 2017 Salary Survey revealed that emerging professionals (with under 9 years’ experience) are earning nearly $5000 more per annum than experienced professionals (with 9+ years).
  • This suggests that organisations are having to offer higher salaries to attract new talent.
  • The survey also revealed the following average salaries: CPOs – $259,340, VPs – $135,757, Directors – $153,347, Managers – $109,401.

Coupa appoints new Chief Marketing Officer

  • Cloud-based spend management company, Coupa Software, has announced that digital marketing executive and veteran software industry marketer Chandar Pattabhiram has joined the company as its chief marketing officer (CMO).
  • Named one of five CMOs to follow this year by LinkedIn, Pattabhiram has more than 23 years of experience in both fast-paced and large technology companies including Marketo, IBM, Badgeville, Cast Iron Systems, Jamcracker, and Anderson Consulting (now Accenture).

Intel to build a fleet of self-driving cars

  • Intel announced last week that it will build 100 high-automated cars to test self-driving technology.
  • The project will showcase Intel’s $15 billion acquisition of Mobileye, which closed this week. Israel-based Mobileye makes technology that helps vehicles “see”; collecting, analysing and transmitting data about the outside world.

The Procurement Tipping Point

At what point should a growing business bite the bullet and professionalise procurement? New research from Wax Digital has found that the right time is surprisingly early in a businesses’ growth, but it’s usually done on the back foot. 

As professionals in the sector we tend to think that procurement is the sole domain of large organisations spending millions of pounds on thousands of suppliers. However, new research has found that many smaller and more formative businesses also turn to procurement.

We recently surveyed 260 UK business and procurement experts and asked them at what point organisations needed to professionalise procurement to get a firmer grip on spend, suppliers, sourcing and so on. We were surprised by how many thought the ‘tipping point’ for procurement was relatively early on in a business’ growth. The results were as follows:

  • 75% said procurement was required once a company reaches £50M turnover
  • 77% claimed to need procurement by the time a business has 100 supplier contracts
  • 72% said once 500 invoices per month are being processed, procurement was essential.

Clearly, it seems that many smaller organisations are adopting procurement, so why is this? When asked why they introduced procurement, 68% said that it was due to rising costs, while 45% said that it was due to inefficient and labour intensive processes. Being a successful, up-and-coming business means experiencing rapid growth and significant change in these areas – more so than a larger, more established business.

For example, an organisation may be undergoing a merger or be highly acquisitive, bringing in more complex supplier portfolios or increasing spend overnight. These types of events can force a business to rethink processes like procurement. The very foundations of the organisation could adjust dramatically, and existing resources may simply not be adequate enough to support it.

Quick, someone build us a procurement function

Another interesting discovery in our research was that procurement is often introduced ‘on the back foot’ as opposed to being part of a pre-planned vision. We found that procurement is implemented as a reaction to a negative situation 48% of the time, compared to 31% of the time when it’s rolled out as a proactive and positive step forward. So few businesses planning ahead with procurement suggests that it’s (wrongly) an afterthought for many. Many businesses are ‘reactively’ using procurement, suggesting that they are already experiencing issues such as a lack of spend control or inefficient processes. But pre-planning with procurement could help businesses evolve more efficiently to try and reduce these problems.

That said, rolling out procurement isn’t always plain sailing, and smaller businesses with limited resources may particularly struggle to establish this new function successfully. Gaining senior management buy-in is the most common barrier to adopting formal purchasing processes, cited by 35%. Managing cultural change and a lack of internal knowledge followed, scoring 27% and 19% respectively. Given that they work for a smaller business – perhaps with a less rigid structure – the need for a procurement function might simply not occur to some SME employees, and it may take some time to win the support of colleagues. Those in the business being hindered by the lack of procurement shouldn’t be afraid to make a case for it to senior management.

Make sure the time is right

No two businesses are the same and each will feel the need for procurement at different stages. It’s not right to see procurement as something that should only be introduced when you reach a specific size or stage in the business cycle. Instead, consider when the businesses is feeling a strain that formalised procurement could help with.

It’s time for the procurement community to help strip its perception as a function for the larger business. This way more businesses can realise its effects.

Contributed by Paul Ellis, Managing Director at Wax Digital.

A Whole (Foods) New World For Amazon

Whole Foods: it’s fresh, it’s organic and it comes with a hefty charge. So where on earth does Amazon fit in? Procurious investigates…

Last week, to the public’s surprise and the retail world’s horror, Amazon announced that it was buying organic supermarket chain, Whole Foods. For the meagre (in Amazon terms) sum of U.S.$13.7bn the retailer will take ownership of the United States’ first certified organic grocer.

It’s a bold and unexpected move given that Amazon is well known for its cheap price points, which have traditionally  undermined brick and mortar stores. Whole Foods, by contrast, is a reasonably exclusive and fairly expensive, organic retailer.

Jeff Bezos, Amazon founder and CEO said “Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” said Jeff Bezos, Amazon founder and CEO. Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue.”

The annoncement has sparked much discussion and speculation ; What are Amazon’s intentions? How will other supermarkets be impacted? Will Amazon reinvent Whole Food’s supply chain?

John Mackey, Whole Foods Market co-founder and CEO believes “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers.”

What does this deal mean for other retailers?

Whole Foods is most prevalent in the U.S. with 431 supermarkets. Unsurpsingly, rival retailers were dealt a hefty blow following the announcement.. Walmart’s shares fell 4.7 per cent, Target’s fell 5.1 per cent Costco’s fell 7.2 per cent and Kroger’s  by 9.2 per cent.

The impact was even felt in the UK, despite there being only nine stores as Tesco and Sainsbury’s by some 4-5% on Friday.

Raanan Cohenn, CEO of last-mile delivery software provider Bringg asserts that “Amazon has become a leading player in the grocery industry overnight. It’s crunch time for the industry.”

“In one word, it means pressure” he continues. “Profit margins are traditionally razor-thin for grocery chains and Amazon will have a greater ability to squeeze margins throughout the supply chain even further.

Latest news implies that Walmart could enter into a bidding war; it’s certainly true that the biggest competitors will do their utmost to make this deal as tricky as possible for Amazon. Given that Whole Foods stock is trading significanlty more per share than Amazon’s $42 offer, a counter bid is entirely conceivable.

The Supply Chain challenge for Amazon

“The challenge for online grocers is that freshness and variety are hard to combine — if they sell one type of tomato, their stock will turn over fast and be very fresh. If they offer 20 types, the choice is wider but the tomatoes will sit in warehouses longer. The supply chain for groceries is trickier and costlier than for non-perishables”says , writing for the Financial Times.

It might be the cost-effective reigning champ of online efficiency but fresh, organic produce is a whole new ball game, and not one that Amazon has been good at winning in the past.

Jason Busch and Pierre Mitchell, Spend Matters, speculated that “Acquiring Whole Foods is perhaps proof that Amazon is willing to buy its way into managing adjacent supply chains in which it has struggled or not focused on yet. It also could provide a fascinating localized test-bed for Amazon Go bridging the consumer and B2B divide.”

If, bidding war allowing, the offer is accepted, Amazon is in a favourable postion to redfine the retail market. They’ll be able to sell fresh groceries online and give customers the option to collect  their deliveries from Whole Foods stores, which would  become instant fulfillment centres. Perhaps Amazon’s ultimate aim will be making same day delivery for groceries the norm.

And, as ZDNet pointed out, “Whole Foods’ roughly 30 million (typically affluent) customers are also likely to be Amazon Prime customers already, which further strengthens the connective tissue between the two brands.”

What do you think about Amazon’s purchase of Whole Foods? How will retail supply chains be affected? Let us know in the comments below. 

IBM Announces Blockchain Truck-Tracking

  • A partnership has been announced between IBM and AOS, a Colombian provider of logistics solutions, which finds the two firms developing a new blockchain and Internet of Things (IoT) solution for the logistics business
  • IBM Blockchain and IBM Watson will be able to track the provenance and status of trucks and their goods using RFID tags that contain the vehicles’ data
  • The solution integrates with IBM’s Watson IoT system to check in on factors like weather and temperature, which can impact the journey and the estimated delivery time

Read more on Coin Desk 

AI to spot Slavery Site From Satellite Images

  • Online volunteers are helping to track slavery from space. A new crowdsourcing project aims to identify South Asian brick kilns – frequently the site of forced labour – in satellite images
  • Nearly 70 per cent of the estimated 5 million brick kiln workers in South Asia are thought to be working there under force, often to pay off debts
  • So far, over 9000 potential slavery sites have been identified by volunteers taking part in the project. The volunteers are presented with a series of satellite images taken from Google Earth and they have to click on the parts of images that contain brick kilns

Read more on New Scientist

Norway Bans Palm Oil Procurement

  • The Norwegian Parliament has voted to introduce a ban on the procurement of palm oil and palm oil products for use as biofuels
  • Rainforest Coalition Norway, which had been lobbying for the ban, welcomed the move. It said: “Palm oil-based biofuel is a bad choice for the climate and drives rainforest destruction”
  • The organisation believes this is the first time a country has banned all use of palm oil biofuel by public bodies

Read more on Supply Management

Cladding Purchase in the Spotlight After Grenfell Tower Fire

After the tragic death of at least 58 people in the Grenfell Tower fire, confusion remains over whether the decision to use combustible panels in its construction was in accordance with British building regulations.

 

The Guardian and the BBC have both reported that Reynobond panels with a combustible polyethylene (PE) core were used in a refurbishment of the 24-storey Grenfell Tower, completed last year. This has yet to be independently confirmed by investigators, although it would explain the frighteningly rapid spread of the fire. The thermoplastic material is known to melt and drip as it burns, which spreads the fire downwards as well as upwards.

Manufacturer’s own warning ignored

A Reynobond brochure from 2016 shows that PE cores are only suitable for buildings up to 10 metres in height, while panels with a fire-retardant (FR) core should be used up to 30 metres. Grenfell Tower is 60 metres tall, for which Reynobond recommends their A2 model, with a non-combustible core.

The Guardian’s report states that the Reynobond PE cladding supplied to the companies refurbishing Grenfell Tower was £2 cheaper per square metre than the alternative Reynobond FR.

Confusion over legality of PE panels

While media outlets have pointed out the PE panels are banned in the U.S. and Europe, there remains some confusion as to whether they are legal in the U.K. or not.

Two Government ministers have said that “in their understanding”, the use of the cladding is against British building regulations.

Treasury chief Philip Hammond told BBC News: “My understanding is that the cladding in question, which is banned in Europe and the US, is also banned here. So there are two separate questions: one, are our regulations correct; do they permit the right kind of materials and ban the wrong kind of materials; and the second is were they correctly complied with, and that will be a subject the inquiry will look at and will also be a subject the separate criminal investigation will look at.”

Trade Minister Greg Hands told Sky news: “My understanding is that the cladding that was reported wasn’t in accordance with UK building regulations. We need to find out precisely what cladding was used and how it was attached.”

Vague building codes

A Reuters report found that British building regulations documents did not specifically say PE-core panels should not be used, yet that doesn’t mean builders are clearly permitted to use them: “British safety regulations across many industries are usually principles rather than rules-based.”

This means the law often requires companies to act safely without giving a specific definition of what this would involve. Firms are instead expected to be able to prove in court that they “behaved in a way that their industry would consider safe, given current knowledge and technology”.

The Fire Protection Association (FPA), an industry body, has reportedly lobbied for years for the government to make it a statutory requirement for local authorities and companies to use only fire-retardant material. 

Paper trail

Lawmakers have urged the Government and the police to immediately seize all documents relating to the building’s renovation to prevent the destruction of evidence that could show criminal wrongdoing.

“The Prime Minister needs to act immediately to ensure that all evidence is protected so that everyone culpable for what happened at Grenfell Tower is held to account and feels the full force of the law,” said Labour lawmaker David Lammy. This means that all emails, minutes of meetings, correspondence with contractors, safety assessments, specifications and reports, must be kept intact.

The Government is reportedly carrying out an urgent inspection of other tower blocks in Britain to assess their safety. There are roughly 2,500 similar apartment towers throughout Britain.