Category Archives: In The Press

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

Roll Out the Red Carpet – David Cameron to Deliver ISM2017 Keynote

The Institute for Supply Management (ISM) announces its most impressive keynote to date as registrations for ISM2017 open.

david-cameron

Former UK Prime Minister David Cameron will deliver the opening keynote at ISM2017, it has been announced today.

Cameron will speak about the geopolitical impact of policy and current events on global business. Over 2,500 assembled procurement and supply chain professionals will witness a riveting and eye-opening first-hand account of Cameron’s own experience during his tenure as UK Prime Minister.

With Brexit arguably being the defining moment of his career, Cameron will share his unique understanding of what the result means for US businesses and supply chains the world over, including its effect on globalisation.

Sharing Leadership Lessons

Cameron’s appearance continues a strong tradition of impressive keynote speakers at ISM’s annual conference. He follows in the footsteps of former President and CEO of Ford Alan Mulally, author and introversion expert Susan Cain, former Secretary of Commerce and professor of public policy, Susan Schwab, and former US Secretary of Defence, Robert Gates, as keynote speakers.

Learning and Networking in the Heart of Disney World

ISM2017 will be held at the Disney Coronado Springs Resort in Orlando, Florida, in the heart of Disney World. This surely makes the one annual conference where attendees will be sure to bring their families along! The conference will feature:

3 Learning Tracks – designed to help attendees deep-dive into three large themes over the conference:

  • Economic (Boom or Bust)
  • Business (Top Line and Bottom Line)
  • Professional (Inside and Outside)

As per previous years, all sessions are tagged with ISM Mastery Model experience levels, ranging from Fundamental through to Mastery.  

11 Signature sessions, including:

  • Unleash the magic of transformational supplier Relationships
  • Accelerating your career path with “insides” from procurement leaders
  • How to lead a successful transformation
  • Be a hero in boom times, not just in bust times
  • Shift the focus to change the results: Procurement’s opportunities to grow the top line

73 other conference sessions on overcoming shared challenges, featuring procurement and supply chain experts from around the world. 

Pre-conference training seminars and certifications, including the CPSM Exam 1 now offered onsite at ISM2017.

Presentation of three major awards

  • The R. Gene Richter Scholarship Program, providing scholarships to six students gaining an education in supply management or procurement.
  • The J. Shipman Gold Medal Award, presented to individuals whose unselfish, sincere and persistent efforts have aided the advancement of the supply management field.
  • ISM and ThomasNet’s 30 Under 30 Rising Supply Chain Stars program, recognising young procurement and supply management professionals for their passion, creativity and contributions to supply chain.

Finally, and perhaps most importantly, ISM2017 offers unparalleled face-to-face networking opportunities with thousands of peers from the profession.

Whether you attend ISM2017 to hear from thought-leaders, hone your skills, witness David Cameron’s keynote, network with peers or simply to have your kids meet Mickey Mouse at Disney World, be sure to share your experiences with the online community here on Procurious.

Registrations are now open for ISM2017. Find out more by visiting http://ism2017.org/

Could President Trump Make Procurement Great Again?

Not that we’re saying that procurement isn’t already pretty great. But could a new man at the top mean major changes for the profession?

trump great

If you missed the result of the US Election last week, then you must have been on Mars. Or living under a rock/hiding behind your sofa. In an unexpected turn of events, Donald Trump was elected as the 45th President of the United States of America.

And irrespective of your thoughts on both the campaigns, and the ultimate result, it’s clear that there are changes coming. We have no idea what Trump’s first 100 days in office will look like, so much of what we’re seeing is still very much educated guesswork.

But should many of the agendas and policies from the campaign come to fruition, then procurement and supply chains, both domestically in the US, and globally, will be affected.

Automotive Indecision

A great deal of campaign rhetoric from the Trump camp came in the shape of American industry, and American jobs. The President-elect frequently stated he would look to remove the US from the North Atlantic Free Trade Agreement (NAFTA) should he win the election.

If this were to happen, it could potentially boost the US’ ailing car industry. In the past year, 8 new manufacturing plants have been created in Mexico, having been moved from the US for lower wages. Included in this number is Ford, who moved all small car production from Michigan to Mexico in September.

If Trump were to end US involvement in NAFTA, these car manufacturers would be just a few of the organisations with a big decision on their hands. Should they manufacture abroad and risk rising import costs? Or return operations to the US heartlands, and pay considerably higher wages?

However, though it’s easy for America to withdraw from NAFTA, it’s unclear what tariffs would be placed on imported goods. Beyond this, it’s likely to result in higher prices for American consumers (and buyers too), without any guarantee that jobs would return to the US either.

From a global supply chain point of view, it wouldn’t create much change. Mexico will remain an attractive proposition for non-US companies, such as Audi, BMW, and Toyota, none of whom are subject to NAFTA. So concerns the Mexican economy will collapse are unlikely to be realised.

Great Big Business Benefits

However, some big businesses and industries would stand to gain significantly from a Trump presidency. In the days following the election, shares in Oil and Gas companies shot up, following Trump’s pledge to make the US energy independent.

This would mean great exploration of the US mainland, and potentially relaxation of environmental policies put in place by President Obama. This would in turn impact procurement, who would have to bear in mind any changes in longer-term contracts.

Another group to benefit could be the Defence sector. There is likely to be great investment in defence in America, which may in turn move other countries to do likewise. Increased spending could free up previously-stalled projects, and kick off new projects benefitting both procurement and suppliers.

Finally, it’s fully anticipated that infrastructure procurement will be increased. With more money being promised to federal budgets, but greater efficiencies required, procurement will play a pivotal role in ensuring that funds are used wisely.

Investment Nerves

In the hours following the announcement of Trump’s victory, global markets dropped significantly. However, the drop, unlike Brexit, was a temporary one, with nearly every major market reporting an increase by close of trading.

Long-term, however, no-one is exactly sure what will happen. As one media source put it, “Investors are in wait and see mode”. This is likely to continue until the middle of 2017 at least, when formal policies will become much clearer.

strong anti-globalisation message resonated through the Trump campaign, and there are concerns that major investments will be hedged until such times that investors are clearer on what the outcomes might be.

Countries like India have traditionally relied on US investment. Any major policy changes could in turn impact significantly on the linked global supply chain. Whichever way it happens, organisations at least have a while to prepare, with President Trump due to take office on the 20th of January 2017.

What do you make of the procurement implications of the election? How major do you think the changes will be? Let us know in the comments below (procurement/business only, no political views please!).

It’s not been easy with news cycles dominated by other events, but we’ve found some great headlines this week.

GM to Cut Production Shifts in US

  • General Motors are to cut production shifts and lay off 2,000 workers at car assembly plants in Ohio and Michigan.
  • The move comes amid falling demand for passenger cars, and shifting consumer trends.
  • GM is the latest in a series of auto makers taking steps to deal with softer retail sales.
  • Earlier this year, GM announced plans to invest up to $691 million to build new plants and expand current ones in Mexico.

Read more at the Wall Street Journal

Burberry Cuts Product Lines

  • UK luxury retailer, Burberry, is to cut the range of products it offers by between 15 and 20 per cent.
  • The company reported a 40 per cent drop in first-half profits, blaming rising costs for the fall.
  • Pretax profit for the first six months of 2016 was £72 million, compared with £119.5 million in 2015.
  • The company has recently written down a number of assets, as well as incurring major costs for restructuring plans.

Read more at Market Watch

Rio Tinto Suspends Executive Over Alleged Payments

  • Rio Tinto has suspended a senior member of staff following an inquiry into a $10.5m payment made to a consultant on a mining project in West Africa.
  • The company launched an investigation in August 2016 after email correspondence from 2011 was found.
  • The emails showed “contractual payments” made to a consultant providing “advisory services” on the Simandou scheme in Guinea.
  • Rio Tinto has also announced that its selling its stake in the Simandou scheme to another project stakeholder.

Read more at Supply Management

Review Called After Contract Dispute Payout

  • Calls for an urgent review have been made after new details emerged about a £1.25m compensation payment following a contract dispute.
  • Legal proceedings were brought by Triumph Furniture after it challenged a contract awarded to a rival.
  • It has now emerged the Welsh Government was alleged by the bidder to have breached EU rules.
  • The Welsh Government said it was taking the issue “extremely seriously”.

Read more on The BBC

Why The Future of Logistics is Dynamic – And Huge!

The market value of the logistics industry is on the rise. But in order to maximise this value, organisations need more dynamic strategies.

dynamic warehousing

Logistics has not been immune to the global changes and shake-ups during 2016. However, in spite of this volatility, the importance, and size, of the Logistics industry has continued to grow. In the era of on-demand everything, organisations need to ensure logistics strategies are able to keep up with customer requirements.

As with any other market or industry, the changes being seen bring risk and reward in equal measure. New technology, new entrants into the market, and demand can boost the agile, and bring down the inflexible. As we have seen in the shipping industry, there’s no guarantees to be had from size and longevity if you can’t meet demand.

And with the global Logistics and Transportation Industry expected to reach a market value of $15.5 trillion in the next decade, the rewards for staying on track are obvious.

Growing Global Value

The estimated increasing value was highlighted in a new study from Transparency Market Research, released last week. The current market value of the industry is estimated at $8.1 trillion, with an estimated 54.6 billion tonnes of goods handled in 2015.

From their research TMR expect this value to nearly double in the next 8 years, to $15.5 trillion, with global logistics companies handling over 90 billion tonnes of goods.

What is key to note is that the industry is not dominated by one or more major player. This makes for an attractive proposition for new players to get a slice of the pie. Currently, the big four companies – Deutsche Post DHL, Ceva Logistics, UPS, and FedEx – control less than 15 per cent of the market.

New entrants tend to enter the market with newer technologies, use of data analytics, or, for companies like Deliveroo, solve the problem of, and meet customer demand for, the so-called “last mile” logistics.

Some retailers are even choosing to move their logistics back in house thanks to new strategies available to them (more on that shortly!). There is also increasing collaboration, with larger organisations working more closely with smaller, newer companies, whose service complements their own.

Apart from being a great way of sharing best practice, it also serves as a lesson to other industries, procurement included.

Disruption on the Way

One thought that seems to be pertinent for the logistics industry is, “If you’re not disrupting, then you are being disrupted”. Companies need to be adapting to changing markets, or they face obsolescence.

PwC recently published “Shifting Patterns: The Future of the Logistics Industry“, outlining just this issue. They see four main areas for disruption in logistics: customer expectations; technology; new entrants; redefining collaboration.

The whitepaper covers what a possible future in the Logistics industry will look like. They share interesting trends across each possible future. However, one key takeaway is the Logistics could be in line for an Uber-type disruption in the near future.

Could Dynamic Strategies Be the Key?

It’s getting to that time of year again. In a little over 3 weeks it’s Thanksgiving, with Black Friday and Cyber Monday following hot on its heels. And although you might not want to think about it, Christmas is peeping over the horizon.

All of this isn’t news for the supply chain and logistics organisations (or at least, we would hope not). However, with increasing, yet still uncertain, demand at this time of year, many are looking to different strategies for their warehousing.

Dynamic, on-demand warehousing is proving to be a viable alternative for many organisations, particularly those retailers looking to change their logistics strategies.

Dynamic solutions can be particularly helping for e-commerce, as it allows companies to quickly adapt to changing demand and costs. With the growth of e-commerce, consumer wants are changing. At the top of that list is fast delivery, something that traditional warehousing solutions can hinder.

At times of peak demand, like the holiday season, organisations can increase their capacity and their coverage across a region, without a major capital outlay.

The dynamic warehousing strategy also pays dividends for warehouse owners. They can offer capacity to a number of companies at once, and are less likely to end up with spare, or unused space, which costs them money.

2016 hasn’t been the best year for Logistics and Supply Chain, but with more flexible and dynamic strategies in place, the coming 12 months, and beyond, could see a significantly more rosy picture.

Have you used dynamic warehousing for your business? How does it work from a procurement point of view? Share your story below.

e-Commerce has reminded us about our Christmas shopping. While we do that, you can look at the latest headlines in the procurement world…

Impact of Hanjin Bankruptcy Not as Severe as Feared

  • ISM has released a ‘Report on Business Special Question’, asking its panel of U.S. supply management professionals if they have been impacted by the Hanjin bankruptcy.
  • Results reveal that while Hanjin’s situation has caused some impact in the U.S., disruption was not as wide-spread as expected.
  • 51.9 per cent reported “no impacts”, 29.7 per cent reported “small, but not material” impacts.
  • 13.4 per cent have said they have experienced a “material, but management impact”, while only 0.8 per cent reported a “large material impact”. 4.2 per cent said they were unsure if they have been impacted or not.

Read more at ISM

Paris Climate Agreement Comes into Force

  • The Paris Agreement came into force on Friday 4th November, formally replacing the Kyoto Protocol.
  • The agreement aims to hold the global average temperature increase to “well below” 2 degrees Celsius above pre-industrial levels.
  • According to Sydney barrister Noel Hutley it is “conceivable that directors who fail to consider climate change risks now could be found liable for breaching their duty of care and diligence in the future.”
  • As of the 3rd of November 2016, 97 of the 193 parties who signed in Paris have ratified the agreement.

Read more at the Australian Financial Review

Philippines Government Looking for Alternative Firearms Supplier

  • The Philippines Government is looking for alternative suppliers of firearms after the U.S. blocked the sale of 26,000 weapons.
  • The U.S. State Department halted the sale due to concerns about human rights violations carried out as part of Duterte’s “war on drugs”, which has seen more than 2,300 people killed by police and vigilantes.
  • Ironically, Philippine Government procurement laws disqualify local gun makers from selling weapons at this scale domestically.
  • However, both Russia and China have offered to sell arms to the Philippines in the US’ stead.

Read more at ABC

IBM Trials Blockchain for Dispute Resolution

  • IBM has announced that it will be using blockchain technology to help resolve supply chain disputes.
  • A number of companies in finance are looking at permissioned ledgers connecting companies that know and (within limits) trust each other.
  • The blockchain could allow companies to transact, resolve disputes and settle more efficiently than current practices.
  • During IBM’s testing of the concept, it reduced resolution time, and markedly improved customer satisfaction.

Read more at Forbes