Category Archives: In The Press

Innovation in the public sector: the rise of the smart, super connected city

High speed Broadband

How are we innovating in the public sector?

Procurious is here at Procurement Week 2015 in Cardiff. We have heard from Jim Smart – Head of Digital Cardiff, on the challenges that public procurement is facing in order to lay down the infrastructure that leads to innovation.

Cardiff is a city primed for growth, and it’s certainly no stranger to innovation – it’s a city that’s prospered not just economically, but socially and culturally over the last few decades.

By procuring broadband and bringing WiFi to the streets of the largest city in Wales, Cardiff will become a real smart city. The welcoming of this first class digital infrastructure will mean Cardiff benefits from the best penetration of superfast broadband throughout the UK Core Cities. It will also offer free to access WiFi on buses across the city and public buildings.

Joined-up procurement is healthy procurement

In this modern age, broadband access and a working Internet connection is taken for granted. But we often forget about the complexities required to get us online in the first place. It’s not just a case of plugging in to connect.

A number of pre-requisites are required to make Cardiff’s wireless dream a reality. The ingredients you will need: an Internet Exchange in the city centre, and a new highly secure Data Centre development. The Exchange itself is worthy of note, it not only represents an important £3.5m investment but it’s one of only four Internet Exchanges in the UK.

Such a monumental piece of work means a joined-up approach is needed in the city. You can’t have one procurement team not talking to the other, every party is required to pull together and champion transparency throughout the tendering processes. Superfast broadband is an enabler for innovation – the procurement itself should champion the super connected ethos, the one infrastructure, that will be borne out of this work.

At this stage it is also one of the first projects that will come in on time and under budget. Music to the ears of anyone involved in the initiative – procurement professional or otherwise!

Once the work is complete, the emphasis will be put back on the infrastructure. BT, Virgin, and Sky (to name but a few) all stand to benefit from the innovation Cardiff is being injected with.

cardiffbay

Cardiff – the ‘One City Planet’

Outside of the work that Jim and his team are involved in, thirty councils have been selected to carry out feasibility studies for something called the ‘Future Cities Demonstrator Programme’- and of those is Cardiff.

Cardiff, like many cities around the world, is facing challenges managing its growth in a sustainable and prosperous way. The project will see the development of a virtual 3D city model to collect and manipulate data in order to monitor and control vital city functions such as, energy, transport, health, water, waste etc, in a holistic manner and develop a full understanding of how they interconnect and inter-depend.

The project will focus in particular on the role of Cardiff City centre as the heart of a rapidly growing city and as the retail, leisure, commercial and transport hub for city-region of 1.4m people. It will work with businesses, universities, third sector and citizens to ensure the delivery of a vibrant, prosperous, low carbon, healthy and happy city, and will form the platform upon which Cardiff can achieve its ambition of becoming a ‘One City Planet’ by 2050.

Internet retailer Amazon on putting people first

File of a box from Amazon.com is pictured on the porch of a house in Golden, Colorado

Work hard, have fun, make history

Procurious is at Procurement Week 2015 in Cardiff – ahead of our exclusive interview with Amazon’s Gary Elsey – Operations Manager for Amazon.co.uk, we present some bite-size tidbits into Amazon’s people-centric philosophy.

Amazon in 1995 – started life an online bookstore (VHS, DVDs, CDs etc. came later), but at that time there was no discernible way of searching through the product listings. A far cry to the behemoth that stands before us today.

Amazon on customers

Amazon’s vision is simple – no matter what it’s doing, what products it’s launching – the customer is always the end goal.

As a company Amazon has always strived to work backwards from the customer. ‘What can we do differently, how can we distinguish ourselves and innovate?’ These are all essential touch-points that the Seattle-born retailer has obsessed over since day one.

For an example of Amazon’s customer-centricity, look no further than the release of Microsoft’s Windows 7 operating system. When it went on sale, as soon as Amazon sold through all its original allocation, it made the ballsy move to direct customers to competitors websites. No ‘out of stock’, or ‘awaiting stock’ messages here… Amazon is an altogether different beast.

With seperate online properties operating in United States, United Kingdom & Ireland, France, Canada, Germany, The Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico, ultimately logistically problems do arise… But here is where Amazon plays its trump card, as the retailer offers almost-instantaneous conflict resolution. If you choose not to opt for online chat or a response by email, an Amazon representative will offer to phone you back.

In Amazon’s history there have even been examples of purchases being personally delivered when the situation dictates…

…On passing back savings

Unlike most, Amazon employees don’t carry business cards. Why? They’re an unjustifiable spend. Amazon always asks, ‘does the customer need this?’ If the answer is no, then the outcome is quite clear (no business cards…) It shouldn’t surprise you to learn that every decision is examined in this way. Amazon always seeks to maintain low operating costs, so it can pass the savings back to the customer.

…On hiring

Amazon’s ethos is very much: ‘I’d rather interview 50 people and not hire anyone than hire the wrong person’

…On inspirational leadership

‘My own view is that every company requires a long-term view’ – Jeff Bezos. It is worthy to note that making a profit is not one of Amazon’s goals. Instead it employs elements of Simon Sinek’s Golden Circle Theory: ‘What, how, why’.

It is said that Amazon’s CEO – Jeff Bezos, spends a couple of days every year on the service desks to field customer feedback. Even better than that, send him an email and he’ll personally see to it that someone from Amazon responds to your query.

Industrial action is over, but trouble continues for US ports

US port closures

The first blog I wrote on Procurious was about McDonald’s horror year in 2014. One of many glaring supply chain issues for the fast food giant was its mismanagement of the industrial action that took place at ports on the US west coast in 2014.

This week something sparked me to go back and see where things had got to with regards to these disputes. What I found was interesting to say the least.

Busy making other plans

While dockworkers were negotiating new contract terms, causing work operations at the ports to grind to a near halt, it appears supplier chain managers across the world were busy formulating back up plans.

Despite longer transit times from the buoyant Asian markets and increased shipping cost, many supply chain managers elected to re-route shipments paths from their original west coast destinations to east coast ports (via the Panama Canal), or though neighbouring Mexico and Canada in order to avoid the rigmarole these disputes have caused.

Those involved in the west coast shipping industry surely would have cringed at stats released last week suggesting that, for the month of January, year-on-year cargo figures have dropped by 28 per cent at the port of Los Angeles. The port of Oakland estimated even greater losses with cargo volumes shrinking by 32 per cent for the month of January.

They’re not coming back

Perhaps the area of greatest concern for the west coast shipping industry is that these sorts of decisions tend to be sticky. Firms that have made a commitment to alternative shipping routes (largely through frustration) are unlikely to resort back to west coast ports now that the industrial action is over. This is exemplified in the findings of a survey released by the Journal of Commerce last week, which suggested that 65 per cent of shippers planned to move less cargo through west coast ports in 2016.

The importance of supply chain flexibility 

Supply chain flexibility means that firms are now less reliant on individual ports than ever before. Aside from fresh produce, most goods can ship from alternative destinations, meaning that supply chain managers now have more options around how they move their goods. Sure, it may take longer, but with proper planning, a steady, reliable supply can in fact be established, something that west coast ports failed to offer in 2014.

Speaking on the losses and challenges the industrial action has created for the Port of Los Angeles, the organisation’s executive director, Gene Seroka, stated: “About a third of our cargo is purely discretionary, some of that cargo has moved to other port complexes. It’s going to be extremely difficult to earn that business back.”

When the cat is away the mice will play

While west coast ports are seeing significantly lower traffic flows, there has been a corresponding up turn in activity on the east coast, with the Port of Virginia seeing a 15 per cent increase in cargo figures. It’s also thought that the planned expansion of the Panama canal will make east coast ports even more attractive options for goods coming or going to the lucrative Asian market. The expansion of the canal, despite numerous complications, is due for completion next year.

So, while the industrial action has stopped, it seems like the impact of these disputes are yet to have fully played out for the west coast’s shipping industry. Can they make up for lost time?

Marks & Spencer’s future lies in its supply chain

Marks & Spencer supply chain

Marks & Spencer, once the darling of Britain’s high street, has developed a reputation in recent years for tired stores and even more tired fashion. However, the company believes that a supply chain revival will turn this perception around.

As part of broader supply chain optimisation project, M&S has elected to bring a significant amount of its previously outsourced operations back in-house. The firm has hired new designers and rejuvenated its online presence in a bid to revive its image and win back its core customers.

The moves are thought to be a reaction to changing consumer preferences in the British retail sector. The rise of the ‘fast fashion’ model of companies like Zara and H&M is creating a shift in purchasing patterns of the company’s most loyal customers (women aged over 50). These consumers are now looking for more contemporary designs.

Patsy Perry, a lecturer in fashion marketing at the University of Manchester said: “There’s a killing to be made if they can serve older women better. Unless you have money to buy designer clothes, it’s hard to find what you want on the high street unless you want to look like your daughter.”

Brothers in garms

Marks & Spencer’s bold new supply chain practices were kick-started with the hiring of Hong Kong based brothers, Neal and Mark Lindsey, as the joint sourcing directors in 2014. The pair had previously worked with high street retailer Next, and bring a wealth of experience in optimising fashion and retail supply chains.

While the benefits to simplifying supply chain processes appear clear in theory, in practice, implementing these measures will not be simple for the retailer.

Marks and Spencer’s supplier relationships and indeed its current business model date back decades. Until recently, the firm outsourced all elements of its garment production business, from design through to warehousing and delivery, to third party suppliers.

Previous supplier relationships were based around producing high quality products and lead times have generally been long. As the firm looks to emulate the ‘fast fashion’ model, these relationships must undergo drastic change.

Speaking on the challenges this may cause, M&S Bill Mills – a textile industry consultant who used to manage factories for M&S suppliers Courtaulds and Coats Viyella, said: “On the one level there are some cost savings, but on the other hand M&S will have to place resource in their buying offices, whether that be UK or local, to manage the factories. It is not a panacea.”

While there is a long way to go for M&S, both in reconfiguring its supply chain and in reclaiming some of its lost market share, the firm as already made some impressive steps in its supply chain optimisation program. By halving it’s number of fabric supplier, the team has already been able to negotiate improved terms to its remaining providers.

New initiative champions best practice to recruit and retain female professionals

More needs to be done to recruit and retain women and last Sunday’s International Women’s Day was just the start…

More needs to be done to train and retail female professionals

The Institution of Engineering and Technology (IET) has joined forces with Prospect, the trade union representing professionals in the UK, to announce a new joint working group to help companies recruit and retain more women engineers and scientists.

The group, which has grown out of a conference to coincide with International Women’s Day, will establish best practice guidance to share across industry on how best to recruit and retain women in science and engineering roles.

Read more: It’s time to tackle career stereotypes

Whats’s holding women back? 

In the engineering industry alone, only six per cent of engineers in the UK today are women. This is due to a number of factors from the careers advice girls are given in schools, to schools not instilling girls with the confidence to opt for science and maths at A level. But it is also due to some employers needing to make their approach to recruitment and retention more female friendly. This is unfortunately an issue all too common, that affects women from all walks of life, engineering or otherwise.

Supported by Meg Munn MP, Baroness Prosser, Naomi Climer, President of Sony Media Cloud Services and IET President-elect, and Denise McGuire, Vice President of Prospect, the group will also have industry representation from a range of major employers who attended the conference, including the Met Office, Atkins Global and BAE Systems.

Unconscious bias: How can organisations and individuals shift subconscious social attitudes, stereotypes and ingrained recruitment and promotion attitudes that exist and negatively impact a more diverse workforce?

Good practice for retention: How can we encourage organisations to recognise that creating a level playing field for women benefits everyone. Flexible working, fair pay and a more inclusive culture should be on all organisations’ agenda because they are proven to improve overall staff retention, and are good for business.

Commenting on the new working group, Naomi Climer, President-elect of the IET and a member of the working group said: “We have talked about the lack of women in engineering and science for many years now. More female-friendly retention and recruitment practices are an important part of the challenge. By bringing together a working group which for the first time has representatives from Government, trade unions, industry and professional bodies, we want to get to the crux of the issue and come up with some hard hitting and practical guidance that can help more companies address this significant problem.

“While International Women’s Day is about championing women’s achievements, it’s also about making sure that women are achieving their potential. And it’s also about making sure our world economies – which increasingly depend on engineering, manufacturing and technology – are not being hampered by the fact we are missing out on the talent and contributions of 50 per cent of the potential workforce.”

Denise McGuire, Vice President of Prospect, said: “Women are in STEM for careers, not just for International Women’s Day! We need to stamp out Unconscious Bias and make the world of work a fairer place for everyone.”

Read more: International Women’s Day

Moving on up: the ascendency of the Chief Procurement Officer

Big CPO moves in both Myer and Honda

It’s been a big few weeks for the ascendency of the CPO. Since Procurious ran this post discussing Tim Cook’s rise through the supply chain ranks to the top job at Apple, we have seen two more procurement professionals ascend to top position at major businesses.

Honda

Last week saw the Honda Motor Company promote Takahiro Hachigo to its top role. Hachigo joined Honda in 1982 initially working in research and development He became a manager of a purchasing division in 2008 and in 2013 was promoted to the role of representative of development – purchasing and production (China).

His promotion, which came a surprise to many, comes off the back of a number of challenging years for the automaker. Ito Tankanobu is leaving the post of CEO after having guiding the company through the financial crisis, the earthquake and subsequent tsunami that wreaked havoc on supply chains across the island nation, an extended period of unfavourable exchange rates and more recently concerns over product quality of airbags used in the company’s vehicles.

Despite news agency Reuters labelling Hachigo a ‘low profile engineer’ the new CEO was hand picked by the outgoing boss, has 32 years experience at the automaker and has risen through company ranks holding executive roles in the US, Europe and China.

Myer’s stocktake

The Second major announcement for procurement professionals with aspirations of holding their company’s top job is the recent appointment of Richard Umbers to top role at leading Australian retailer Myer.

Umbers replaces Bernie Brookes as the company’s CEO after holding the position of chief information and supply chain officer for the retailer. The new CEO has also held senior roles with supermarket chains Aldi, Woolworths and at Australia Post.

Analysts have questioned the timing of the announcement, which comes just three weeks before the company is set to release its half-yearly results. Myer has not listed profit forecasts ahead of the announcement, but neither has it corrected analyst’s predictions of an $89 million profit, a significant decline from the figures the firm recorded in 2014.

Investors too, seem to be a little spooked with the new appointment with the company’s share price dropping 10 per cent on Monday with news of the leadership reshuffle.

The appointment of Umbers (not a traditional retailer), suggests an intention from Myer to clean up its internal operations. It’s thought that as the retailer received a more 70 per cent upturn in traffic to its online store last year it’s possible that the company’s future lies in the way it integrates technology, back office process and distribution to support a shopping model that will be based increasingly online – an area that Umbers has significant experience in.

Procurious wishes both former Procurement bosses all the best in their new roles.

Accenture acquire Brazilian supply analytics firm Gapso

Accenture acquire Brazilian supply analytics firm Gapso

Management consultancy Accenture, announced last week it had acquired the Brazilian supply chain analytics firm Gapso. The merger will see the Brazilian firm’s operations integrated into Accenture’s Analytics division.

Analysts have suggested the decision by Accenture to purchase Gapso will benefit the firm in two ways. The first is that it will provide a solid foothold for the company in the rapidly growing Brazilian market, allowing the firm to explore opportunities in the region’s lucrative mining, oil and gas and agricultural sectors.

As well as opening up Latin American markets, the purchase of Gapso also points to the future of supply chain management and Accenture’s role within it. Gapso specialises in using data and advanced analytics to solve complex supply chain and logistics challenges. Accenture’s purchase of Gapso sees the firm acquiring a team of skilled data scientists, analysts and developers, suggesting the consultancy is keen to explore different approaches to supply chain management.

This position is strengthened further when you consider that less than 12 months ago Accenture acquired i4C Analytics, an Italian provider of advanced analytics software programs.

Rodolfo Eschenbach Accenture’s Digital lead in Latin America, said: “Accenture are happy to be extending its analytics reach in Brazil through the acquisition of Gapso.”

“By combining Accenture’s and Gapso’s broad analytics skills and capabilities, Brazilian companies in the natural resources and agribusiness industries will have access to the best data scientist talent and solutions in the market for driving real, data-driven, operations outcomes at scale. When businesses harness, optimise and analyse their data for insight, value in the form of improved productivity or a competitive advantage can be realised,” he said.

Oscar Porto Gapso’s Business Director, was quoted saying: “Over the past twelve years, Gapso has curated an impressive team of analytics experts and capabilities that enable faster and better outcomes in connection with a client’s most critical logistics issues.

“By joining Accenture, we will be able to build on our achievements and engage in a more powerful, broader-scope of analytics conversations with clients. I’m proud of the Gapso team and I am looking forward to taking our methodologies further and continuing to disrupt the resources and agribusiness industries through insight-enabled decision-making.”

C-Suite reluctant to stick their head in the Clouds

UK businesses are reluctant to stick their head in the Clouds, says KPMG.

Businesses scared of the Cloud

A global study of almost 2,100 contracts covering deals worth £7.8 billion suggests that Cloud-based services are failing to capture the popular imagination of UK businesses.  It also suggests that organisations are increasing the level of IT services they outsource to improve service delivery, with many investing budgets saved over the past few years on HR, sales and finance support.

Published by KPMG, the 8th annual ‘Service Provider and Performance Satisfaction’ study includes detailed analysis of current corporate IT spend in Britain, by examining more than 330 UK-based contracts.  It reveals that 71 per cent of UK organisations are spending a mere 10 per cent, or less, of their IT budget on Cloud services. Many organisations are also continuing to rely on ‘tried and tested’ outsourcing models and the survey shows that favoured destinations for IT support services remain India (51 per cent), Poland (8 per cent) and South Africa (8 per cent).

Asked why they are reticent about employing Cloud services, the top 3 reasons cited by UK C-suite respondents centred around data location, security and privacy risks (26 per cent), concerns over regulation and compliance (16 per cent) and cynicism around the ease with which Cloud services can integrate with legacy IT systems (15 per cent).

“Despite widespread acceptance that Cloud services offer access to the latest technologies, and make IT more accessible, adoption remains relatively sluggish.  While concern about the security risks surrounding new technology is understandable it may also be disproportionate, as Cloud options are just as safe as other outsourcing solutions.  Of course, investors and stakeholders will welcome caution on the part of the buyers, but they also want to see innovation, meaning that UK plc will need to find the right balance to remain competitive,” says Jason Sahota, director in KPMG’s Shared Services and Outsourcing Advisory team.

The survey goes on to reveal that, despite the economy picking up, some companies across the UK are still nervous when it comes to committing to long-term investments.  Asked about their IT outsourcing plans for the next two to three years, just 43 per cent said they plan to increase spending.  This figure contrasts with 77 per cent, this time last year.

However, where budget has been set aside for outsourcing, it is clear that organisational thinking is maturing.  When the survey was first undertaken, respondents focused primarily on cost savings as their reason to outsource – but this year’s survey shows that the search for quality improvement (20 per cent), access to skills (16 per cent) and a desire to reduce the time it takes to ‘get things to market’ (6 per cent) are driving the rationale behind IT outsourcing decisions.

The findings also suggest that satisfaction levels remain high in the UK, with 77 per cent of respondents reporting that they are comfortable with the support they receive.  Worryingly, however, the research shows inconsistencies in how businesses are approaching integration and governance of the services they outsource.  The majority (70 per cent) said that their IT function currently performs the role of service integrator, whilst only half (50 per cent) have partially met the expected benefits of service integration and management.

Sahota concludes: “As IT forms an inseparable part of the wider business strategy in many organisations, technology decisions are now rarely left to the CIO alone.  It means that, with the potential for conflict over the choices being made, organisations should dedicate a greater level of investment towards governance than they may have in the past.  If they fail to do so as they move towards more complex delivery models, poor governance can impact their ability to provide quality services, increasing risks around cost, service quality and delivery.”

China removes world’s leading technology brands from approved state purchase lists

China blocks tech brands

A Reuters report released on Friday has confirmed the Chinese government has implemented procurement restrictions on its agencies preventing them from buying US produced technology products.

The report outlined that US Companies like Apple and Cisco no longer appear on the list of approved technology vendors Chinese government agencies can purchase from.

But Why?

Two theories exist as to why these steps have been taken. The first relates to security concerns that have arisen between the US and China, particularly pertaining espionage activity between the two countries.

In 2013, the now exiled, Edward Snowden released a series of leaks that suggested the US government routinely accessed the internal data of US owned companies to gather intelligence on other nations.

Snowden also accused the NSA (an organisation he used to work for) of intercepting routers produced by Cisco that were being shipped to China and inserting surveillance devices inside that would relay data back to the agency.

Cisco remains adamant that it was unaware of this practice, however the Chinese government, with good reason, responded by removing all 60 of the previously approved Cisco products from its purchasing list.

The spying allegations prompted serious privacy concerns from the Chinese who, if the allegations are true, have every right to minimise the impact such espionage.

Tu Xinquan, the Associate Director of the China Institute of WTO Studies at the University of International Business and Economics in Beijing highlighted Chinese concerns over the espionage allegations. “The Snowden incident, it’s become a real concern, especially for top leaders. Some sense the American government has some responsibility for that; (China’s) concerns have some legitimacy” he said.

An interesting side note that must be mentioned when discussing this case is that Chinese owned Huawei; the world’s largest network equipment provider, is banned from bidding for US government contracts over similar concerns that the firm may use its technology to spy on US government interests.

Protecting Local Interests

The second potential motivation for removing foreign companies from the approved supplier list is to strengthen China’s domestic tech industry.

IDC (a market research and advisory firm) suggests that the Chinese ITC sector is set to grow by 11.4 per cent to $465.6 billion USD in 2015. China’s technology sector is currently trailing the US both in terms of maturity and product capability, however it is understood to be catching up rapidly.

The Reuters report quotes an unnamed executive of a western technology firm who claims “There’s no doubt that the SOE segment of the market has been favouring the local indigenous content,” He went onto claim that the Snowden security concerns were merely a ‘pretext’ to support the development and growth of the Chinese technology industry.

Close the Windows

Despite these claims, Chinese government officials have pointed to weak product guarantees and poor support offered by foreign firms as the driving reason as to why the products have been removed from the list.

In 2014 the Chinese government announced that its offices would no longer be allowed to purchase any technology that runs the Windows 8 operating system, a move that was prompted by Microsoft electing to suspend support for Windows XP, a system used most in Chinese government offices. According to Chinese news agency Xinhua, the government was keen to “avoid the awkwardness of being confronted with a similar situation again.”

Whether the motivations for this move were based on security concerns or out of a desire to protect and promote local industry, we’ll likely never know. However, Chinese officials do seem to have created a policy that will support the growth and development of Chinese owned tech firms. Furthermore, it seems that US government policy, combined with the Snowden leaks, has provided ligament justification for making such moves.

Zero Hours Contracts have “protected UK from European unemployment levels”

Zero Hours Contracts have “protected UK from European unemployment levels”

Recently-released figures show the number of people reporting to be employed on a Zero Hours Contract has risen to 697,000. That’s 2.3 per cent of the workforce, in 2014…

We’ve been provided expert comment from Christian May, Head of Communications and Campaigns at the Institute of Directors – here is what Christian has to say:

“There doesn’t appear to be much difference between the Coalition and the Labour Party when it comes to Zero Hours Contracts. All parties now support a tough clamp down on the use of exclusivity clauses, and the IoD led the charge in calling for this change during the consultation process. After all, it’s the flexibility that makes these kind of contracts so valuable to the labour market and there’s nothing flexible about restricting and controlling an individual’s freedom to seek work.

“Given the consensus that now exists on ending the exploitative use of exclusivity clauses, what remains of the debate is largely semantic. Those who wish to hold up Zero Hours Contracts as a symptom of an unfair economy will continue to do so, but they must appreciate that for hundreds of thousands of workers and employers these contracts represent an extremely attractive proposition. Despite efforts to portray all those on such contacts as exploited, the truth is that there are plenty of engineers, contractors and professionals whose willingness to be flexible adds significantly to their market value and, therefore, their earning power”.

Christian adds: “It’s also worth remembering that a flexible labour market, of which Zero Hours Contracts are a vital component, has protected the UK from European levels of unemployment. Indeed, the UK’s labour market has been singled out for praise by the OECD. The alternative is a rigid labour market and high unemployment. 

“With a focus on best practice and a commitment to ending the use of exclusivity clauses, Zero Hours Contracts will remain, for some people, an attractive and convenient way into work.”