Category Archives: In The Press

Flying Warehouses & Fashion Buyouts – Amazon Dominates Headlines

No sooner had 2017 started than Amazon appeared in the news in a big way. From flying warehouses, to buyouts of fashion chains, no-one dominates the headlines quite like the online giant.

flying warehouse

Disruption. It was a buzzword of 2016, and even if the word is falling out of favour, the activity looks set to continue this year. And the company at the forefront (again) of this disruption is Amazon.

The online giant has proven time and again it’s not content to rest on it laurels. So when the company appeared across the news headlines for a variety of reasons, you might not have been surprised. However, when you consider the headlines it was making, you might think again.

Flying Warehouses – The New Reality

Many companies will consider the cost of new facilities to meet demand trends in their strategies. Amazon, however, appear to have bypassed the real estate question with their proposed flying warehouse.

The company submitted patents late in 2016 for these warehouses, which would be serviced by a fleet of drones. The purpose of the “airborne fulfilment centre” would be to visit spectator-heavy events (think music festivals, sports events) where they could sell in-demand goods.

Analytics firm, CB Insights, were responsible for finding the flying warehouse patent, originally filed in 2014.  Additional patents serve to outline other plans in line with the warehouses too. These include a fleet of shuttles to keep warehouses stocked, the creation of an interconnected network of drones, as well as docking stations for drones to allow them to be picked up by the shuttles.

A diagram from Amazon’s patent (image courtesy of South China Morning Post)

The idea might sound a touch fantastical, but there are serious potential benefits that Amazon could realise. Not only would it save Amazon money in building warehouses, but it would also save on energy costs. Drones would be able to glide down to deliveries before being picked up.

Add to this using the airships as flying billboards, and Amazon could sell advertising space above some of the world’s biggest events.

This could represent a huge step change in the retail environment, with Amazon at the forefront. And you wouldn’t bet against them making it a reality. After all, it wasn’t long ago they completed the first drone delivery – something people dismissed when the idea was first proposed.

The Fastest Fashion of All?

It’s not just logistics and warehousing that Amazon are interested in disrupting either. There are strong rumours in the USA that Amazon are set to purchase American Apparel out of bankruptcy.

The clothing retailer went into bankruptcy in November for a second time. Now, with bids submitted late last week, it is suggested that Amazon might come out victorious. The move would fall in line with Amazon’s strategy to add to it’s nascent fashion arm.

The buyout would help to protect 4,500 jobs in America, and allow them to access American Apparel’s 100 plus stores across the country. It could also give Amazon a political boost following heavy criticism of its practices from President-elect Donald Trump.

Throughout his Presidential campaign, Trump criticised Amazon (amongst others) over its tax payments and business model. However, by purchasing American Apparel and maintaining its ‘Made in America’ promise, it’s thought that it may help smooth tensions between the company and the future President.

Technology Trends

Finally, Amazon has also been making headlines in the technology world. Even without attending the CES gadget show in Las Vegas, Amazon is making its presence felt.

Not only is Amazon’s ‘Alexa‘ AI assistant gaining in popularity, it’s also the chosen system for many other companies. Prominent companies, including Ford, LG, and Lenovo have all opted for Alexa as the AI interface in some of their products.

Increasing number of products are integrating voice commands, and Amazon’s decision to release an Alexa developer kit last year appear to be paying off. The company is seen as the early mover in this space, and looks set to continue its dominance over its rivals.

Even if there is still potential for glitches in the system delivering unwelcome surprises!

Do you think Amazon will make its flying warehouses a reality? Is this the next step in retail? Let us know in the comments below.

With the new year flying past, we’ve saved you some time by searching out this week’s top headlines…

Tesla’s Gigafactory Begins Mass Production of Battery Cells

  • In partnership with Panasonic, Tesla has begun producing lithium-ion battery cells for energy storage products and the Model 3 vehicle.
  • The Gigafactory is being built in phases, with manufacturing beginning inside finished sections. It is expected to be the largest building in the world when completed.
  • The current structure is only 30 per cent complete, yet houses 4.9 million square feet of operational space.
  • Tesla anticipates cost reductions through increasing automation, process design, locating most manufacturing processes under one roof and economies of scale.  

Read more on the Tesla website

Trump “Personally Involved” in Procurement Decisions

  • An analysis of Donald Trump’s campaign promises and policies has revealed that he is unlikely to make significant changes to U.S. Defence procurement policy.
  • However, he will seek to be personally involved in the negotiation of major acquisitions.
  • The President-elect tweeted about cost overruns of the Lockheed Martin F-35 fighter jet, and encouraged Boeing to compete with its F-18 Super Hornet.
  • Trump’s focus appears to be on technology that is immediately available rather than future research and development, and leans towards Airforce and Navy investment rather than Army.

Read more at Defense News 

Top Supply Chain Universities Ranked in U.S.

  • SCM World has released the results of a survey ranking the top institutions for Supply Chain courses in the U.S.
  • Practitioners were asked to list their top three institutions that are “markers of supply chain talent”,
  • The top five places went to: Michigan State University; Western Michigan University; Massachusetts Institute of Technology; Penn State University; and Arizona State University.
  • Connection to industry, through practical education and internships, was also flagged as an important factor in the results.

Read more at Forbes

Apple Removes New York Times from App Store

  • Apple has removed the New York Times App from its Chinese app store, in compliance with a request from the Chinese Government.
  • The Chinese Government began blocking the NYT website after a series of articles on then Prime Minister, Wen Jiabao, in 2012.
  • An Apple spokesperson stated the reason for the removal was “that the app is in violation of local regulations”.
  • Both Apple and Chinese authorities declined to comment on what regulations had been violated, or if the app would reappear in the future.

Read more at the New York Times

Financial Troubles Spell Tough Times for Small Businesses

The start of 2017 looks set to be a tough period for small businesses. With increasing number of businesses being wound up, it appears the high street’s suffering is far from over.

insolvency small businesses

The past twelve months have been hard for small businesses, and it doesn’t look as though 2017 will offer much respite. Changing consumer trends, and economic and political factors, are already taking their toll on the UK’s High Street.

Over 760 businesses ceased trading in December 2016, with a further 1093 small businesses scheduled to be wound up this month. And, according to a survey of the latest insolvency notices published in The Gazette, some industries are being harder hit than others.

Small Business Suffering

Between the companies wound up in December and January, as well as those which failed in the third quarter of 2016, it brings the total number up to nearly 5,500 failed businesses.

With the official figures for the final quarter of 2016 due for publication in January 2017, cause and effect is yet to be confirmed. But it is certain that wherever a business is unable to weather restrictions in cash flow, insolvency looms.

The research was carried out on behalf of London insolvency practitioners Hudson Weir. It reveals that some industries are being hit harder when it comes to failing businesses. The study revealed that 14.5 per cent of these companies were operating in the retail and food and drink sectors.

However, it’s in the construction industry where the impact is felt most acutely. According to data collected during the second quarter of 2016, 2450 construction companies ceased trading. Next most affected was the wholesale, retail and repair of vehicles sector, with 2065 company insolvencies.

And it’s not only small businesses suffering from lower trading towards the end of 2016. Retail giant, Next, has issued a warning over trading for 2017. The company saw a drop of 3.5 per cent in the run up to Christmas, and anticipates a similarly gloomy picture for 2017.

Brexit or Cash Flow to Blame

The reasons for company insolvency can be complex, ranging from unrealistic planning through fraud and unforeseen loss of market share. But the root cause of is it frequently simple: inadequate cash flow.

Financial trouble tends to strike early in the business life cycle. Only 41.4 per cent of the UK businesses started in 2010 survived to their fifth birthday.

But how much of an impact has the Brexit vote and uncertainty had on insolvencies? Although the UK economy seems to be surviving the immediate post-referendum period, vulnerable business sectors – like construction – have experienced contraction.

Restaurants, cafes and other food outlets are heavily represented in the latest insolvency reports, too, a trend which could reflect the recent well-publicised rise in food prices. Even large companies such as catering giant Compass have been affected by the consequences of a weaker pound.

Hasib Howlader, a chartered accountant at Hudson Weir Ltd, commented on the survey results.

“Brexit is unlikely to bring good news for small businesses, and it seems now it’s just a question of how bad it’s going to be. With more than 40 per cent of small businesses struggling to survive beyond five years even in a pre-Brexit climate, it’s now more important than ever for them to be looking for warning signs that their business may be unhealthy.

“If cash flow is a problem, and you can no longer pay your bills as they fall due, the earlier you speak to an insolvency practitioner the better.”

Mitigating the Effects

Even though businesses are at the mercy of circumstance, it’s possible to mitigate the effect of uncertain situations like Brexit. Hudson Weir recommends that business owners:

  • Get to know the normal patterns in cash flow data

When a business keeps good records of its cash flow over a period of years, it’s possible to identify seasonal and other trends, and plan for them.

  • Look to the future

The logical next step after record-keeping is making a cash flow forecast. A clear-eyed view of incomings and outgoings six months to a year in advance helps manage business expectations.

  • Keep up to date with invoicing and payments

Each invoice should be accompanied by clear payment terms, and it’s well worth enforcing these. It’s also worth getting to know customer payment habits, since any unusual delays can be early indicators of financial trouble.

  • Make long payment terms the exception, not the rule

30- and 60-day terms make cash flow management more complicated.

  • Focus on managing cash flow

This is something even highly profitable business should do, as out-of-control cash flow undermines profitability and jeopardises future prospects.

Yahoo Breaks Record – For The Biggest Hack in History

The biggest hack in history – it’s certainly not an award to be envious about. But Yahoo broke the record after announcing a major breach from 2013.

hack record

It’s been a bad week for embattled internet giant, Yahoo, as the company announced details of a huge cyber security breach from 2013. The hack impacted over one billion accounts, twice as big as the previous largest breach.

Yahoo was also the victim of the previous hack ‘record’, which it announced in September. It means that user data from over 1.5 billion accounts has been stolen from the company between 2013 and 2014.

Both the FBI and the New York Attorney General are investigating the hack. However, the company is likely to suffer as trust in its security and systems falls.

Hack Included US Officials

The first, and largest, of the hacks occurred in August 2013. Yahoo have said that data such as usernames, passwords, phone numbers and security questions were all stolen. The company is taking steps to contact users affected by the hack, asking them to change passwords and security questions.

It’s an embarrassing turns of events for Yahoo, who are already struggling to keep pace in the tech industry. It’s the second hack the company have announced this year. To further their embarrassment, it has come to light that 150,000 of the affected accounts belonged to US Government Officials.

According to a Bloomberg report, the data stolen from the officials in the hack could be a threat to national security. Data could allow cyber criminals to identify officials, target them, and further hack personal and professional accounts.

Organisations affected included:

  • Current and former White House staff;
  • FBI agents;
  • US Congressmen and their aides;
  • Officials at the NSA and CIA;
  • Current and former US diplomats; and
  • Every branch of the US Armed Forces.

Trouble on the Verizon?

The two breaches, and the high-profile nature of the accounts included, come at a bad time for Yahoo. In recent months CEO Marissa Meyer has come under increasing criticism for how the company is performing.

The hacks may also have a major impact on the deal Yahoo currently has to sell its core internet assets to Verizon. The deal, currently estimated to be worth $4.8 billion, has still to be finalised. And while it’s likely to still go ahead, Verizon have already said it will be looking for a lower price.

In October, when the first hack was announced, Verizon stated that it was “reviewing the deal“. It’s unlikely that a second breach will assist Yahoo’s negotiation position much either. With shares prices falling 6.5 per cent in Thursday trading last week, the deal valuation is likely to be put back on the table.

However, some experts believe that the deal will still be closed at its original price. The impact of the breaches will not be seen for some time, and certainly not in a way that would show any monetary damage. But at a time when a smooth deal was top of the priority list, Yahoo will need to work very hard to recover consumer confidence.

What Should I Do?

While you will be contacted by Yahoo if you are impacted by the hack, we’ve pulled together some things you can do in the mean time.

  • Log into your e-mail account and change your password

Make it a brand new password, with upper and lower cases, special characters and numbers. No dates of birth!

  • Check accounts the e-mail is linked to

Like most people, you’ll use your e-mail to log into other online accounts. Check all these accounts to make sure there’s no unusual activity. Change your passwords.

Once you’ve done this, check for any password reset requests that you haven’t asked for in your e-mail. Report anything suspicious to the site in question.

  • Check Sent Mail for Spam

Your account might have been used for sending spam mails to your contact list. Do a quick check of your sent mail for this.

  • Two Factor Identification

In light of the increasing number of hacks, sites have begun to introduce two factor identification. This works alongside your password as part of the logging in process. Register for it where you can.

You’re never going to be 100 per cent safe from a hack. But by using strong passwords (different ones for different sites), you can help to minimise the impact and possibility.

While we frantically try to remember all our passwords, we’ve looked out some of the top headlines for this week…

Trump Holds Silicon Valley Tech Summit

  • Silicon Valley tech heavyweights sat down with President-elect Donald Trump for two hours last week.
  • The leaders including Apple’s Tim Cook, Facebook’s Sheryl Sandberg and Amazon’s Jeff Bezos.
  • Topics discussed included vocational education, trade with China, and the need for data analysis technology to detect and reduce government waste.
  • The tech industry and Trump were frequently at loggerheads during the election. Trump also singled out a number of them for criticism on non-US supply chains.

Read more at the New York Times

Amazon in Drone Delivery First

  • Amazon made history last week with its first delivery by a fully-autonomous flying drone.
  • The delivery, containing a TV remote control and a bag of popcorn, was made to a customer in Cambridge, U.K.
  • The delivery took 13 minutes from Amazon’s local warehouse to the customer’s home. Amazon intends to extend the trial to hundreds of users.
  • Packages must weigh five pounds or less and can only be delivered during the day and in clear weather.

Read more at the Wall Street Journal and watch the video here 

Mexican Government Deploys Troops for Shipment Protection

  • As many as 1000 troops have been deployed along rail lines in Mexico to protect automotive cargo from thieves.
  • Thieves have been boarding trains to steal tyres, batteries and other automotive parts.
  • Mazda and General Motors are among the companies that have been impacted by the thefts.
  • American Honda has also been affected, and takes the damage into account when deciding between rail and sea-borne deliveries.

Read more at Automotive Logistics

UK Falling Behind on Timber Requirements

  • The UK faces a future timber shortage thanks to delays in planting of forests.
  • In order to meet Government requirements of 10-12 per cent increase in woodland areas in England, 11 million tree need to be planted between now and 2020.
  • However, the Chief Executive of Confor has highlighted serious delays due to inefficiencies in the grant system for planting.
  • The highly bureaucratic process means it can take up to three years before permission is granted to plant trees on a large scale.

Read more at Supply Management

Are We Witnessing the End of the Fairtrade Movement?

Mondelēz International have chosen to pull the Fairtrade label from all Cadbury branded products. Are we witnessing the beginning of the end for the movement?

fairtrade movement

In 1997, the formation of FLO International brought ‘Fair Trade’ labelling to shops for the first time. Later rebranded as Fairtrade International, it was recognised as the global leader in fair trade standards and labelling.

Since that time, hundreds of organisations have hosted the Fair Trade label on their products. While the labelling was voluntary, organisations and the general public viewed this movement as a great step forward for developing countries.

However, in the past week, Mondelēz International have taken the decision to bring all of its fair trade policies in house. And it’s left many people wondering about the future of the movement in its current state.

What is Fairtrade?

Fairtrade is just as it sounds. The aim of the movement is to create better working and living conditions for farmers and workers in developing countries. This includes paying better prices for crops (which don’t fall below the market price), and embedding local sustainability.

Crops range from coffee and cocoa, to bananas and cotton. It also includes products you might not immediately link to it, like flowers, gold and wine.

Some facts and figures around the movement are (courtesy of the Fairtrade Foundation):

  • More than 1.65 million farmers and workers work for Fairtrade certified organisations
  • 56 per cent of these farmers grow coffee
  • There are 1,226 certified Fairtrade organisations across 74 countries
  • $106.2 million was paid to Fairtrade producers in 2013-14
  • 26 per cent of all farmers and workers in the organisations are female
  • Organisations invested 31 per cent of their Fairtrade premiums on productivity or quality improvements; 26 per cent was invested in education

The movement has clearly helped millions of farmers and workers around the world, giving them a better deal for their crops. And, as social consciousness has grown, so have consumer tastes for Fairtrade products.

The UK is one of the largest markets in the world for Fairtrade products. In 2012 (more recent figures are hard to come by), UK consumers spent more than £1.3 billion on these goods.

Is It Really Fair?

However, unfairly or otherwise, the movement has been dogged by criticism about how fair it actually is. As far back as 2007 (and beyond), critics were questioning how good a deal these farmers and workers were getting.

Some critics have argued that by being affiliated with the movement, farmers are actually limiting their markets. Others have argued that it doesn’t account for mechanisation in production and doesn’t give the opportunity to improve production processes.

And a report in 2014 by the School of Oriental and African Studies (SOAS) in London raised concerns that some workers were actually earning less than non-Fairtrade workers.

Some products don’t quality for Fairtrade labelling, and specialist brands are likely to miss out. Additionally, it’s often difficult for farmers to join the movement, with fees and a lack of organisation frequently cited.

And despite its position in the public eye, Fairtrade isn’t the only organisation offering this service. The Rainforest Alliance is one such organisation, but perhaps suffers from being less well-known.

Companies Changing Strategies

All of which brings us back to the change about to be undertaken by Mondelēz with its Cadbury brands. The global organisation plans to bring all of its certification in-house, under its ‘Cocoa Life‘ fair trade scheme.

While the company maintains that the move won’t impact the percentage of fair trade products it produces, it’s raising concerns about the future of the Fairtrade movement.

When Cadbury joined Fairtrade in 2009, it prompted many of its competitors to do likewise. Critics are concerned that its move away from Fairtrade might see other organisations follow suit. There are concerns that ethical standards may drop, even although Fairtrade will continue to monitor Cadbury’s work.

The company has committed to ensuring that its supply chains retain the protection they currently have. And even Fairtrade International have welcomed the move, seeing it as a company taking accountability for its supply chain and sustainability efforts.

Whether this ultimately means the end for Fairtrade is unclear. It’s highly unlikely that the movement will cease to be, but it may have to change to remain relevant. Public social consciousness will only increase, and manufacturers will need to be able to prove the transparency and legitimacy of their supply chains.

In that respect, whether it’s in-house, or done by an external NGO, sustainability labelling will continue to exist. And Fairtrade will still be seen as the cornerstone in the movement.

What do you think about the move by Mondelēz? Do you think it will make a major difference? Let us know in the comments below.

While we take some time out to evaluate our food purchases, we’ve compiled some top headlines for your consideration.

Pentagon Buries Evidence of Bureaucratic Waste

  • The Pentagon suppressed the results of an internal study which exposed huge levels of administrative waste.
  • A dramatic report from The Washington Post revealed the extent of the waste to be an estimated $125 billion.
  • Reporters believe the Pentagon feared Congress would use the findings as an excuse to slash the Defence budget.
  • The study was originally requested to help make the Pentagon’s back-office more efficient and reinvest any savings in combat power.

Read more at the Washington Post

Apple Supply Chain “On Move to USA”

  • A large part of the Apple supply chain may be on the move back to the USA, according to one report.
  • Foxconn, one of Apple’s key producers, currently carries out the majority of manufacturing in Chinese factories.
  • However, the company is in talks about expanding its US-based operations to iPhone and other product build.
  • The move comes following strong criticism of the company by President-elect Donald Trump during the US elections.

Read more at the Wall Street Journal

Trump Air Force One Tweet Sends Markets into Chaos

  • The social media habits, and impact, of President-elect Trump were highlighted again last week.
  • A tweet calling for the cancellation of an order for a new 747 Air Force One, built by Boeing, caused chaos in US markets.
  • Immediate effects included a sudden plunge in Boeing’s stock, which recovered as clarity emerged around the true budget – $1.65 billion. Boeing currently has a $170 million contract with the Air Force.
  • Trump and the CEO of Boeing have since spoken by phone regarding the order and the tweet.

Read more on ABC News

Fujitsu and DHL to Use IoT to Disrupt Logistics

  • Fujitsu has announced a partnership with DHL Supply Chain UK which will focus on using the Internet of Things in logistics.
  • The two companies plan to share expertise to jointly develop innovative solutions for supply chains, and also emergency services.
  • One example of wearable technology is UBIQUITOUSWARE which helps emergency services track individuals.
  • The technology provides real-time tracking insights, as well as ensuring timely responses in emergency situations.

Read more at Supply Chain Digital

Unlikely Alliances on the Rise in Disrupted Markets

Amazon’s disruption of the grocery, food delivery and home-care industry could spark unlikely alliances. And these alliances could help take the fight to disruptors.

alliances

With Amazon’s expansion of its grocery deal with Morrisons, its launch of Amazon Restaurants, and a rumoured housekeeping service, incumbents could see unusual partnerships as a means to fend off the retail juggernaut.   

Amazon’s recent advances into the homecare and food delivery market, have followed the much vaunted expansion of its pre-existing delivery deal with Morrisons. The company has also recently announced plans to introduce ‘Amazon Go‘, a shopping experience without checkouts.

There is also a rumoured launch of a new housekeeping service, as well as Amazon Restaurants and Amazon Fresh services. These moves could result in incumbent players taking drastic measures to combat the e-commerce giant.

This is according to Nick Miller, head of FMCG at Crimson & Co, who predicts that Amazon’s competitors could form unlikely partnerships in order to avoid losing ground. 

Shopping on the Go

Amazon announced a couple of weeks ago that it would be extending its existing delivery deal with Morrisons’ to offer one-hour grocery deliveries to selected postcodes in London and Hertfordshire to Amazon Prime Now customers. The service has been named “Morrisons at Amazon.”  

Meanwhile, advertisements were seen in the US media two weeks ago for ‘Home Assistants,’ who would work with customers to tidy people’s homes, do laundry, put groceries away and “assure that customers return to an errand-free home.”

If true, this new service would be another convenience to Amazon Prime Now customers. These customers already have access to Amazon Restaurants (a home food delivery service), as well as both Morrisons at Amazon and Amazon Fresh for same-day deliveries on a massive range of fresh and frozen grocery goods.

When you further consider the potential for an Amazon Go grocery store in the UK, it’s clear the online giant is keen to expand its reach. 

Convenience is King

Miller commented on the moves, and what it means its competitors. “It’s pretty clear that Amazon’s aim is to be the one-stop-shop for all domestic-life conveniences. Whether that be shopping, groceries, takeaways or cleaning, they want to lead the market. It’s an incredibly obvious and yet aggressive strategy,” says Miller.

“Convenience is the key word. The customer, for an annual fee (a Prime subscription), has a central platform where they can access a wide variety of services and products at their leisure, and with confidence in Amazon’s established reputation.

“As this service becomes more and more engrained amongst users, loyalties to competitors will increasingly be challenged. Why go to four places when one does it all?” 

While on paper these plans are impressive, there are questions Amazon needs to address. The key consideration is that these markets often entail more complex service demands and delivery requirements.

Services like Handy and Hassle are dominating players in the homecare market. Deliveroo, has developed a leading position in London’s ‘last-mile’ food delivery market, but this has recently seen threats from Uber with the entry of UberEats.

Meanwhile, many of the big supermarkets maintain grocery delivery services. Ocado, the online grocery specialist which supports Morrisons’ website, saw its shares fall by 8.5 per cent in the wake of the Morrisons news. 

Innovating to Remain Competitive

As Amazon refines and expands its services, these incumbent players will likely need to innovate to remain competitive. Ocado, for example, is likely to suffer considerably as Amazon moves into the food delivery market.

Companies looking to remain competitive will have to match Amazon on convenience, as well as breadth of offering. However, there is potential for innovation across the space that could help organisations here. And this is also where the unusual alliances could come in.

Miller highlights how a ‘last-mile’ deliverer, such as Deliveroo, could partner with a supermarket to offer grocery shopping and takeaways in one service. There’s strong potential and attractiveness in making this service possible. It could also put both in a position to challenge Amazon on ‘Restaurants’ and ‘Fresh’.

As Miller also states, both parties would see major benefits from such an alliance. Deliveroo would access a wider customer base, while the supermarket would get expertise in ‘last-mile’ delivery.

It goes to demonstrate how unlikely partnerships could provide a route to superior service in delivery. Joining forces with local transport businesses, such as taxi firms, could also provide a boost to delivery speeds.

Either way, thinking laterally and tapping into pre-existing networks could help companies to compete with Amazon.  

Still Obstacles for Alliances

These ideas, however, do not come without their own obstacles.

Miller commented on some of these, “These kind of innovations would undoubtedly bring a number of logistical challenges. Not only the alignment of the delivery chain to enable the fastest and best possible experience for the customer, but also the coordination of logistics and digital platforms between two companies.

“However, approaching the problem from this angle could prove vital for any company attempting to see off Amazon.”

Peak Oil – From Global Catastrophe to Global Opportunity

Modern economics is a matter of supply and demand. And when it comes to ‘peak oil’, it’s the difference between catastrophe and opportunity.

peak oil

Since the early 20th Century, scientists, experts, and economists have been predicting the manifestation of ‘peak oil’. For years, many people viewed ‘peak oil’ as a herald of global catastrophe, and the end of major economies.

However, in recent years, the supply and demand situation for oil has turned in favour of supply. It now appears that peak oil demand is what organisations and countries need to be aware of.

What’s more, some experts are predicting that this demand will happen sooner than expected. And global oil and gas organisations need to consider their next move in order to stay competitive.

What Do We Mean By ‘Peak Oil’?

Peak Oil‘ describes a situation where global oil production hits its peak, then is in perpetual decline. The first prediction of this was in 1919, and an expectation that peak would be reached by the mid-1920s.

Throughout the last century, a number of geoscientists have continued to make predictions. And these predictions have all been proved to be wrong. However, some experts believe this peak may already have happened without anyone really noticing.

Studies have shown that in North America, the volume of oil discovered has dropped consistently since the 1930s. In addition, production of oil in the region has dropped year on year since the 1970s. That’s not to say that overall fossil fuel production has dropped – we’ll come to that shortly.

What people have agreed upon is that the concerns over ‘peak oil’ have abated, or disappeared entirely. The expected global economic collapse is unlikely to take place (or at least be a result of running out of oil).

Supply Outstripping Demand

So what has changed? Well, there are three reasons that keep appearing in a lot of the articles written about ‘peak oil’. They are:

  1. A huge increase in the volume of shale oil being produced. The oil is produced differently, but can be a direct substitute for crude oil.
  2. The US-Iran deal signed in 2015 has lifted sanctions on the oil-rich Middle-Eastern country.
  3. OPEC, which accounts for 43 per cent of global oil production, has, until recently, refused to cut supply. This surplus of supply was the reason the price of a barrel of oil dropped dramatically earlier this year.

This has shifted the thinking on a surplus of demand for crude oil, to a surplus of global supply. Or from ‘peak oil’ to peak oil demand.

Simon Henry, the Chief Financial Officer at Royal Dutch Shell, has predicted that this could happen in as little as five years. Henry stated that, “peak may be somewhere between 5 and 15 years hence…driven by efficiency and substitution.”

This view is at odds with many of the other major global oil producers, however. Exxon Mobil is anticipating a 20 per cent rise to 2040, while Saudi Arabia, the world’s largest crude oil producer, has argued that demand will rise on the back of increased consumption in emerging markets.

But, as some experts point out, even these predictions are built of shifting sands. The global trade slowdown, combined with the events of 2016, could adversely impact demand in developing countries.

Consumers & Organisations Shifting Focus

Whether it’s five years, or fifty years, what is clear is that oil is still a finite resource. Production will eventually diminish, and consumer requirements will change alongside this. This is where the global opportunities come in, but only for organisations willing to keep pace with change.

Public interest in renewable energy is increasing rapidly, and consumer buying habits are changing too. Even industries traditionally driving oil consumption, like the automotive industry, are seeing massive change.

In the UK alone, sales of electric cars have increased by 48 per cent in the past year. Sales of hybrid cars during the same period have increased a whopping 133 per cent. There are large solar panel fields being built around the world, and Ikea is even selling them to consumers in the UK.

Shell and BP are just two of the organisations expanding their portfolios into renewable energy sources, such as biofuels and natural gas. Greater investment in the renewables industry by major organisations has also helped to reduce costs associated with it. And as costs fall, demand from organisations and individuals will inevitably rise.

It would be foolish to make predications given how difficult it is to predict correctly about oil and energy. It’s a topic that is unlikely to go away any time soon, and one that organisations and wider supply chains need to be keeping up to date with.

Do you have a view on ‘peak oil demand’? Do you think it’s time to focus more on renewable energies? Let us know what you think in the comments below.

Like a treat behind each door of your advent calendar, we’ve found the tastiest procurement headlines this week.

Robotic Exoskeleton Gives Workers Super-Strength

  • SuitX, a Californian robotics company, has unveiled a new Modular Agile Exoskeleton for manual workers.
  • The suit is expected to greatly improve worker productivity and limit exposure to long-term health risks such as back injuries.
  • The exoskeleton is comprised of three modules – backX, shoulderX, and legX – which can be worn separately or as a single system.
  • The exoskeleton supports the body, reducing the amount of effort required to perform tasks such as lifting heavy weights.

Watch the video on THOMASNET

U.S. CEOs Face Consumer Backlash over Trump Victory Response

  • US Corporate CEOs have not hesitated to make their political views known in light of Donald Trump’s election victory.
  • Responses have ranged from congratulatory, to calls for unity, and commitments to company diversity policies.
  • Statements in support or against President-elect Trump have put brands at risk of consumer backlash.
  • Some CEOs who have spoken out have seen calls for boycotts of their brands on social media. Other CEOs have experienced backlash from their own employees on the other side of the political spectrum.

Read more at the Washington Post

Bank of England Seeking £5 Note Solutions

  • The supplier for the new £5 is looking for solutions to the make-up of the note’s base polymer following a backlash this week.
  • It was revealed that the note’s polymer contains animal fat in the form of beef tallow.
  • A petition on behalf of groups including vegetarians, vegans, and religious groups garnered more than 100,000 signatures in two days.
  • The Bank of England has said that their supplier, Innovia, is working with its supply chain to come up with a resolution.

Read more on Supply Management

Maersk Line Acquires Hamburg Sud

  • A.P. Moller-Maersk has agreed a deal to acquire German shipping line Hamburg Sud from the Oetker Group.
  • It’s estimated that the deal is worth over $4 billion, after Maersk won out in the bidding process.
  • The deal brings Maersk’s share of the global container market to 18 per cent, and it hopes to use the deal to return to profitability.
  • It’s the latest in a long line of mergers and acquisitions in the shipping industry, thanks to a huge downturn in 2016.

Read more on Supply Chain Dive

Tania Seary Named ‘Influencer of the Year’ 2016

Procurement’s influence is driven by its leaders. And having a great influencer at the top can make a world of difference.

hello influencer

This week the procurement community made a dint in the universe when Procurious’ Founder, Tania Seary, was named Influencer of the Year by Supply Chain Dive, a leading industry news publisher.

Congratulations to our 18,000 Procurious community members, as well as the 32,000 other procurement professionals who follow us on LinkedIn, Twitter and Facebook! This award recognises your commitment to sharing, connecting and collaborating within the world’s first online community for procurement & supply chain professionals.

The Dive Awards

Supply Chain Dive solicited its 6,000 readers to identify the industry’s top disruptors and innovators. Procurious was selected as an award winner along with other leading companies including Amazon, Patagonia, and J.C. Penney.

Fellow nominees for ‘Influencer of the Year’ included supply chain luminaries including Bill McDermott, Chief Executive Officer, SAP, Bob Ferrari of Supply Chain Matters, and Lora Cecere of Supply Chain Insights.

Commenting on Tania’s award, Edwin Lopez, associate editor of Supply Chain Dive, said, “The supply chain is incredibly fast moving, and the influencer award seeks to recognise those who through their actions or words are helping supply chain managers do their jobs better.

“Tania Seary did both as the founder of Procurious, a social network designed exclusively for peer-to-peer education, where supply chain managers can go to ask questions, share tips, or learn from others’ experiences on a daily basis.”

Learning, Sharing, Collaborating – Growing

At our Big Ideas Summit this year, Tania put forward her big, simple idea: the procurement profession needs to share.

In many ways, by putting her Big Ideas out to the universe and now being announced “Influencer of the Year”, her wish has come true.

“We’ve got to remember that Influencers are just normal people. They are not marketers, but generous communicators who can drive powerful industry shifts before they happen,” says Seary.

“In the end, influencers are probably a type of evangelist. At Procurious, we want you all to be evangelists for procurement.  You all have a role to play.

“We all have the ability to influence. It doesn’t matter which country, industry, age or stage you are – we all have a unique perspective. If we share this unique view, we can give others in our profession insights they may never have otherwise had.

“Your personal influence can make a world of difference.”

Share, share, SHARE!

Tania believes that procurement needs to share – share learnings, stories, experiences, and questions – in order to change the face of the profession.

And on Procurious, it’s clear to see that professionals are rising to the sharing challenge. The Discussion Forum is one of the most popular areas of the site, with nearly 1,000 visits per week. Nearly 1,000 questions have been posed, with members sharing their knowledge in over 4,500 answers.

Want to know the difference between a supplier and contractor? Or what’s the best route for professional accreditation? Or how about how to detect procurement fraud in your organisation? The Discussion board has all these topics are more for you to get your teeth into.

And as Tania speaks at conferences and events around the world, “share, share, share” is a message that she gets to deliver face-to-face too. This will be especially true during the Procurious Big Ideas 2017 series, being held across the year in 5 countries.

Language Matters

As the amount of procurement-related content grows exponentially around the world, we need to keep in mind that the language we use matters.

We know that the procurement and supply chain profession has struggled to overcome outdated stereotypes. Positive words and imagery can make a huge impact on how the people who make decisions in business see procurement.

Through Procurious and other social media channels, we can change the face of the profession from the inside out.

Ensuring your profile is picture perfect (and we have some great tips on Procurious) makes a big difference. It will also help to ensure that when you come to face-to-face meeting with peers, colleagues, and stakeholders, they are seeing the best of you.

So don’t just wait for things to happen! Take a leaf out of Tania’s book – get out there and connect with fellow professionals and share your stories. You never know where it will lead you!

Are Supply Chains Already Feeling the Trump Effect?

President-elect Trump doesn’t take office until January 20th 2017, but his impact is already being felt in global supply chains.

Trump trade deals

Yes, it’s been a little over two weeks since Donald Trump won the US Presidential election. And it’s still nearly two months until he officially takes office. Yet, it’s hard to get away from media reports on what will happen during Trump’s first 100 days in office.

NAFTA, the Trans-Pacific Partnership (TTP), and import tariffs have all been in the news. And if global supply chains weren’t already watching with interest, they certainly should be now.

NAFTA – Overhaul on Cards

During the election campaign, Donald Trump made much of the movement of US manufacturing jobs to Mexico. One solution was to end US involvement in NAFTA, pushing companies to move jobs back to US heartlands.

The North Atlantic Free Trade Agreement was signed in 1994, effectively eliminating tariffs between the USA, Canada and Mexico. The agreement has allowed for seamless movement of goods across borders. It also means that the US currently has more trade with Canada and Mexico, than Europe and China.

An estimated $1.4 billion worth of goods cross the US-Mexico border every day. However, it’s not all been positive, with many organisations moving production to Mexico, where costs are lower.

However, in the past week, the stance from the Trump camp appears to be one of overhaul, rather than withdrawal. The President-elect wants to ensure a “better deal” for America, as well as reduce America’s $76 billion trade deficit.

This could include tariffs of up to 35 per cent on Mexican imports, and penalising companies moving production there. Other changes could include issue to do with currency manipulation, as well as labelling of meat products, and lumber production.

However, experts have warned that any or all of these measures could hurt the USA too. Increased meat prices in US supermarkets, higher house prices, and Mexican tariffs on US goods could all be on the cards. And that’s without the guarantee that jobs would come back to the US.

Relocating Supply Chains

One company subject to plenty of Donald Trump’s ire during the election was Apple. The President-elect singled out Apple several times as an example of a company that should re-shore its production.

To emphasise his point, Trump has threatened to put a 45 per cent import tariff on all Chinese-made goods. At present, Apple devices are assembled in China, with key components sourced from specialised suppliers throughout Asia. In spite of this, however, re-shoring is not that simple for Apple.

Experts have warned that moving production would be challenging, citing a lack of skilled workers and a steep hike in costs. There is also the matter of the highly complex supply chain Apple has established in Asia.

Analysis carried out by the MIT Technology Review stated that higher labour costs, and logistics costs of transporting components to the US, would add between $30 and $40 to the cost of producing each iPhone.

However, the Nikkei Asian Review has reported  that Apple is actually looking at moving some elements of production. It would not be unprecedented either. In 2012, key Apple supplier Foxconn set up an iMac assembly line in Texas. And in 2013, Apple supported Flextronics, another contractor, in building a Mac Pro production line in Texas too.

The media this week reported a call between Donald Trump and Apple CEO, Tim Cook, leading many to suspect that discussions are already taking place. However this ultimately plays out, global supply chain movement and disruption could happen. And if Apple were to move first, it seems like that others would follow suit.

‘Made in China’ Great Again?

One country not looking favourably on President Trump’s policies and tariffs is China. It has been reported that China is unhappy with potential import tariffs, as well as being labelled as a currency manipulator by the future President.

Reports from state media have stated that any tariffs would be met with tariffs of China’s own. There was also a thinly veiled threat against raising tariffs above agreed WTO levels, and starting a trade war.

However, at the same time, China could be a major beneficiary of Trump’s plans to pull the US out of the TPP on his first day in office.

The aim of the TPP was to create a common market, similar to the EU, between its members – the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. As these countries make up 40 per cent of the world’s economy, it was seen as a great opportunity for many.

However, critics argue that it favours big business, and Donald Trump looks set to abandon it in favour of freshly negotiated trade deals. The belief is that, without the USA, the TPP would be dead in the water. But that would open up markets to greater deals and trade with China.

Australia was one country that signalled it would be interested in a China-led trade deal. Deals such as the Regional Comprehensive Economic Partnership (RCEP) could see China increase its power in Asia, leaving America in the cold.

What do you make of the policies announced by President-elect Trump in the past week? Could the US suffer by going down a protectionist route? Tell us your thoughts below.

So you’ve got more time to bargain hunt this Cyber Monday, we’ve tracked down the top news headlines this week…

Samsung and Panasonic Investigate Labour Abuses

  • A Guardian investigation has revealed exploitation of migrant workers in Malaysian factories producing goods for leading electronic brands Samsung and Panasonic.
  • The group of Nepalese migrant workers claim they have been deceived about pay, as well as having to pay large sums of money to secure the jobs.
  • Working conditions are reported to include 14 hours on their feet without adequate rest and with restricted toilet breaks.
  • Samsung and Panasonic have opened investigations into the conduct of their suppliers following the claims.

Read more at The Guardian

BMW Logistics Using Autonomous Robots

  • The first fleet of autonomous transport robots to be used in everyday operation has been launched by BMW.
  • The first fleet of ten robots has been put into operation at the car maker’s Wackersdorf plant.
  • The robots will transport components around the facility, and are capable of carrying loads up to 500kg.
  • The move comes as the company aims to remove as much CO2 emission from its manufacturing processes.

Read more at Supply Chain 24/7

Shell May Face UK Trial Over Nigeria Spills

  • A High Court is to make a decision on whether two Nigerian communities can bring cases against Shell.
  • The communities claim that pollution from repeated spills has caused lasting damage to their environment.
  • Lawyers representing the communities argue that Shell controls and directs its Nigerian subsidiary, and is therefore responsible.
  • However, Shell have also lodged applications to challenge the jurisdiction of the English courts in the matter.

Read more on Supply Management

Canada Energy Decisions to Impact Freight Carriers

  • Canada has announced a plan to phase out all coal power by the year 2030.
  • Four affected coal power plants will will have the option of switching to lower-emitting resources or using carbon-capture and storage technology.
  • The move will have a knock-on effect on the country’s freight carriers, particularly the railroads.
  • Volumes of coal carried by railroads have fallen by 12 per cent this year, and are likely to get smaller still in the next decade.

Read more at the Wall Street Journal

China’s ‘Global Giants’ Defy Worldwide Economic Slowdown

‘Global Giants’ in China are bucking the global growth trend. Against a backdrop of economic slowdown, these companies are striding forwards.

china global giants

China’s emerging global businesses are bucking the trend of domestic and international economic slowdown. According to a new report from global accountancy body ACCA and Lancaster University, growth rates are currently sitting between 12 and 64 per cent.

The report, China’s next 100 global giants, reveals the top 100 fastest growing businesses in China for 2016, tipping them as most likely to become ‘global giants’ in the next three to five years.

Huapont Life Sciences Co, which manufactures pharmaceutical, pesticide and active pharmaceutical ingredients, took out the top spot in 2016. This is an improvement from its second place ranking in the inaugural 2014 Global Giants report. It is followed by Hongfa Technology Co., and Hangzhou Hikvision Digital Technology Co.

“It is impressive to see that businesses in China are maintaining such high growth rates. Against a national GDP growth of 6 per cent, many of these countries are doubling this, some even multiplying it by 10,” said Faye Chua, head of business insights at ACCA.

“Almost half (46) of this year’s global giants also appeared in 2014. This demonstrates impressive growth maintained over a prolonged period. The number of new entrants, however, also indicates the dynamism of competition and business emergence here in China.”

Factors for Growth

The report indicates that there are common features between the top 100 businesses, with one of the most prolific being a highly effective business model.

“The successful fast-growing businesses in China are creating a ‘home base’ for globalisation. They are building market share and power domestically before, then applying these successful business models in other markets,” explained Ms Chua.

“Almost all of the top 100 have become either strong or dominant in their domestic markets. They are then able to pursue a more global strategy of acquisition and distribution in key overseas markets like Europe or the United States.”

Moving on from Manufacturing

Sector representation in the top 100 indicates an increasingly diverse economy in China. There has been a move away from the traditional dominance of manufacturing and production, towards services and intangible products.

The computing and communication equipment industry is the most-represented in the list, with 21 entrants.

Open for Business

The report indicates that, while successful businesses are based all over China, there are several metropolitan hotspots for growth.

Shenzhen is a rising headquarter for fast-growing businesses, home to 11 from this year’s list (up from seven in 2014). Beijing is home to 13 of the global giants, down from 17 in 2014.

There has been a movement towards headquartering in the south of China, in cities such as Fuzhou, Foshan and Shantou City. The report also shows an increase in the number of headquarters based in second-tier Chinese cities including Wuhan, Hangzhou, Suzhou and Nanjing.

The China’s next 100 global giants report considered companies listed on domestic Chinese and international stock exchanges, ranked against five measures:

  1. size (as measured by turnover);
  2. growth (in revenue);
  3. domestic presence;
  4. international presence; and
  5. business model and strategy.

The full list of China’s next 100 global giants is available at ACCA’s website.

The Power of the Hackathon: Putting Theory into Practice

The concept of a hackathon is nothing new. But more and more organisations are realising the benefits found in these events.

mcg hackathon

Many people associate the concept of a hackathon with the emergence of the digital age. However, it may come as a surprise to you, but the term ‘hackathon‘ was first coined in 1999. They started out as highly collaborative events, aimed at pooling computing resources for testing ahead of Beta launches.

However, in recent years, the hackathon has been hijacked by organisations who have recognised the benefits of these events. Now, everything from technological innovation to Blockchain have been the subject of a hackathon.

And there are more coming that you might be able to get involved with too!

This Hackathon is Spotless

This week, integrated facilities service provider, Spotless Group, are hosting a hackathon in conjunction with global start-up accelerator network Startupbootcamp. The two-day event, held at the iconic MCG in Melbourne, Australia, will focus on the Internet of Things (IoT) and DataTech.

Spotless recently highlighted innovation as a key priority for its business. The organisation is hoping that the event will help provide solutions to real problems, enhancing its overall customer service.

Julian Fogarty, Spotless’ General Manager of Brand, Innovation, and Technology, said, “By investing in external strategic programs, partnerships and events, Spotless is demonstrating to customers and shareholders its commitment to pioneering industry-leading services.”

The partnership with Startupbootcamp will ultimately help with a key issue found with hackathons – turning innovation into reality. The organisation connects corporates with start-ups and entrepreneurs, and helps put the ideas generated at a hackathon into practice.

The winners at the event will receive up to $10,000 and six months in Startupbootcamp’s start-up workplace. These teams will also receive advice from mentors and fellow hackers as they work on their ideas.

Digital Cities

It’s not just organisations that are organising hackathons to drive innovative ideas. The city of Sacramento, California, recently hosted a Startup Weekend to generate new business ideas for the city.

Teams were created on the first day, then ideas were generated over the course of the weekend, with business pitches on the Sunday evening. From there, the three winning ideas went to pitch to investors at a venture capitalist event in the city, with the hope of securing funding to go forward.

Another place looking to hackathons to generate innovation is Delta State, Nigeria. The event is aiming to generate new solutions in line with the UN’s ‘Sustainable Development Goals’, with a particular focus on critical needs and solutions for African countries.

The hackathon is being supported by Google, who is not only hosting, but providing some of their own developers to help kick-start the process. It’s expected that around 3,000 people will attend the event in December, either as participants or in the audience.

Hackathons and the Blockchain

One term that has been coined recently is ‘The Hackonomy’. The concept is derived from the Blockchain, and has much in common with bitcoin. To drive a more official side of hackathons, and to provide reward for innovation, a crypto-currency, HackerGold, has been developed.

The currency will allow “frictionless” access to a marketplace of developer talent pools and code libraries for start-up companies. By opening up this market, it should also enable previously unconnected ‘hackers’ to connect and work together.

Blockchain Lab, a blockchain technology pioneer, is set to be the first organisation to accept HackerGold. It will use the currency to pay for services, such as auditing on smart contracts, and code development.

There’s plenty more to come from this space in the shape of a 5 week hackathon, ether.camp, currently being held in London. It’s the first hackathon to be held entirely using Blockchain, and looks set to create a new generation of start-ups using this digital technology. We’ll be interested to see the outcomes when the event finishes on December 22nd.

Have you used a hackathon in your organisation? Or have you been involved with one? Was it a success? Let us know below.

While we try to get our heads around a whole new set of terminology, we’ve sourced your top headlines for this week…

Apple’s Rumoured Expansion into Digital Glasses

  • Apple is rumoured to be considering an expansion into the production of smart glasses.
  • Apple Inc. is reported to have spoken with potential suppliers about the wearable technology, and ordered small quantities of near-eye displays from one supplier for testing.
  • CEO Tim Cook is a known enthusiastic for augmented reality (AR), particularly after the success of Pokémon Go earlier this year.
  • The Apple glasses would be the company’s first product targeted at the AR market.

Read more on Bloomberg

Solar-power Shingles Cheaper Than Roof Tiles

  • Tesla and SpaceX Founder Elon Musk has unveiled a new product – a roof consisting entirely of solar-power generating shingles.
  • The tiles are comparable to high-performing solar panels in terms of power generation.
  • The roof costs less to manufacture and install than a traditional roof, on top of the predicted electricity savings.
  • The anticipated cost savings are due to lower shipping costs, as the tempered-glass tiles are only a fifth of the weight of traditional roofing materials and are less susceptible to breakage in transit. 

Read more on Bloomberg

Procurement Fraud Worsens in Australian Public Sector

  • A recent investigation has found that public sector fraud in the Australian state of New South Wales (NSW) cost the government up to $10 million between July 2012 and June 2015.
  • Procurement and contract management fraud caused the heaviest losses, with each case costing an average of $225,000 and, in one case, $1.7 million.
  • Scams involved invoices for work never done, inflating invoices, or invoicing for non-existent work done by non-existent companies.
  • Incidents also included falsified timesheets and records created for goods and services that had never been delivered.

Read more on Government News

VW to Cut 30,000 Jobs from VW Brand

  • Car-maker Volkswagen has announced it will cut approximately 30,000 jobs at its VW brand over the next five years.
  • 23,000 of the jobs set to be cut will be in Germany, the company’s biggest unit.
  • VW said the decision was aimed at improving profitability in addition to funding a shift towards producing electric and self-driving vehicles.
  • However, it added that it will create around 9,000 new jobs by increasing investments in electric car technology.

Read more at International Business Times