Category Archives: In The Press

Are Price Wars Impacting The UK Food Supply Chain?

The price war between supermarkets in the UK is frequently referred to as a ‘race to the bottom’ . But as the major retailers fight for market share, suppliers with already wafer-thin margins are the ones feeling the price war’s impact hardest.

A report released last week by the National Farmers’ Union (NFU) in the UK, argued that, while trying to win customers, retailers were returning to “damaging short-term practices“, and heaping pressure on their producers and suppliers.

Numerous suppliers have argued that retailers have begun to prioritise price over quality and service, and trying to recover their decreased margins across their supply chains.

Over Supply Issues

Compounding these issues are two other factors – over supply and aesthetics – something that farmers and other industry stakeholders, including chef Hugh Fearnley-Whittingstall, have called out retailers on.

Although bound in some cases by EU Regulations on fruit and vegetables, many retailers are rejecting high-quality food (usually vegetables) as “imperfect”, even if the food in question is in good condition.

Around one-third of fresh food produced in the UK is never eaten, with vast quantities being rejected on cosmetic grounds. As well as the issue of rejection on quality grounds, supermarkets have also been accused of wasting tonnes of food that is over-ordered, so that they can have full shelves for customers.

Financial Distress

An estimated 1,500 UK food and beverage manufacturers in the UK are currently classed as suffering from “significant” financial distress. Although this figure has fallen by 4 per cent during the second quarter of 2015, it still represents a figure three times higher than in the same period 2 years ago.

Experts believe the cause of this distress is linked to a readjustment to supermarkets’ lower price strategies. With suppliers under pressure, industry professionals are calling for change in order to ensure a future for all parties.

Judith Batchelar, Director of Brand at Sainsbury, has argued that there needs to be a more “joined-up” approach across the supply chain, with collaboration between all the parties and steps taken to integrate the latest technologies and information systems.

Although admitting that Sainsbury itself had a long way to go in this respect, Batchelar argued that this was the best way to create long-term sustainability, and help to balance the inherent supply and demand driven industry fairly.

Fresh Strategies

In the US, retailer Target is also addressing its supply chain strategy for fresh produce in the wake of major stores closures across North America this year.

The food supply chain, described as a “Frankenstein” system by Target COO, John Mulligan, is seen by the organisation as a key element in its battle to regain its market share.

However, it’s not all bad news in North America. US-based agriculture co-operatives have announced record income and revenue figures for 2014, with incomes up 16.4 per cent and a total of $246.7 billion revenue for the same period.

The figures are credited to an increased reliance on co-operatives, increased involvement in communities and greater number of producers joining one or more co-operatives in the past year.

It is hoped that the success of the co-operatives can be repeated in the UK, increasing the importance of the co-operatives and bringing the same collaborative strategies supermarkets are talking about into practice and achieving tangible benefits.

Do you work in procurement in retail or for a supermarket? We’d love to hear your experience of these issues, as well as how you might have solved them. Get involved on Procurious.

In need of some news to share with your colleagues over morning coffee? Look no further than what we have for you…

Tata Demands Suppliers Cut Prices

  • The Indian Steel Giant, Tata, has been accused of “bullying” tactics towards suppliers by demanding a 30 per cent reduction in prices
  • The company recently wrote down the value of its UK assets, and has made over 2000 people redundant in the past few months
  • A letter signed by Lorraine Sawyer, procurement director of Tata Steel Long Products Europe, was issued to the whole supply base, initially asking for a 10 per cent price reduction across the board
  • The letter goes on to ask for “contribution from all…suppliers” and implies that suppliers who do not comply may end up losing business

Read more at The Telegraph

Nurse Saves NHS Trust “Thousands”

  • A nurse has helped save tens of thousands of pounds in Plymouth – by introducing new and more efficient equipment.
  • The Senior Sister, who also acts as an Clinical Procurement Manager, has saved Plymouth Hospitals NHS Trust thousands of pounds over a 6-week trial period
  • Michelle Winfield said the key to saving money was “involving clinical staff in the choices and changes”
  • James Leaver, category manager for the trust, said, “We are seeing a real sea change in attitude with people no longer taking the historic view that procurement and finance are ‘imposing’ changes on clinical staff.”

Read more at The Plymouth Herald

BHP Billiton Shares Plunge Following Dam Disaster

  • Shares in Australian mining giant BHP Billiton have fallen sharply following the collapse of two dams at a co-owned iron ore mine in Brazil
  • What caused the dams to break is unknown, but it caused a wave of water, mud and debris to be released, engulfing nearby villages and killing at least 2 people
  • Shares in the company fell by 3.5 per cent on both the Australian and UK stock markets on Monday morning
  • The disaster has prompted calls for better regulation on the mining industry in Brazil, which is one of the country’s leading sources of export revenue

Read more at The Guardian

Obama Signs Illegal Fishing Laws

  • U.S. President Barack Obama has signed the Illegal, Unreported and Unregulated (IUU) Fishing Enforcement Act
  • The legislation includes a number of provisions preventing illegally harvested fish from entering the U.S. and supports efforts to achieve sustainable fisheries around the world
  • Currently, U.S. fisheries law focuses on at-sea or dockside enforcement of domestic fishing operations and does not provide the tools needed to address imported seafood and fishing violations
  • It is hoped that the new laws will ensure that both the economic and environmental sustainability of the U.S. Fishing Industry are protected

Read more at Maritime Executive

Austrian Wastewater Solution Wins Procurement Innovation Award

This year’s Public Procurement of Innovation Award has been won by the Austrian Federal Procurement Agency for its work in delivering a ground breaking wastewater solution.

The award, which was presented to the Austrian delegation at a ceremony in Paris, aims to recognise successful public procurement practices that have been used to purchase innovative, more effective and efficient products or services.

This year’s finalists included entries from Sweden (medical imaging for optimisation of care flows), Italy (integrated energy service framework contract), Netherlands (learning space self supporting river systems) and Spain (Galician Public Health Service).

Innovation led to Sustainability

Ultimately it was the Austrian solution that came out on top. According to the Awards panel, the project, which recycles wastewater by vaporising it to remove waste particles, was chosen as it not only involved the application of innovation-friendly procurement procedures, it also ensured increased resource efficiency and improved environmental sustainability.

“We felt that the procurement of the vaporising system best showcased the impressive work being carried out, as well as the type of solution that public procurement of innovation can achieve, the procurement brought together the institutional knowledge of public procurers with the ingenuity of the private sector” said Wouter Stolwijk, Director of PIANOo, the Dutch Public Procurement Expertise Centre, who presented the award to the Austrian delegation (pictured below). 

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The solution, that will be used to clean the residual water left over from the production of coins and notes at the Austrian mint, is said the reduce the amount fresh water used in the process by 97 per cent. It is believed that the machine could also have uses in other industry sectors.

 

 

2015 marks the second year of the PPI award with last year’s award being won by an impressive robotic bed washing facility at the Erasmus Medical Centre in Rotterdam. That innovative solution reduced bed-washing costs by 35 per cent and cut the CO2 footprint by 65 per cent.

See the full list of finalists here.

Are Supply Chains Taking IT Security Seriously Enough?

The IRS, the CIA, Sony Pictures, TalkTalk, Kaspersky – what do all of these organisations have in common?

If you said that they have all been victims of cyber attacks during 2015, you would be right. With each high-profile incident, the profile of IT security and cyber crime is raised further.

For procurement and supply chain, this is something that needs to be considered, but is it being taken seriously enough?

Supply Chain Security

A recent poll carried out at IP Expo Europe by cyber security firm Tripwire, revealed a startling statistic when it came to IT security. Nearly a fifth of respondents to the poll said they would be prepared to use IT suppliers who do not meet their IT security standards.

Additionally, nearly half of the respondents (47 per cent) admitted that they currently do not carry out audits before working with suppliers, although 23 per cent did say they were planning on introducing this in the near future.

This is not a new issue, as this 2013 article highlights. So why, in 2015, are so many organisations not taking this issue seriously? With brand, reputation and share price at risk, not to mention potential regulatory fines, what should organisations be doing?

As simple as it seems?

While these statistics do not exactly paint a rosy picture, the truth is that the reality is not as simple as it might seem. One of the victims of a hack this year was Kaspersky, an Internet security and anti-virus software organisation.

Symantec, a global provider of Cloud, mobile and virtual security, was held to account by Google this month for issuing fake security certification for websites. These certificates could be used to intercept and subvert SSL/TLS protected traffic, which underpins e-commerce, banking, government and other important services.

Following two audits, Symantec has uncovered an incredible 2458 certificates for unregistered domain names, and Google has demanded an explanation and resolution to the issue.

Even the US Senate, taking action to pass a version of the Cybersecurity Information Act (CISA) that allows companies to share any and all information about their user base with the Department of Homeland Security, has come in for criticism.

John McAfee, founder of the IT security and anti-virus software company that bears his name, points out that while this Act helps the cyber security fight within the US, it doesn’t help with attacks from foreign soil, where the majority of the US hacks in 2015 are believed to have originated from.

What’s to be done?

If you weren’t already aware, the UK Government released new training in June this year to help procurement professionals stay safe online. The training is free and can be accessed via CIPS.

The Chartered Management Institute has also offered these tips to business leaders, which can be implemented in every organisation:

  • Understand the potential threats – review any internal and external vulnerabilities in business web systems, such as any easy entry points for hackers
  • Integrate cyber security policy within corporate culture – security policies must permeate throughout every process and decision with a company. This includes audits of suppliers.
  • Practice an incident response plan – have a ‘go-to’ plan of action for responding to a cyber incident

Good IT security comes down to good education, not only employees, but also stakeholders and suppliers, as well as good communication. Equally, one of the best ways to beat the cyber threat is by collaboration – with governments, regulators and even rival companies.

If organisations put their differences to one side and work together, there may be light at the end of the tunnel yet.

We’ll leave the last word to Jeh Johnson, the United States Secretary of Homeland Security – “Cyber security is a shared responsibility and it boils down to this: in cyber security, the more systems we secure, the safer we all are.”

Do you work in IT procurement? Do you have any good tips that you could share with your fellow professionals? Let Procurious know and we can spread the word.

We’ve scoured our sources to come up with the key headlines in procurement and supply chain this week…enjoy!

Boerum Showcases Supply Chain Transparency

  • Boerum Apparel, a clothing company based in Brooklyn, has released a sweatshirt which shows off its entire supply chain
  • Each garment’s journey from plant or animal to the finished product is is written on its label, and includes where the raw materials were sourced and where it was turned into a sweater
  • The organisation is working hard on its “radical transparency” programme, and hopes that it will lead others to follow suit
  • You can get more information by search for the Twitter hashtag #knowyoursources

More at Treehugger.com

Toyota Breaks with Supply Chain Tradition

  • Japanese car manufacturer Toyota launched its new Corolla model this year, but departed from their traditional supply chain process of keiretsu
  • For the first time, Toyota chose to source a key component, a crash prevention system, from German manufacturer, AG Continental, rather than a Japanese-based firm
  • The decision is regarded as a symbol of Japan’s automotive suppliers falling behind the rest of the world when it comes to cutting-edge technology
  • Toyota plans to keep its keiretsu, but wants suppliers to be more globally successful and spend more on technological development

Read more at the Wall Street Journal

Living Wage on the Rise

  • The voluntary living wage in the UK is set to rise by 40 pence per hour, rising from £7.85 to £8.25 per hour in London
  • The rise is set to be officially announced this week, with organisations having six months to implement the changes
  • The move follows a report from KPMG that claimed almost six million workers in the UK were paid less than the living wage
  • In the last Budget the UK government announced a new compulsory National Living Wage that will come into force from April 2016, starting at £7.20 per hour

Read more at The BBC

Volvo to Test ‘Kangaroo Avoidance’ Technology

  • Around 20,000 kangaroo collisions are reported on Australian roads each year
  • Volvo has conducted a trial in Canberra last week aimed at adapting and using existing technology to help avoid the creatures on the nation’s roads
  • The technology uses radar and cameras to sense kangaroos along the road ahead and automatically brake as necessary
  • The technology has been used in the past for cows, moose and reindeer but requires calibration due to kangaroos’ more erractic behaviour

More at The Verge

Sharp announce Dave Dwyer as New Supply Chain Head

Sharp Imaging and Information Company of America (SIICA), a division of Sharp Electronics Corporation (SEC) has announced that Dave Dwyer will be promoted to the role of Vice President of Supply Chain and Operations. Dave Dwyer

Mr Dwyer brings more than 20 years of logistics and supply chain experience to his new role, having previously held management positions with Nabisco Biscuit Company and Kraft Foods before taking the moving to Sharp in 2002 as the Director of Supply Chain Planning.

Mike Marusic the Senior Vice President, SIICA Marketing and Operations made the following remarks on Mr Dwyer’s appointment, “Dave has done an outstanding job in his previous role running the SEC Logistics Group, through his efforts in working with all of the SEC business areas, he developed strong relationships across the organisation and with third-party partners in driving improvements to the logistics process.”

Dwyer will hold responsibility for the end-to-end supply chain management at Sharp. A direct focus will be given to enhancing alliances with the firms supply chain partners in support of the Sharp Consumer and Business Products companies. As part of an efficiency drive within the firms supply chain, Dwyer will lead a consolidated team comprised of members from various functional departments.

Speaking on his new appointed, Mr Dwyer was quoted saying, “I am extremely excited to join a great team in SIICA, with their support, I look forward to enhancing the supply chain and operations processes across the organisation to achieve a more unified and efficient operation.”

Can Good Procurement Lead to a Successful IPO?

IndiGo, a budget Indian airline, may well have procurement to thank for a successful IPO launch today.

It has been suggested that a frugal business strategy, including a strict focus on reducing costs has primed the airline for success in the hugely competitive Indian aviation market.

India’s aviation market is growing at roughly 18% a year and offers huge opportunities for investors looking to cash in on this demand spike.

Despite this boom in demand, high operating costs and taxes have hindered the progress of many airlines operating in the subcontinent. A debt-racked Kingfisher airline was recently grounded and Spicejet, another Indian carrier, is facing similar issues.

Cost Conscious Culture Drives IPO Interest

Aviation experts point to IndiGo’s cost conscious culture as the leading reason as to why the business is performing so well. IndiGo’s procurement strategy is simple – they buy just one type of plane from one supplier (the company’s recent order with Airbus was the largest single order in the manufacturers history). This simplicity allows the firm to save time and money on maintenance, and reduces the amount of effort that needs to be allocated to supplier management.

IndiGo also has an enviable record when it comes to punctuality. This has not only encouraged more passengers to fly with them, but has improved the airline’s forecasting and reduced fuel costs, ultimately contributing to a more profitable operation.

Interest Domestically and from Abroad

The IPO is has been seen by investors as a huge opportunity to capitalise on growth of IndiGo. The firm’s market share has increased from 12.5 per cent five years ago to 34 per cent at the end of March. The funds raised in the IPO are earmarked for the purchase of new planes that are expected to further spur the growth of the firm.

Interest from both foreign and Indian firms (including Goldman Sachs and Singapore Sovereign Wealth Fund) in the IndiGo IPO has already been strong. The IPO will be launched today.

Is the UK’s position as a global innovation leader at risk?

New research shows that a majority of UK organisations suffer from “innovation inertia” or a lack of consensus in where to invest their resources. Does the UK need to re-focus its efforts so as not to be left behind?

The research from Hitachi Data Systems found that 75 per cent of organisations are being hampered in their investment decisions by a lack of clarity and access to business data. Additionally, a staggering 90 per cent of IT leaders believed their organisation was not in a position to respond to rapid change in it industry.

Although there is a much-increased volume of data available to business leaders, it appears that many are not being able to leverage this effectively. From a long-term point of view, this leaves British organisations potentially lagging behind their global competitors.

Lack of Investment

Alongside the “inertia” caused by a lack of organisational investment appears to be a significant decrease in investment in innovation at a national level.

The Confederation of British Industry (CBI) has revealed that the UK spent the least on innovation and science of any of the G8 nations in the past year, with only 0.49 per cent of GDP invested back in these areas.

The CBI also argued that more Governmental support was required in order to make innovation more attractive for businesses, a stronger framework and a re-thinking of business rates two of its key suggestions.

Industry leaders have also warned that innovation could be harmed should the Department for Business, Innovation and Skills change innovation and R&D grants from the UK Government, to loans.

Representatives of the aerospace, automotive and pharmaceutical industries have warned that this could lead to fewer R&D projects in the UK, and organisations shifting new R&D projects abroad.

Falling Behind?

Although there is much talk about the UK falling behind, the situation is perhaps less perilous that it seems.

The 2015 Global Innovation Index (GII) places the UK as one of the world’s top five most-innovative nations, both from a volume and quality point of view. This ranks the UK alongside economic peers such as Sweden and the USA, as well as being ahead of Germany and growth economies such as China and Brazil.

It could be argued, based on the comments from the CBI, that an increase in investment in innovation is required to keep the UK in its current position, rather than have the country play catch up with its global peers.

Ambition is Key

Yet, the UK and UK-based organisations need to continue to innovate and create in order to maintain its position. How best, though, to kick-start more innovation projects?

Richard Jones, pro-vice chancellor for research and innovation at the University of Sheffield, believes that universities will play a major role in rebuilding the UK’s innovation programmes.

In a speech to the Association for University Research and Industry Links’ annual conference, Professor Jones argued that universities needed to see what they could contribute to wider society and be more “ambitious” to achieve their goals.

Lead by Example

In the past 12 months, two of the UK’s most famous innovators, James Dyson and Richard Branson, have both invested in programmes to help boost innovative and entrepreneurial activities in the country.

Having figureheads leading by example, as well as investing time and money into this, could potentially give the UK the lift it needs in the coming years to keep its place at the top of the tree.

Do you think the UK needs to be more innovative? Is the country at risk of falling behind, or are the reports over-stated? Start the discussion on Procurious!

Stuck for a conversation in the coffee queue this morning? Procurious has gathered all the big headlines in procurement and supply chain for you…

Talk Talk Boss Warns of ‘Arms Race’

  • Talk Talk Chief Executive, Dido Harding, has warned that all UK companies are under threat of a “cyber security arms race”
  • The hack on the telecommunications company happened last Wednesday and has affected millions of customers, although no losses have been directly attributed to the hack as yet
  • Harding warned that any company in the UK could be vulnerable to a cyber attack
  • She went on to say, “This is happening to a huge number of organisations all the time. The awful truth is that every company, every organisation in the UK needs to spend more money and put more focus on cyber security – it’s the crime of our era.”

Read more at BT.com

London Mayor Contradicted on Garden Bridge Procurement

  • Claims that the procurement process behind the Garden Bridge was ‘robust’ made by London mayor Boris Johnson have been directly contradicted by TfL’s director of internal audit
  • Clive Walker, the man who oversaw mayoral body Transport for London’s internal investigation, conceded that the process was neither ‘open’ nor ‘objective’
  • Critics have suggested that TfL made attempts to ‘water down’ the audit and introduce elements which reflected well on its performance

Read more at Architect’s Journal

Technology Means Traffic Jams Could Be ‘Thing of the Past’

  • Motoring and technology engineers are hard work on the next generation of connected vehicles, which could completely transform British roads.
  • The concept revolves around cars talking to the city and guiding drivers through the busy streets with minimal delay
  • Siemens and NXP are in the process of designing the in-car chips and infrastructure to build ‘intelligent road systems’, allowing drivers to be kept up to date with conditions in real time
  • The technology giants believe the systems will be ready to go in the UK by 2020

Read more at The Express

Hyperloop Test to Start within ‘Weeks’

  • Hyperloop Transportation Technologies (HTT) has announced it will start work on the $6bn Hyperloop test track within the next two to three weeks
  • The Hyperloop system, originally the concept of Elon Musk, has had to overcome a number of issues to get to this stage, aims to create super-fast, cheap transportation between major cities
  • The system, which will be solar powered, could transport over ten million passengers during testing

The Collaborative Economy – The New Globalisation?

New organisations, new social media platforms, great connectivity – all of these are expanding the wealth of knowledge and skills that individuals have access to. As this continues, are we looking at a shift in the nature of global trade?

Ten years ago, I sat in a business lecture debating why globalisation was a good thing, and why organisations needed to be alive to the possibilities of being able to source any item, at any time, from anywhere in the world. Although I won that argument, I couldn’t have known how the world would change in the intervening decade.

Globalisation and Trade

At the time, I was young, idealistic and thought large, dominant global organisations couldn’t be a bad thing, no matter what my debate opponent said about local economies and global trade. I should say that this was also back when I drank coffee from the red, blue and green chain companies, before realising local, independent providers had them beat…

Now, reports are suggesting that traditional globalisation, the trade between countries, is decreasing. Some forecasts show that, for a third consecutive year, growth in global trade will be lower than overall economic growth, while others highlight that international capital flows are worth 10 per cent of what they were in 2007.

While it may be true that globalisation in a traditional sense may be on the wane, there is a new form of globalisation on the rise.

The Collaborative Economy

Cross-border trade is changing thanks to technological advances and increasing interconnectedness of subject matter experts and those who require specific skill-sets that they don’t already have access to. This is the Collaborative Economy.

Sites like Upwork (a combination of two pioneers of the collaborative economy, Elance and oDesk) allow organisations to ‘hire’ independent talent for one-off or short-term jobs, filling a requirement or skills gaps, without having to hire a full-time employee.

The difference in this case is that the individuals offering their expertise to meet business requirements are frequently in a different country or in a different time zone, but able to leverage technology to provide a service.

There are an estimated 80 million ‘sharers’ in the collaborative economy in the USA, as well as over 23 million in the UK and over 10 million in Canada. And with conservative estimates of investment totalling $25 billion, it appears that we are just scratching the surface.

Procurement Professionals without Borders

Procurement is very much at the start of its journey when it comes to the Collaborative Economy, but the potential is enormous. Asset sharing and transfer of knowledge could enable procurement to work across borders and access knowledge, all while reducing costs associated with travel and adding value through accessing best practice and reducing risk.

Online sharing platforms, such as FLOOW2 can assist with supply chain transparency and reduce overheads by facilitating the sharing of assets. And could we end up seeing this go one step further, with procurement professionals themselves being shared between organisations? It’s not as far-fetched as you might think.

This isn’t consultancy – this is freelance procurement. When asked about my ‘Big Idea’ for procurement, I voiced the opinion that in the next decade people wouldn’t work for one organisation or in one place, but on multiple projects and in many teams, dependent on the required skills for the job.

It has taken less than 6 months for others to talk about the same subject – how long before talk becomes reality? I’d be interested to hear what you think and if you would set yourself up as a procurement freelancer. Let’s start a debate – maybe someone else will win this time!

Is there a crisis on the horizon for Asian economies?

The old saying used to be “If America sneezes, the world catches a cold”. Times are changing and now it seems that China has caught a cold, and the rest of the Asian economies may be coming down with something worse.

In 1997, Asia was hit by an economic crisis, sparked by, amongst other things, a series of currency devaluations. When the Thai Government took the decision to unpeg the Baht against the US Dollar, it had a knock-on effect across the rest of the region, with falling stock markets and reduced imports.

Back in the current day, similar issues with slow economic growth and currency valuations in the region have many investors worried that a new crisis may be on the horizon. While many economists and experts may disagree with this, there are parallels being drawn between the situation today, and the one nearly 20 years ago.

Market Instability

Asian economies have just experienced their worst collective quarter since the Global Financial Crisis. Not even the Chinese powerhouse is immune to the slump, with its main stock market posting its worst quarterly results since 2008 and growth slowing to 6.9 per cent.

Currency valuations are down too. The Malaysian Ringgit has fallen a massive 26 per cent this year; the Thai Baht has hit a five-year low; Singapore’s central bank is about to undertake its second easing of monetary policy of 2015; Japan is facing another recession.

With export markets weakening, less money available to spend on imports, and China, long since the key customer for many Asian countries, unable to help due to its own perilous situation, there are concerns that it’s only a matter of time before there is a knock-on effect around the world.

Sales Slump

Last week alone saw five major global organisations report a sharp decline in sales, tied to poor sales in Asia, which have lead to falling profits and revisions of growth forecasts.

  • A 4 per cent fall in the sales of Barbie Dolls has hit Mattel profits (down to $223.8m from $331.8m last year), as a strong US Dollar impacts overseas markets
  • Shares in Hugo Boss dropped 10 per cent, with the organisation blaming the deteriorating Asian market; it went on to cut its growth forecast for sales and core profits to 3-5 per cent
  • Shares in Burberry dropped 8 per cent on Thursday last week, with its investors focusing on a dip in Chinese sales as the primary cause
  • Casino and hotel operator, Wynn Resorts, reported a 60 per cent drop in earnings in the three months to September. Its Macau operations, traditionally a major money earner, saw a 37.9 per cent decrease in net revenues for the same period
  • Nestle, still recovering from the Maggi Noodles safety scare, cut its growth outlook to 4.5 per cent, citing slower than expected growth in China

Global Uncertainty

As the situation in Asia develops, investors around the world are nervous about what might be coming next. Decreasing export revenues, in particular to the Chinese market, are set to have an impact on growing economies like Brazil and Turkey.

There are concerns in Europe too, where exports to Asia are big business, as slow European markets aren’t able to pick up the slack in sales. Even in the USA, where growth is much healthier, long-term instability may ultimately cause problems.

Winter of Discontent?

Where does this leave procurement and supply chain? As professionals, we need to be aware of the developing situation, both from the point of view of sales and exports, but also for risk exposure for organisations.

While some organisations may be able to take advantage of the situation by sourcing cheaper products and materials, we need also to be aware of the potential risks of making changes to suppliers and across supply chains.

Where the markets go from here remains to be seen. Investors and economists will both be hoping that the coming quarter brings more stability and wards off any further talk of a second crisis.

Do you work in Asia, or have part of your organisation in Asia? What are your thoughts on the current situation? Get in touch, or leave your comments below.

Meanwhile, Procurious has scoured the web for the top headlines in procurement and supply chain this week…

New Job Creation in UK Automotive Industry

  • Up to 28,000 jobs could be created in the UK automotive industry supply chain over the next five years
  • A report from the Society of Motor Manufacturers and Traders (SMMT) estimates British car production is set to reach a record two million vehicles annually by 2020
  • This boost in output will require an additional 9,500 employees at vehicle manufacturers in the UK, along with a subsequent increase across UK-based supply chains
  • The report comes in the wake of huge investment by car-makers and supply chain companies throughout the UK

Read more at The Birmingham Post

Uber App ‘Does Not Break UK Law’

  • A ruling by the UK High Court has decreed that the Uber app does not break the law
  • The court had been asked to decide whether the company’s smartphones were considered meters, which are outlawed for private hire vehicles
  • The Licensed Taxi Drivers’ Association (LTDA), which represents many of the 25,000 licensed taxi drivers in London, asked the judge to rule it was a meter and ban its use
  • The LTDA now plans to appeal

Read more on the BBC

Nespresso updates on ‘The Positive Cup’

  • CEO of Nestlé Nespresso, Jean-Marc Duvoisin, gave an update on the progress of ‘The Positive Cup’, Nespressos 2020 sustainability strategy
  • Marking one-year since its launch, Duvoisin announced that significant progress had been made towards improving the lives of thousands of coffee farmers, as part of the company’s AAA Sustainable Quality™ Program
  • Over the past two years Nespresso has been working with its partner TechnoServe to help re-build the coffee sector in South Sudan, resulting in the country’s first-ever coffee exports in 2013
  • Nespresso aims to source 100 per cent of its coffee from its AAA Sustainable Quality™ Program by 2020

Read more at PR Newswire

Wal-Mart to add Supply Chain Capabilities

  • The US retail giant will aim to add capabilities to its supply chain in order to improve efficiency in the coming year
  • CFO Charles Holley, speaking at an investors’ day, stated an expectation of an earnings fall in the year to January 2017
  • Wal-Mart plans to extend the capabilities of its distribution warehouses to allow for shipping of individual items, rather than servicing of stores alone
  • It is expected that this will improve accuracy and efficiency, while at the same time reducing costs

Read more at Just Style

Procurement Hero Reaches For The Skies In Aid Of Cystic Fibrosis

Every two years Matthias Fuchs has been undertaking a flying marathon challenge. The challenge is supported by Qantas and raises funds for terminally-ill children at the Children’s Hospital Westmead.

This time around Matthias will take on a record 12 days flying in economy class without ever leaving a plane or airport terminal. Qantas has already supplied Matthias with the proposed flight schedule, and we can tell you that it clocks in at around 200 flying hours, over a distance of 167,000km…

During his time spent in the air, Matthias will cross the Pacific Ocean six times, and the Indian Ocean four.

The challenge has been an enormous success in previous years, in 2013 he alone raised a whopping $140k for the Cystic Fibrosis Unit at the Children’s Hospital Westmead. This year Matthias says that the proceeds will be used to maintain the mass spectrometer machine that was bought previously, as well as fund a clinical research fellowship.

Sponsor the challenge here

Matthias says: “This is a cause very close to my heart as my 12 year old daughter Kristen has cystic fibrosis.”

Matthias loves to fly, so much so he’s kept a record of every flight he’s ever taken. That’s 1232 flights…

Will you support the good man in his noble cause, as he attempts the marathon challenge for one last time? To-date $161k has been raised, but he hopes to reach $175k-200k before it’s time to take-off.

What’s more, donate $5k and you’ll get your company logo embroidered on the shirt he’ll be wearing during the challenge.

Come on, dig deep!

Volkswagen Emissions Scandal: A Lesson In Awareness & Accountability

With Volkswagen caught cheating on emissions tests and its CEO quitting over the scandal, what can it teach us about awareness and accountability?

The past few days have seen the great and good of the automotive industry waxing lyrical in the broadsheets and providing their take on events.

As the Volkswagen board gathered to appoint Porsche’s Matthias Muller as its new chief executive, and amid alarmist claims that it’s a bigger threat to the economy than the Greek debt crisis, questions are mounting over how much ministers knew in advance.

In light of such damning revelations we can expect reverberations to be felt within supply chains for months (even years) to come.

At the time of writing, US authorities predict the scandal affects over 482,000 diesel passenger cars sold in the States between 2008 and 2015. Affected models include the VW Golf, Jetta, Beetle, and Passat as well as the Audi A3. Damningly each car that violates the US Clean Air Act faces a fine equivalent to £24,000 – which equates to a £12 billion bill in US fines alone.

‘An investor’s nightmare’

Both Deutsche Bank and JPMorgan have downgraded Volkswagen -with DB cutting VW from ‘hold’ to ‘buy’ and slashing the price target target to €130 from €260. While JP downgraded its stance on VW’s preference shares to ‘neutral’ from ‘overweight’, cutting the price target to €179 from €253, saying it cannot rule out additional engine investigations and does not have visibility over the total liability for VW.

Citi said: “The regulators (not only the US ones) hold the key to answer the question of potential impact (not only on VW, but also on the global auto industry). We think regulators may not overlook the matter, given their stress on the compliance with environmental regulations.

“At this juncture, lots of uncertainties remain, but we cautiously view that some ‘spill-over’ to other regions/ auto industry is inevitable. Germany and Korea have already begun a probe into the matter for more scrutiny. Depending on the outcome, it could lead to some cost pressure and tighter regulations.

“VW commands ~25% share in the EU market, so it faces a potentially higher negative impact on sales in EU, if similar manipulations were to be found in the region.”

Kevin O’ Marah – commenting on the scandal for Forbes made the following astute observation:

For supply chain professionals however the VW scandal illuminates two important things:

  • Awareness of global operations is spiralling upward fed by digital technologies and ubiquitous information visibility.
  • Accountability for what business does, especially in terms of impacts on health, safety and the environment, is something we need to own.

But who really is accountable?

We doubt that talk of the device was included in VW’s procurement plan… Which raises even more questions – namely: who ultimately came up with the idea, and where did it come from? There has to be a paper trail back to the perpetrator, but again, was the true purpose of the device fudged? As we went to press, news sources are even reporting that a Volkswagen engineer warned the company about emissions rigging as far back as 8 years ago…

We’ve covered ethical arguments previously on Procurious – Transforming a bribery-entrenched culture, Rolls Royce accused of ‘buying the business’, Intrigue, money laundering and arrests at the Alhambra and you’ve weighed in heavily using the Discussion forums. Back to that Forbes analysis, which suggests that those involved turned a blind eye..  “Everything from child labour to adulterated foods and conflict minerals come from the same dirty bucket of extended supply chains that make it easy to ignore or even hide bad behaviour.  Accountability depends on visibility, which is expanding by leaps and bounds.”

As supply chain professionals, we together should take responsibility and own this. The buck should stop with us. Why then, didn’t this happen?

Here’s a selection of other big stories making headlines in procurement and supply chain this week…

Coca-Cola Co. is overhauling its U.S. supply chain

  • Coca-Cola said on Thursday it plans to sell nine production facilities to three of its largest independent bottlers as it seeks to unload low-margin assets and reduce manufacturing costs in the United States.
  • The bottlers, Coca-Cola Bottling Co Consolidated, Coca-Cola Bottling Company United and Swire Coca-Cola USA, will acquire the nine plants, valued at about $380 million, from Coca-Cola Refreshments, which Coke created after buying its top bottler in North America in 2010.
  • Additionally, Coke said all four entities, along with Coke’s operating group in North America, will form a new supply group to work together on decisions in areas such new packaging launches and ingredient purchases, Coke said. The new group will represent about 95 per cent of the company’s production volume in the United States.
  • The world’s largest soda maker is facing sluggish sales volumes in the U.S.. It has been selling bottling operations, which partly entail getting its products to retailers, to franchisees to shift away from the capital intensive and low-margin business of distribution.

Read more at Reuters

Chancellor George Osborne announces start of HS2 procurement

  • Announcing the bidding process for phase one of the project during a trip to China to woo investors for UK infrastructure projects, chancellor George Osborne said that at least seven new contracts would be opened up to companies, with a total combined value of £11.8 billion.
  • The government is also organising an “HS2 partnering day” to give Chinese companies an opportunity to partner with UK firms on bids.
  • HS2 will provide high-speed rail services from London to the Midlands, and the North and construction of phase one is due to start in 2017.
  • HS2 Ltd chief executive Simon Kirby said: “Together we will transform intercity rail travel in the UK, build specialist skills and expertise across the country, create at least 2,000 new apprenticeships and build a legacy to inspire the next generation of young engineers.”

Read more at Supply Management

Investors look to sew up Vietnam garment opportunities

  • There are big changes occurring in Vietnam’s bustling garment industry, as businesses and investors prepare for changes linked to the upcoming Trans-Pacific Partnership.

  • The agreement being negotiated by 12 countries, including the US, promises radical tax cuts for Vietnam’s garment exports, but only if they use fabric made locally or in other TPP countries, which excludes China.
  • For the emerging country’s thousands of small and medium-sized garment makers, however, the benefits are less certain. The 25 million garments produced every year at the Ho Guom Garment factory in northern Vietnam all bear the label “Made in Vietnam” but more than half the material used to make them comes from China.

Read more at Channel NewsAsia

Using the blockchain to fight crime and save lives

  • Blockchain technology has been described as email for money, but it has the potential to be so much more.

  • According to Blythe Masters, theblockchain represents a watershed moment in technological history. “You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s,” she said in an interview with Bloomberg.

  • Blockchain technology is a hyper-secure record of digital events that is distributed among many different computers. The blockchain can only be updated by consensus of a majority of the participants in the system, and once information has been entered, it can never be erased. Blockchain technology is best known for its connection to the cryptocurrency, Bitcoin. It’s what enables transactions to happen without middlemen or a central body, while protecting against duplication and fraud.

Read more at Techcrunch