Category Archives: In The Press

Podcast: Social Media for Procurement

ATK helps put procurement in the drivers’ seat with social media

Social media in procurement podcast. Image Pixabay

A.T. Kearney’s Knowledge Director, Helen Clegg, is spearheading the discussion for educating the procurement profession on the benefits of social media.

Hear my interview with Helen http://bit.ly/14VDC1x where I share how to leverage social networks, from building relationships with suppliers to receiving real-time news about supply chain disruptions.

On the topic of risk, I share with Helen my view that there are more risks to procurement professionals for NOT being connected with social media, than there are to being involved.

I also share my top tips for building a social media presence, as well as recommending that everyone finds a millennial mentor!

If you find it useful, I would love you to share it with your Procurious network, on LinkedIn or over Twitter?!

How to detect fraud in your organisation

This is a guest article from Visna Lampasi, The Faculty’s 2014 Chief Procurement Officer of the Year (Asia Pacific).

How to detect fraud in your organisation

With the growing emphasis placed on the CIPS Ethical Mark, we quizzed Visna Lampasi – Global Chief Procurement Officer & Procurement Thought Leader on how to detect fraud in your organisation.

Procurious asks: Do you believe fraud has become a bigger issue for Procurement in recent years? And if so, why? 

Visna answers: The number of instances in procurement fraud and corruption is increasing and becoming a far bigger issue than previously for organisations globally.

Whilst some industries have imposed pay freezes and pay cuts over the last number of years, the living costs have been rising and during a time when the jobs market has been stagnant.

If you couple this with an organisation who has poor procure-to-pay controls, then this will unfortunately reveal opportunities to defraud.

Procurious: From a  procurement perspective, what do you see as the most common examples of unethical conduct  are in the supply chain today?  (bribery; misconduct by suppliers; misappropriation of company funds etc.)

Visna: There are many types of procurement fraud, which can be committed across the entire source-to-settle core process not just procure-to-pay.

The ones that I have come across the most throughout my procurement career are: – 

·         Fictitious suppliers and sub-contractors
·         False, inflated or duplicate invoices
·         Unjustified sole source awards
·         Bribery and kickbacks

·         Undeclared Conflicts of Interest
·         Purchases for personal use or resell
·         Split purchases

Procurious: What do you believe are the most important activities for detecting and deterring fraud in the business?  

Visna: The simplest way to prevent procurement fraud is to: – 

1)      ensure that you have robust “Procurement Policies & Procedures” in place and that these are reviewed regularly to ensure that they are effective,

2)      proactively drive organisational “Compliance” against these policies and procedures,

3)      ensure appropriate “Segregation of Duties” – ensure that the person who can set-up a supplier, issue purchase orders, and process an invoice for payment is not the same,

4)      ensure tight controls within your “Procure-to-Pay” process as a minimum, with appropriate checks and balances in place.

Don’t forget to address your “Source-to-Contract” process as well, which is the front end of the Source-to-Settle process and more often than not is disregarded.

Procurious: Government Procurement have long had strict gift and hospitality policies in place and the private sector are increasingly following suit. Do you think there’s such a thing as ‘going too far’?

Visna: There needs to be a balance here and one that takes into account different cultures and customs that an organisation is going to encounter when doing business both locally and overseas.

The important thing here is that an organisation has a policy in place around gifts, meals and entertainment and that is being followed by its employees.

Full transparency is key and will assist to address questions around reasonableness and perception prior to acceptance.

Procurious: Western countries often have quite different beliefs and practices around what constitutes unethical behaviour.  Do you have any tips for dealing with suppliers in other countries which may take a more lax attitude towards gifts and payments?  

Visna: My suggestion would be to look to your organisation’s corporate values and Code of Conduct for guidance around expectations of ethical behaviour and determine if these align with the country you are seeking to do business with.

Many organisations also have lists of embargoed countries, which will also assist in identifying whether the country is approved to do business with.

Procurious: If businesses are serious about taking a ‘zero tolerance attitude’ towards corruption, what policies, procedures and employee training will be fundamental?   

Visna: Robust procurement policies and procedures are fundamental, supported with regular communications and on-going training to increase awareness and build capability.

Current members of The Chartered Institute Procurement of Supply can complete an eLearning  module on Ethical Sourcing, which incorporates elements around procurement fraud and corruption.

A license can also be purchased for the Chartered Institute of Procurement & Supply Anti-Procurement Fraud Training,  which will allow organisations to deploy this online training to all of their employees globally.

Leading female entrepreneurs front government export drive

The UK Trade & Investment arm of the UK government has just distributed ‘From local to global’. The guidance has been collated and published in aid of the GREAT Britain campaign – a campaign that encompasses the very best of Britain’s businesses, tourism, and educational offerings.

Kelly Hoppen offers export advice

Kelly Hoppen was chosen to pen the forward to a new online document that delves into the logistics and economics of the huge export market.

Kelly boasts an enviable track record, with over 30 years of first-hand experience building businesses.

“Language, logistical and cultural barriers can all be business obstacles. However, these barriers can be overcome with the right support, guidance and people to cheer you along throughout the journey,” she says. To that end here are a number of tips to help first timers thinking of entering the export business:

Know the currency

Understand the currencies you will need to deal with. Talk with your foreign exchange provider early, as they can give you insights into the potential currency risks.

Start small

It’s tempting to pursue multiple markets. Don’t. Begin by focusing on one or two markets.

Appreciate cultural differences

Failure to take account of different cultures can lead to damaging and costly mistakes. This could range from causing offence by not observing correct protocol to inappropriate packaging and marketing.

Get paid

It’s easy to overlook the risk of non-payment. Establish the credit rating of potential clients and guard against non-payment through letters of credit or credit insurance. If you’re a UK business, UKEF (UK Export Finance) can provide advice and insurance where the private market can’t help.

Business skills and networking

Kelly isn’t the only one offering her advice. Here’s Heather Melville, Director of Strategic Partnerships at RBS, on networking internationally:

Learn your markets

Use the experiences of your new contacts to get under the skin of new markets. Learn about the opportunities and the challenges. Ask questions to get the right answers.

Immerse yourself in the culture

Tap into the expertise of your local contacts. They can advise you on what to wear, what traditions to respect and even teach you some local dialect to throw in!

Know the business card etiquette

Be aware of business card customs when networking abroad. In Japan, for example, the business card is often embossed and represents a significant part of the process. Present your own card with both hands, and take the time to receive a card warmly.

Importing and exporting advice

Tips for using digital to sell overseas

The final part of the published guidance revolves around the notion of ‘selling while you sleep’.

Remember these top tips: 

Distance isn’t a barrier

Asian consumers, for example, are more connected because of their love of smart phones, meaning there are vast opportunities to extend the reach of your brand.

Spot common trends

Engage with your customer using the common trends in their market. Learning how different markets operate is simple but extremely effective.

Cost of digital

Weigh up the options of ‘digital only’ vs ‘digital and physical presence’ within a new market.

Know whether to scale up or down

Scalability is easy and affordable. Whether you want to sell into one country or 101, e-marketplaces allow you to trade across multiple countries via one platform.

Engage with social networks

Be more social. Consumers expect to be able to engage with you or other shoppers before purchasing.

How much do you really know about digital currencies?

In a report commissioned by HP, the Ponemon Institute has made a number of interesting finds. Its “Security & Compliance Trends in Innovative Electronic Payments” paper reveals that support for digital currencies and new electronic payment systems are perhaps stronger than originally thought.

Need a primer on digital payments? Watch this very informative video from e-commerce platform PinnacleCart.

Understanding the future of money and mobile payments

New electronic payment systems and virtual currencies are expected to make paper currency the horse and buggy of the 21st century. Are organisations up to the challenge of ensuring security and privacy when businesses and consumers use these payment systems for purchasing items and transferring of funds?

And while 79 per cent of the US organisations that took part in the research plan to adopt digital currencies, a key barrier to the adoption of innovative electronic payments remains. Namely: the issue of security. In terms of new electronic payments, all of the following were cited in respondent’s answers as either currently supported in marketplaces or the not too distant future: payments with a mobile device or use of phone number, e-currency (Bitcoin or other open source P2P money), stored value cards, and bar codes.

The biggest concern seems to be authentication risks with the use of virtual currencies. While new payment models are evolving, but the same security fundamentals for maximum protection in the overall payment process are still needed. The most critical are one-time passwords or tokens, federated identity and authentication systems and multi-factor authentication

There is also the perception that the pressure to quickly migrate to the use of innovative electronic payments is making it difficult to address the security and privacy issues.

A case-in-point: Digital wallets (or e-wallets) are used to hold virtual currency – and high profile names in technology like Google and Apple already have solutions in place to drive the adaption rate. In-fact belief is so strong that almost half (46 per cent) of respondents predict that virtual currencies will overtake paper currencies within the next five years. Perhaps there’s some truth in this… we are increasingly looking to financial institutions and credit card companies to make the inroads needed to take such practices to the next level. They’ll be the ones to create new approaches to the security and privacy of the electronic payment platform. These organisations are closer to the consumer experience with electronic payment systems and might have a greater incentive to innovate and improve both security and privacy.

What do you make of these new virtual payment systems: is more time needed to fully realise the benefits (and drawbacks) of such innovations? 

Is the economic future really as small as this book says?

If we believed everything we read then the UK has had to draft in Eastern Europeans to help make sandwiches, and our mobile phones are all giving us cancer…

Being the skeptical sort we’re inclined to take The Future is Small with a grain of salt, seeing as it raises pertinent questions about the future of investing.

Freefoto.com

The book begins by placing a spotlight on the current stagnation of world economies – arguing that despite trillions of dollars of support having been injected into the global financial system, the global economy will remain moribund for decades to come.

This is irrespective of record low interest rates remaining in place, and governments running higher budget deficits for longer than originally planned.

It’s a hard pill to swallow, given the words of Dr John Glen’s still ring in our ears – what we took away from the CIPS 2014 conference.

But given Williams’ credentials maybe there is some truth in his views… Could it be that small firms are set to be the stock market outperformers of the future?

Fundamentally, Gervais believes that it is the greater growth potential of genuinely small companies that explains why many can buck a tough economic trend, whereas most larger companies with major market positions are trapped by their flat sales lines.

Gervais Williams is an award-winning equity fund manager. He received Grant Thornton’s Quoted Companies’ Award Investor of the Year in both 2009 and 2010; then in 2012 his Diverse Income Trust was recognised as the Best New Investment Trust by the Association of Investment Companies. He was also What Investment’s Fund Manager of the Year 2014.

Gervais is a respected commentator on prospective market trends. He outlined his controversial views in his book Slow Finance in 2011 and develops those ideas in The Future is Small.

Is bigger always better, or is there beauty to be found in smallness? Could this be the new dawn that the little guys have been seeking?

Supply chain issues on the small (and silver) screen

According to an excellent commentary from The Guardian, viral YouTube hits and blockbusting movie releases are helping to shine light on pertinent issues affecting supply chains the world over.

The Guardian cites such cinematic successes as Blood Diamond, alongside indie-documentaries like Blood in the Mobile (an expose on mobile phone production methods that are financing war in the DR Congo), and The Price of Sugar (at what human cost is sugar produced?) But there’s also a growing glut of online-only, YouTube short films – each aiming to achieve the same goals.

The Story of Stuff is a great example, as well as being something of a YouTube success story… Originally released in 2007, it’s been watched by over 44 million worldwide.

The Story of Stuff exposes the connections between a huge number of environmental and social issues, and calls us together to create a more sustainable and just world. It’ll teach you something, it’ll make you laugh, and it just may change the way you look at all the stuff in your life forever.

Can you recommend any other videos that are making similar waves in these areas?

Stay up-to-date with Procurious




Procurement: The new and improved model?!


Procurement Professionals on LinkedIn

The following article originally appeared on the Procurement Professionals LinkedIn Group.  Join and view other articles here.

In 2011 the Coalition Government launched their ‘new’ Government Construction Strategy with its aim to improve the industry whilst reducing whole life cost and carbon by 20 per cent by 2015.

Procurement: the new and improved model

A major part of the strategy focused on reforming public sector procurement, and in particular trialling a series of new procurement methods to drive these improvements and efficiencies by effecting behavioural and cultural change. The models intended to draw on established best practice and drive an ‘evolutionary, not revolutionary change’ across the public sector. They utilise a range of common principles which emphasise the need for collaborative working and early contractor involvement, where the supply chain responds to an outline client requirement and declared budget rather than a pre-determined design.

The three models are:

  • Cost Led Procurement – During the Cost Led Procurement process, a client sets out their output specification against a challenging cost ceiling based on their own knowledge and experience of costs . They then invite the supply chain to bring their own collaborative understanding to develop an innovative response to the brief. CLP is of particular use in a competitive framework environment where there is opportunity to continually improve on the unit costs of the programme working collaboratively with the supply chain.
  • Integrated Project Insurance – This is the most innovative and new approach. The Integrated Project Insurance (IPI) model offers clients the opportunity to create a holistic and integrated project team (an ‘Alliance Board’) to eliminate the “blame/claim” culture. The innovative “integrated project insurance” package limits the risk for the individual members of the team, fosters joint ownership of the project, and thereby reduces the likelihood of overrunning in terms of cost and time.
  • Two Stage Open Book – This model improves on an established approach often used in a framework environment. At the first stage a client invites prospective integrated teams to bid for a project based on their ability to deliver an outline brief and cost benchmark. The appointed team works alongside the client to build up a proposal after which the construction contract is awarded – this is the second stage.

In 2012 a trial programme for the new models was established which included projects from the Ministry of Justice and the Environment Agency, and more recently the procurement of the Education Funding Authority regional framework. However the trials have so far only focussed on CLP and Two Stage Open Book, as due to the innovative nature of IPI it has taken more effort to initiate a trial project.

Also in line with the development of the new models and in order to bring about further reform, the GCS reinforced the need to improve the public sector procurers skills. It has backed the creation of a Major Projects Leadership Academy run in partnership with the Saïd Oxford Business School and Deloitte, and ‘encouraged’ the dissemination of best practice across central and local government. Finally the GCS also provided an updated version of the Common Minimum Standards for procurement. Although the impact of these initiatives is more difficult to measure.

Despite all of this I still hear from contractors on a regular basis that clients are more concerned with lowest price tendering. Or are too reliant on their advisors producing a design before they procure a contractor and then expecting innovation and value engineering to further reduce their spend. So for me the big question now is – three years on, and (perhaps more importantly) less than twelve months to the next general election, have all of these reforms made any difference in the industry?

Based on the evidence provided in the trial projects the potential benefits of the new procurement models are demonstrable for all parties. However the trials have been restricted to a small number of high value central government projects. And whilst anecdotal evidence suggests that things are improving generally in construction, this is more than likely related to an upturn in the economy as a whole.

 

Tesco scandal shines a light on the retailer-supplier relationship

All is not well at Tesco HQ… Amid tales of the supermarket’s accounting scandal, a colossal 4 billion pounds has been wiped from its stock market value. The trouble stemmed from an overstatement of its first-half profit – a full 250 million. Not a small drop in the ocean by anyone’s standards.

Tesco profits scandal

“The Financial Conduct Authority has notified Tesco that it has commenced a full investigation following the overstatement of expected profit for the half year which was described in our announcement of 22 September 2014 and which is currently the subject of an independent review by Deloitte. Tesco will continue to cooperate fully with the FCA and other relevant authorities considering this matter.”

It’s not simply a tale of accountants getting their sums wrong… the wounds of deceit bleed deep, and it’s the suppliers on the other end that will hurt the most.

According to this story on The Grocer, a supplier with close ties to Tesco has revealed that buyers are “desperate” and are artificially bringing forward huge payments in order to fill the “huge gaps” left.

Tesco scandal has suppliers divided

Luckily the suppliers have the ears of the government-appointed watchdog – namely Christine Tacon, an Adjudicator of the Groceries Code. The Adjudicator’s motivations focus on whether the supermarket has breached code that adversely affects suppliers. Such breaches can include payment delays or changes to supply agreements.

David Sables, CEO at Sentinel Management Consultants told The Grocer that he believed this was merely “an extension of what was always going on.”

Graham Ruddick, Retail Correspondent for The Telegraph, writes: “There is currently no code, regulator or set of rules controlling the relationship between suppliers and retailers in the UK. In addition, there is nowhere to turn for a supplier if it feels it is being bullied by a retailer. Many suppliers are too scared to speak out against a larger retailer for fear of being delisted or replaced by a rival, so they suffer in silence and agree to the unreasonable demands being placed on them.”

He further states that the Tesco scandal could spark a long overdue shake-up of the retailer-suppler relationship – noting that: “Last year this lack of regulation resulted in the horse meat crisis.”

If one good thing is to come out of this sorry debacle, maybe it should be this?

How Better Together is putting the excitement back into UK public procurement

The Scottish Independence Referendum was a thrilling time, one I’m glad to have been part of, but now it’s over, what is the real impact of Better Together for UK Public Procurement?

Better Together for UK Public Procurement

I believe that we are facing exciting times ahead and that we now have an amazing opportunity to create something special, something lasting and something that will have a real impact on the communities we serve.

Let’s push things to the next level

It’s time for our collaborative buying organisations to push things up a gear.  At a UK level the public sector spends over £45bn on goods, services and works.  Crown Commercial Services chairman Bill Crowthers is quite right when he says that “we need to make the most of this extraordinary buying power.”

How CCS, Scotland Excel and other collaborative buying organisations engage with their customers, the public bodies the length and breadth of the UK, will be crucial as we move into the next generation of public contracts.

We need agreements which serve not only London but Lerwick, not just Belfast but Bangor.  Our collaborative partners must deliver agreements and contracts that will reduce the overall cost to the whole public purse.

Savings not just for the strong and influential public bodies with huge amounts of spend but for the smaller less centrally located bodies too.  All for one and one for all!

It’s time for innovation, imagination and change

Let’s use this next period to encourage innovation amongst our suppliers, particularly those who are UK based small and medium enterprises.

Let’s use imaginative contract strategies, structured contract management and true and deep supplier engagement.

Let’s make access to public contract opportunities easy.

If we really are better together then let’s have a single gateway where all public contracts for the UK are advertised.

Think how refreshingly simple it would be if you’re a British supplier, particularly a small one looking to grow, if you knew about every single contract opportunity for your commodity in the UK as soon as it was advertised.  So let’s build on the success of portals like Public Contracts Scotland to create something bigger and better that covers the whole of the UK.

Let’s take the impetus given to us by the new EU directives and drive this SME agenda forward!

Community benefit clauses that benefit all

We need to seize the opportunities to make public procurement a force for good in the wider community and economy.  We can use community benefit clauses to not only deliver apprenticeships and work placements, but also to promote improved engagement with and services for communities.

How about donating the power of a community benefit clause in your construction project to another area if you can’t sustain any more apprenticeships at the moment where you are?  Why not put it in your contract but target it for a related geographic area where there is a demonstrable need?

Now that would be Team UK working better together wouldn’t it?

There is powerful information in the data – we just need to use it!

We have access to big data on spending across our organisations, across our sectors, across our countries, across the UK.

It’s time to inspire our IT suppliers to give us integrated solutions which join up purchasing systems to general ledgers to contract registers to national procurement information hubs.  It’s no longer acceptable for us all to say we don’t have the data; that we just don’t know.

Just imagine what we could do with all that knowledge about our spend and contracts if we can actually get our hands on it?

The future for public procurement is exciting

So as we head towards a place where decision-making could become more local, the potential for public procurement to excel has never been greater.

We can deliver even more savings and value by joining up behind the scenes and working together whenever we can.  This won’t be by implementing a one size, or organisation, fits all approach.  It will only be by adopting a federalist approach that recognises procurement teams operating at local, sectoral and national levels all have their roles to play in this exciting next stage.

Only then we truly be better together.

Sourcing things differently: the world of alternative storefronts

Here in 2014 companies are increasingly looking for different ways to get products into the hands of the end user. We’re not just talking about practical logistics, but every decision and thought that informs a customer’s purchasing process. Take Internet sensation Alibaba for instance – sure you can draw parallels to other popular online storefronts, but there’s something in its old-fashioned street-vendor approach that no one else has successfully harnessed in this age.

Elsewhere HowGood is offering shoppers the chance to shop transparently, informing around sustainability and ethical factors.

What is Alibaba? Alibaba online marketplace

What is Alibaba? 

Described by The Economist as the world’s greatest bazaar, Alibaba is a Chinese e-commerce platform that is single-handedly responsible for carrying out more transactions than both eBay and Amazon (and that’s combined…) In terms of numbers Alibaba represents a massive 80 per cent of online purchases in China.

Alibaba is a haven for manufacturers, suppliers, importers and exporters.

Three websites actually sit under the Alibaba umbrella, and they are: Taobao, Tmall and Alibaba.com.

It’s an online marketplace (for want of a better explanation), one that’s free for users to browse and buy, but sellers can pay for ads in order to stand out. It’s come some way from its roots when it existed solely for the purpose of connecting manufacturers to potential customers. In 2012 Taobao and Tmall saw transactions totalling $170 billion being made – and revenue in 2013 stood at $6.73 billion.

There’s more than just the transactional side of the business too. Services such as AliSourcePro will allow businesses to source new supplies, and get quotations for stock in under 12 hours. A payment system – Alipay, meanwhile handles small and micro financial transactions.

The rise and rise of Alibaba: A healthy investment

The Chinese e-commerce giant has made it into the history books by achieving the largest initial public offering (IPO) since records began. Upon its debut Alibaba stood tall at $92.70 (a full 38 per cent more than the original estimate) – and racking up a colossal $25 billion in total shares.

And with that, Alibaba founder Jack Ma has somewhat unsurprisingly just topped China’s rich list too.

Your sustainable weekly shop

HowGood sustainable shopping

Want to be better informed about the things you’re putting into your shopping basket?

HowGood is offered through both a dedicated app and online experience – and has just amassed $2 million in funding.

Researches and rates products based on a number of criteria (60 In total); with everything from a company’s behaviour over time, to the provenance of ingredients and the manufacturing process.

Procurement under the spotlight

HowGood’s website states:

“We investigate the products’ ingredients – and the company’s procurement and processing methods. We’ll look at everything from corporate governance to specific issues like hazardous waste emissions.

We’ll also put company behaviour in the context of their industry. So if a company’s industry has naturally low carbon emissions, their emissions policy will carry a lower weighting — and vice versa.”

HowGood’s genesis dates back to 2007, in 2014 it now shares data to small US grocers spread across 21 different states. Its ‘Featured grocer’ spotlight regularly identifies highly-rated products and suppliers.

Find out more about the food you eat at howgood.com