Category Archives: In The Press

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.”

Late payments are forcing directors to take salary cuts

A new report has revealed that businesses are being paid at least one month later than agreed, and company directors are taking salary cuts to mitigate the impact.

Late payments are forcing directors to take salary cuts. Image Shutterstock

One in five directors has been forced to take a salary cut to avoid their firm going out of business due to late payments.

Tracy Ewen, managing director of IGF Invoice Finance, comments on the news: 

“The enforced wage cut taken by one in five directors is a worrying development that shows how delayed payments are bringing many small businesses close to failure. This latest news provides further evidence that urgent action is needed to force improvements among late payers. If the Prompt Payments Code isn’t working, then perhaps more stringent legislation is necessary.”

Tracy continues: “However, until this happens, there are funding measures firms can take to cover breaks in their cashflow without resorting to slashing salaries. Consequently it is important that firms thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations.”

New role for former Procter and Gamble CPO

Rick Hughes, the former CPO of Procter and Gamble, has accepted a new role at GEP, a procurement software, outsourcing and consultancy firm.

Rick Hughes P&G

After a stellar 31 year career at P&G, one of the world’s most recognisable brands, Hughes will take on an advisory role with GEP that will see him provide advice on procurement transformation, supply chain innovation and global risk management to the organisation’s clients.

Subhash Makhija, CEO and co-founder of GEP, said: “Rick Hughes is one of our industry’s true stand-outs and it’s terrific having him on the GEP team. Rick’s expertise, insight and experience generates tremendous value for clients and that is very exciting for everybody who cares about procurement.”

Speaking on his appointment Hughes said: “The GEP team is well-known and well-respected for the strength and depth of its people, for its passionate commitment to clients, and for delivering results that always move the needle. This is a period of great change and possibility in the industry. I am delighted to be working with GEP, helping our friends and colleagues overcome new challenges and seize new opportunities.”

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Latest trends in the procurement outsourcing service provider landscape

Want to know the latest procurement growth and adoption trends in Europe? How about service provider positioning, and solution characteristics of Europe-focused contracts too? You can find all of that in the new report by Everest Group.

Everest Group Procurement Outsourcing report

The report, titled: “Procurement Outsourcing Service Provider Landscape for Europe with PEAKMatrix Assessment” deep-dives into the following:

  • Overview and adoption trends in the PO market in Europe
  • 2014 PO PEAK Matrix for Europe
  • Service provider delivery capability assessment
  • Solution characteristics of PO in Europe

Rajesh Ranjan, Partner and Head, Business Process Services Research, Everest Group, comments: “Europe is the second largest geography for Procurement Outsourcing, and service providers have had to ‘up their game’ in the wake of intense competition to grab new opportunities.

The multi-process PO market in Europe currently stands at US$610 million, which is nearly one-third of the global PO market, and showed 13 per cent Year over Year (YoY) growth in 2013. United Kingdom is the largest geography within Europe with a 50 per cent share. However, the service provider landscape is in stark contrast – various regional players have a more prominent standing and some of the global BPO players are yet to grab a sizeable share in Europe. In the wake of intense competition, service providers are enhancing their capabilities to grab new opportunities in Europe. This confluence of competing forces is shaping the market in various interesting ways.

A total of 16 PO service providers were analysed using the PEAK Matrix Assessment based on Performance (P), Experience (E), Ability (A) and Knowledge (K). These included: Capgemini, Genpact, GEP, Infosys, Optimum Procurement, Proxima, Wipro, and WNS to name but a few.

In the report  three PO service providers achieved the highest tier “Leader” recognition – they were: Xchanging, Accenture, and IBM. These “Leaders” were classified as having the largest PO market share and were positioned the strongest performers in their ability to deliver services successfully. Leaders outperform other players across nearly all the metrics assessed.

In addition to market success, the classification was also captured through four sub-dimensions: scale, scope, technology, and delivery footprint.

Read more: the report is available to purchase now from this link.