Category Archives: In The Press

Have Commodity Prices Finally Bottomed Out?

Rising commodity prices have the experts talking about a bull market. But what do buyers need to keep an eye on in the coming 12 months?

commodity prices

You can find and download the ‘MetalMiner’s Annual Metals Outlook Report – 2017‘ here.

MetalMiner has called it – commodity prices in the U.S. have finally bottomed after five years of a bear market. So far, we’re witnessing an uptrend, but the publication’s founder and executive editor Lisa Reisman says industrial metal buyers should continue to take a cautious approach.

“Although markets remain bullish,” she says, “rising interest rates would likely lift the U.S. dollar and depress commodity prices. In addition, Chinese demand remains tepid and a slow-down in China would also lead to lower commodity prices.”

Big 3 Commodity Price Influencers

MetalMiner’s Annual Metals Outlook Report is essential reading for metal buyers. The report speaks authoritatively about the state of the commodities market, the industrial metals market and key price drivers before diving into a detailed analysis of aluminium, copper, nickel, lead, zinc, tin, HRC, CRC HDG and plate price movements.

The big three price-influencing factors that commodity buyers must continue to keep an eye on are, as you would expect:

  1. Metals production;
  2. Demand from China; and
  3. The U.S. Dollar.

According to MetalMiner’s analysis, after commodity prices fell sharply in 2014 and 2015, producers responded by shutting down lines and curtailing capacity. These actions have helped markets maintain better supply/demand balance this year.

December 2015 saw China unleash a renewed government stimulus in the form of credit expansion and infrastructure building, which has – for now – improved demand, particularly for industrial metals.

Finally, a weakening U.S. dollar this year has had a bullish effect on commodities. Between them, these three factors have lifted metal prices across the board, with some rising more aggressively than others.

Trends in Metals

According to Reisman, the price movement in zinc and nickel took many analysts by surprise in 2016.

“We have often said that metals move in trends. In other words, if the entire industrial metal sector languished in bear mode, it might prove difficult for, say, one metal to make substantial price gains. In 2016, tin along with steel led the price rally back in March and April, respectively.

“And though we knew steel prices had support from the import blocks due to anti-dumping trade cases, we were surprised at how quickly some of the other base metals supported the bullish trend – particularly zinc, followed by nickel.”

Bull or Bear – Have a Plan

To cut to the heart of the matter, Procurious asked Reisman which metals she would recommend buying organisations keep a close watch on as we move into 2017.

“From a rising price perspective, the more bullish metals – tin, nickel, lead and zinc – deserve a close watch. In addition, many buying organisations purchase steel on longer-term forward buys.

“We would wait patiently before committing large volumes, to see when steel prices find a bottom (steel prices have been sliding since early August) and then make purchasing decisions once we see where prices will go.”

There are plenty other sage pieces of advice to be found in the report. One such nugget is that while forecasting the future of commodity prices is an impossible task for purchasing organisations, it’s not as important as knowing what to do when prices move.

Have a plan in place to hedge or buy forward in a bull market, while ensuring you stay as informed as possible.

MetalMiner is North America’s largest metals information site, providing global perspectives on the issues, trends and trade policies that impact organisations that source and trade metals. MetalMiner provides clients with custom advisory related to industrial metal prices, forecasts and benchmarks.

Download the ‘Annual Metals Outlook Report for 2017′ here.

Scan, Print, Wear – Does The Future of Fashion Lie in 3D?

3D Printing is disrupting yet another industry – fashion. But this time, the big companies are ahead of the game.

3d printing fashion industry

From parts for fighter jets, to prosthetic arms and legs, and concept cars, 3D Printing is being used to manufacture a huge variety of items. And with its use on the rise, it’s putting pressure on organisations to reassess their manufacturing and supply chains.

The latest industry to come into the sights of the 3D Printing revolution is one that might surprise you – fashion. It’s not strictly a new phenomenon (it’s been over a year since these items first appeared), but it’s worth noting for a couple of important reasons.

Firstly, unlike in other industries, the well-known clothing manufacturers are at the forefront of the efforts. Secondly, the consideration of what this might mean for the fashion industry in terms of manufacturing and intellectual property.

Introducing Liquid Factory

Last week, Reebok announced the introduction of ‘Liquid Factory‘, a brand new manufacturing process using the concept of 3D drawing. Using a liquid created especially for them, Reebok can literally draw a shoe, without the need to use a mould at any point.

Not only does this drastically reduce the speed of manufacture, but it also allows Reebok to innovate more freely in the design of their footwear. According to Bill McInnes, Head of Future at Reebok, it’s the first jump forward in footwear manufacturing in over 30 years.

“One of the most exciting things about Liquid Factory is the speed. We can create and customise the design of shoes in real time, because we’re not using moulds – we’re simply programming a machine,” said McInnis. “Liquid Factory is not just a new way of making things, it’s a new speed of making things.”

Innovation doesn’t come cheap, for the consumer at least. A pair of the new ‘Liquid Speed’ trainers will set you back $189.50, though McInnes points out they more advanced than other trainers.

Setting the Fashion Trends

Reebok aren’t alone in using new methods to creating footwear.

Adidas rewarded its sponsored athletes who won medals at Rio 2016 with a new 3D printed running shoe. Under Armour created a new trainer with a 3D printed sole, and sold out the entire line (at $300 a pair) after Michael Phelps wore them at the Olympics Opening Ceremony.

Under Armour have stated that the 3D printing process allows them to create a highly customised shoe based on individuals’ vital statistics. And printing, rather than moulding, allows for “mass customisation” without huge increases in price.

And it’s not just trainers that are going through the 3D printer. Bikinis, dresses, and even the costumes for HBO’s latest masterpiece, Westworld, have been 3D printed. 3D printing is also being used to manufacture so-called “smart fabrics“, essentially wearable technology in clothing.

IP, Counterfeits & Consumers

However, while 3D printing holds many positives for the fashion industry, there are concerns too. Consumers are unlikely to see changes to their shopping habits in the very near future. But it’s how shopping will evolve that plays a major role in the fashion industry’s evolution.

Consumers may in the future be able to pay to download files of clothes to print themselves at home. 3D body scans could make tailored clothing much cheaper and more accessible.

But the over-riding concern for designers and retailers is what would happen to the IP. And how could they cope with the likely influx of counterfeit goods. The industry already deals with countless fakes, but access to CAD files and cheaper 3D printers could see the issue increase exponentially.

Fortunately, the fashion industry has time on its side in this respect. Affordable 3D printers capable of this are still very rare. And if organisations choose to invest time and resources into protecting their IP now, it could save them considerable trouble in the future.

Will 3D Printing change the way we buy clothes? Could it also see an end to sweatshop labour in fast fashion? Share your views below.

While we’ve been searching for a cheap 3D printer, we’ve also been on the look-out for the top headlines this week.

Uber Drivers in Landmark Case Win

  • Uber drivers in the UK have won an employment tribunal case, which ruled they were workers, rather than self-employed.
  • The decision means that drivers will be entitled to holiday pay, rest breaks and the national minimum wage.
  • Uber, who argued that its drivers were self-employed contractors, has already said it will appeal.
  • Should the verdict stand, it could impact tens of thousands of workers in a similar situation.

Read more on The BBC

Tesla Posts First Profit in Three Years

  • Electric car maker Tesla has posted a surprise profit this quarter after selling more vehicles than expected.
  • The company’s revenue rose 145 per cent to $2.3 billion in the quarter, while vehicle sales doubled to 24,821.
  • Tesla’s stock rose 5 per cent in response to the news.
  • The news may mean Tesla is able to meet its bold target of selling between 80,000 and 90,000 electric vehicles this year.

Read more at The Wall Street Journal

Currency Related Price Increases Continue

  • Microsoft has become the latest company to increase its prices as it adjusted its charges to account for currency fluctuations.
  • The rise comes less than two weeks after Unilever’s public spat with Tesco over requested price increases.
  • Microsoft stated that the increases were as a result of assessing their product prices, and creating alignment across the European region.
  • Apple have also announced price rises on their hardware in the UK, some by more than £500.

Read more at Supply Management

Modern Slavery Allegations in Fashion Supply Chains

  • A BBC investigation has revealed modern slavery and child labour in the supply chains of major global companies.
  • The supply chains of Marks & Spencer and ASOS were found to have poor working conditions in Turkish factories.
  • War of Want also alleged similar findings in the supply chain of Japanese retailer, Uniqlo.
  • The company’s Chinese suppliers have been found to enforce excessive overtime, and dangerous conditions, on their workers.

Read more on Supply Chain Dive

Samsung Eats Horsemeat on the Titanic with Captain Kirk

Highlighting potential procurement lessons from the latest supply chain crisis for Samsung – the Galaxy Note 7.

samsung galaxy

This article was written by Daniel Ball, Director at Wax Digital.

The Samsung Galaxy Note 7 spent just two and a half months on the market before it was recalled amidst a crisis badly affecting its share price, not to mention its brand image.

The device was quickly taken off the market after some models of the phone exploded and went on fire. It was found that overheating lithium ion batteries were to blame.

Some analysts have been quick to consider how a respectable brand like Samsung, which surely has a sound manufacturing process and supply chain, has come to retailing a product that turns out to be dangerous.

Many have put the blip down to Samsung’s competition with rival Apple. The battery of the Galaxy Note 7 is bigger and has a higher energy density than Apple’s iPhone 7 Plus. This suggests that Samsung has tightly crammed in more components.

Has Samsung’s desire to trump Apple seen it rush a product to the market without properly addressing the true capability of its battery technology?

It’s also been argued that the mobile sector’s demands are pushing battery technology to and in some cases beyond, its limits. It’s not the first time this technology has literally flared up (remember the hoverboards last Christmas?).

Race to Beat the Competition

The situation raises a key question that applies to any competitive marketplace.

At what point does the race to release new products and beat the competition, or simply deliver a competitively priced product to tight margins, become more important than ensuring your supply chain is not taking risks? Where is the line drawn in adding components into the product that could ultimately harm the very people you are trying to win over (your customers)?

It’s what I call ‘the Titanic effect’. In a bid to make the infamous boat lighter and faster in the race to cross the Atlantic, all sorts of risks were taken. And it was the customer who paid the ultimate price.

While not all risks involved are supply chain related you have to ask the question “what was procurement’s role in all of this?”

Are customer and business demands properly mapped onto supply chain capabilities? Are supplier checks rigorous enough to ensure they can do the job we need them to do safely and securely?

Or is procurement like poor Mr Scott in Star Trek, constantly at the mercy of his boss, Captain Kirk, wanting him to flog the warp engines again even though he keeps telling him “they cannae take much more”. 

At the bottom line, visibility of who is in your supply chain and how they are operating has reared its head once again. It raises the point that procurement needs to play an increased role in the decisions of the business to ensure the rules of demand and supply are effectively balanced.

Rising Oil Price Shows Green Shoots of Commodity Recovery

As oil prices hit their highest level for 15 months, there is hope that this signals a recovery for other commodity prices too.

green shoots recovery

On Wednesday last week, global oil prices reached their highest levels for 15 months. The US Energy Information Administration reported that domestic crude oil supplies had dropped by 5.2 million barrels in the week ending October the 14th.

The oil price was further spurred on by an announcement from Saudi Arabia regarding future oil production. The announcement confirmed that non-OPEC producers have shown willingness to join efforts to limit global crude output.

The reduction of the ‘glut’ in oil supplies helped to buoy global markets, and sparked discussion on the recovery of other commodities. So is a reduction in supply going to lead to a global commodity recovery? Or is it too premature to say?

Green Shoots of Recovery

Talk of the recovery was lead by the Chief Executive of the world’s largest mining company, BHP Billiton. In the company’s first quarter production report, Andrew Mackenzie, stated that, “Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months.”

This viewed echoed earlier positive quotes from another resource giant, Rio Tinto, regarding the oil and gas markets. Increasing demand from China is anticipated to drive commodity prices up from the last quarter this year, and through 2017.

Also benefitting from production decreases from China itself are commodities such as iron ore, whose price has risen 35 per cent this year. Metallurgical coal prices have tripled in the same period for the same reason. Prices of zinc too are at their highest level since the middle of the year, as production is decreased.

The recovery comes after five consecutive years of falling prices, mainly due to falling demand from China. At one point during last week the commodity market stood on the edge of being a “bull” market for the first time since 2011.

The strength of positivity behind the commodity market also lead to better performance for US markets. This is welcome news for many companies after a particularly volatile year.

Rises Expected to Continue

The recovery doesn’t appear to be a short-term thing either. The price of a barrel of oil is expected to rise to around $55 during 2016. Beyond that, it’s estimated that the price will continue to rise, reaching $70 during 2017.

Rising prices are good news for other industries which have struggled in 2016. Maritime shipping has seen an overall loss of around $5 billion this year, with Hanjin being a high-profile example of the industry’s woes.

However, if rising prices are combined with increasing volumes, the shipping and transportation industries could see a recovery too. As more shippers move forward with scrapping large numbers of ships, it’s hoped that an increase in demand could help drive more profits next year.

However, there is also the feeling that the only way that the maritime industry will fully get back on its feet is through M&A. There have been large moves in this area this year, but not enough to combat the prolonged over-capacity seen in the industry.

Consumer Goods Could Suffer

However, the rising prices aren’t good news for everyone. As we saw in last week’s news, as commodities and raw material prices rise, so does the cost of manufacturing goods. Unilever’s proposed price rises that were rejected by retailers came partly as a result of this.

Palm oil, crude oil, and aluminium are all contributing to rising costs for consumer goods. Allied with fluctuating consumer demand, even at a time of year where sales would be expected to be high, it means difficult times ahead for manufacturers.

And although the likes of Unilever, P&G, and Reckitt Benckiser have seen increased revenues recently, this has been attributed more to increasing prices, rather than an improvement in demand.

As ever, what is good news for one group, inevitably turns out to be worse news for others.

Do you think oil prices are a sign of economic recovery? Or could prices going too high actually lead to decreasing spend as goods become more expensive? Let us know below.

While we tracked the rising price of our seasonal shopping, we were on the lookout for the week’s big headlines…

Another South Korean Shipper Facing Bankruptcy

  • STX Offshore & Shipbuilding Co., South Korea’s fourth largest shipbuilder, has applied for bankruptcy protection in the USA.
  • The move is designed to stop creditors seizing US-based assets while the company searches for a buyer.
  • One creditor is New York-listed Teekay Tankers Ltd., who won a $32 million arbitration award last year for non-delivery of four oil tankers.
  • Although STX has received billions of dollars to keep it afloat, the issues in the industry have hindered any recovery.

Read more at the Wall Street Journal

How does the NHS Spend its Money?

  • Ever wondered how the NHS spends its money? Think there’s a lot of waste?
  • The BBC has launched a series of articles aimed at answering the public’s questions about the NHS.
  • Though spending is being cut across the service, it remains the most cost-effective health system in the world.
  • However, this counter-balanced by outcomes being at lower levels to other countries who actively spend more on healthcare.

Read more and Get Involved on the BBC

Facebook launches “Workplace”

  • Facebook has launched a business collaboration tool, said to be ad-free and not connected to users’ regular Facebook accounts.
  • Businesses can sign up as an organisation for a small fee per user that drops as more users sign on.
  • The tool offers group chat, video calls, live video and a news feed, with relevance algorithms just like regular Facebook.
  • Though many collaboration platforms already exist, Facebook is hoping to build on the familiarity of their public platform for user experience.

Read more at Facebook

Strike Puts Jim Beam Distilleries Under Pressure

  • Over 200 workers at Jim Beam distilleries in Clermont and Boston are striking over staffing shortages and long hours
  • The shortages come as the distilleries struggle to keep up with growing bourbon demand.
  • Bourbon is a $3 billion industry in Kentucky, providing an estimated 15,400 jobs and providing 95 per cent of the world’s bourbon supply.
  • Negotiations are expected to resume this week between striking workers and Beam Suntory, owner of the Jim Beam brand.

Read more at the Chicago Tribune

European Business Abandoning Manual P2P Processing

New research has revealed a move by European business towards a completely digital P2P environment.

automatic p2p european business

Canon, world leader in imaging solutions, recently announced that just 3 per cent of Western European businesses believe that manual P2P processing will continue into the future.

The finding originates from The Future of Purchase to Pay (P2P) 2016, a Canon trends report compiled by ICM Unlimited. The report asked finance and procurement leaders how they believe the world of P2P would to evolve over the next few years.

The study, conducted by ICM Unlimited, and developed in conjunction with Purchasing Insight, is the result of 706 online interviews with business influencers and decision makers spanning 12 European markets.

The respondents were sourced from board level directors within corporate finance and procurement functions, and from businesses of varying sizes.

Spend Under Management?

Most businesses report that they have yet to fully control spend using Purchase Orders (PO), while half say they have less than 50 per cent of their spend under control. Despite this, however, there is almost universal agreement that the P2P process will be automated in the future. Over half of the European companies have already begun that journey.

The report found that while there are concerns around cost and productivity, businesses seem motivated to explore how P2P technology can help. Half of finance decision makers (50 per cent) feel their department productivity is below average, while 42 per cent of procurement leaders feel their department is operating below the desired level of productivity.

However, the trend towards automation in finance sees no sign of slowing down. 23 per cent of European decision makers are saying that their businesses will achieve full digital transformation for P2P in the next two years.

It seems businesses view manual processing of P2P as wholly or partly to blame for the situation. This is shown by 10 per cent of businesses in Europe saying they have already achieved full digital transformation of P2P.

Increasing European Collaboration

Rachel Griffiths, Business Process Consultant, Canon UK, comments: “In this challenging market, European businesses clearly feel that they need to get a better grip on P2P. They want to be able to access and pay for goods and services in the most cost effective and efficient way possible.

“Efficiency and productivity are key elements to any successful business. And technology is seen as the best platform through which to improve in these areas. In order to boost these factors through technology, businesses will need the support of trusted partners.

“At Canon, our expertise at providing cutting-edge technology not only solves business challenges, but supports the delivery of superior results in any business function, including P2P,” Griffiths said.

This view was echoed by Pete Loughlin, Managing Director at P2P consultancy firm, Purchasing Insight.

“The selection of a partner for P2P is very important and European businesses want to collaborate directly with solution vendors for this challenge.

There is a remarkably strong sentiment towards working with a single vendor across the entire P2P spectrum, rather than cherry picking point solutions. This ability to work with a single partner is what will provide end-to-end P2P solutions and services, under several delivery models. This will be crucial to the successful transformation into a P2P excellence organisation.”

Love It or Hate It – The Importance of Supply Chain Stability

A disagreement relating to rising supply chain costs has highlighted the importance of supply chain stability.

marmite supply chain stability

Early on Thursday morning, the top news headlines weren’t about conflict or celebrity scandal, but the future of a famous British staple. Maligned and loved in equal measure, Marmite was the topic on everyone’s lips.

The sudden interest in the salty, yeast-based spread came about due to a very public spat between Tesco and Unilever over rising product costs.

According to reports, Unilever had requested that Tesco, and other UK retailers, raise the price of their products in store by 10 per cent. However, when Tesco refused to pass on this cost to customers, Unilever stopped supplying certain goods to the retailer.

Tesco responded to this by halting online sales of Unilever products. This sparked concerns of a prolonged shortage of goods on supermarket shelves.

However, by Thursday evening, the situation was resolved and the stand-off ended. It’s expected that Unilever goods will return to the Tesco website in the next few days.

It’s understood that Unilever gave some ground in negotiations, leading to an agreement between the companies. Asda has also publicly commented that it successfully negotiated with Unilever on the price increase.

Rising Supply Chain Costs

Unilever’s reason for the requested price increase was the continuing fall in the value of the pound. This has in turn led to higher import costs for goods into the UK.

While many of its products, including Marmite, are manufactured in the UK, Unilever imports products and raw materials from its base in the Netherlands.

Since the Brexit vote in June, the pound has fallen in value by over 17 per cent. As the pound dropped to its lowest level since June 23rd on Tuesday, it was reported that some airport Bureau du Change had been offering exchange rates of less than one Euro per pound.

Graeme Pitkethly, Unilever’s Chief Financial Officer, was quoted on Thursday morning as saying the price increases were part of “normal business“. But, while the price increases may be a normal part of business, experts have warned that this may just be the beginning.

As the UK’s exit from the EU comes closer, it’s expected that consumers will see rising prices for many products. As the UK imports more than 60 per cent of what it consumes, the FMCG industry will be one of the hardest hit.

Items such as bread, milk, bananas and wine are expected to increase as manufacturers and retailers stop being able to carry the increasing import costs. A rise of between 8 and 10 per cent is expected on clothing, while petrol will rise an estimated 4 or 5 pence per litre in the UK before the end of the month.

Importance of Stability

At a time when margins are being squeezed, the importance of supply chain stability is huge.

A survey published by the UK Food and Drink Federation (FDF) showed that 63 per cent of manufacturers are suffering from decreased profit margins. As well as this, 76 per cent a seeing higher ingredient costs too.

With 96 per cent of the UK’s food and drink businesses small or medium-sized, larger organisations need to be aware of the impacts of margins throughout their supply chains.

Some organisations will try to put increasing costs back on to manufacturers, without taking into account the long-term impacts. Any further supply chain disruption on top of what is happening already could potentially drive prices higher again.

While prices rises for consumers are probably inevitable, increasing supply chain efficiencies and demand forecasting can help to limit the damage.

Helen Dickinson, Chief Executive of the British Retailers Consortium, said: “Retailers are firmly on the side of consumers in negotiating with suppliers and improving efficiencies in the supply chain to control the inflationary pressure that is building through the devaluation of the pound.

“However, years of falling shop prices and higher costs have left limited scope for retailers to continue absorbing this pressure. Everyone in the supply chain will need to play their part in maintaining low prices for consumers.”

By building a greater understanding of the costs through the supply chain, retailers and manufacturers can try to overcome a lack of stability collaboratively.

Do you work in procurement in retail or FMCG? What are your experiences of the recent price rises? Let us know below.

Away from the worries of empty shelves, we’ve stocked up on the week’s big procurement and supply chain headlines.

GM in Court Over Price Bargains

  • A court in Massachusetts will heard a case last Friday, brought against GM by a now bankrupt supplier.
  • Clark-Cutler-McDermott, alleges GM knowingly led the company into a bad faith deal, and encouraged them to take on more debt.
  • GM have requested the case be dismissed, arguing CCM is trying to pass the blame for poor management.
  • The case will help to shed more light on the highly-criticised bargaining practices allegedly happening in GM’s supply chain.

Read more at Supply Chain Dive

Samsung Galaxy Note 7 US Recall Begins

  • Samsung have begun the process of recalling a further 1.9 million Galaxy Note 7 devices, bringing the total to nearly 3 million since the beginning of September.
  • A fault in the Note 7’s battery has led to it overheating, with users experiencing smoking, sparking, or on-fire devices.
  • The recall is expected to cost Samsung an estimated $2.3 billion.
  • The company has seen $21 billion wiped off its market value since Tuesday last week.

Read more at The Guardian

MPs Call for End to Antibiotic “Overuse”

  • A group of MPs has called for the curtailing of the “systematic overuse” of antibiotics in supermarket meat supply chains.
  • Conservative MP Zac Goldsmith tabled a motion calling on UK supermarkets to adopt policies prohibiting routine mass-medication of livestock because of the emergence of antibiotic resistant bugs.
  • The motion has so far received the support of 21 MPs from across the parties.
  • Goldsmith tabled the EDM after a report found resistant E. coli in supermarket pig and poultry meat.

Read more at Supply Management

Amazon Fined by FAA Again

  • The FAA has proposed a fine of $78,000 for Amazon for breaching regulations on shipping of hazardous materials.
  • It’s the online giant’s fourth fine in as many months, with more likely to come from the UK.
  • The latest fine relates to the shipment of an ethanol-based hair tonic, without the correct documentation for flammable goods.
  • The issues highlight the hurdles Amazon faces in scaling up its own logistics and transport operations.

Read more at the Wall Street Journal

Not Worth The Money – Will Entrepreneurs Avoid Business in Britain?

The Great British Pound is in trouble again this week and it’s making budding entrepreneurs think twice about their business plans.

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Talk of a Hard-Brexit Sparks Global Concern

The pound plummeted to a 31-year low last week sparking global concern. The crash followed Prime Minister Theresa May’s announcement on Sunday 2nd October, which revealed a firm timeline for triggering Article 50 and the beginning of Brexit. Extra fuel was added to the, already well-stoked, fire when the media reported that she would opt for a complete break from Europe- a “hard brexit”. Reports  already suggest that a “hard brexit” could result in a loss of 70,000 jobs and cost £10bn in tax receipts.

With the pound sitting at $1.27 against the US dollar, chancellor Philip Hammond scuttled to New York with the hope of reassuring America’s biggest banks about the consequences of Brexit. He will try to convince the Wall Street powerbrokers that London will maintain its position as the world’s leading financial centre once the break from the EU is complete.

The pound is also falling against the euro this week, hitting a five-year low and continuing to escalate concerns.

Weak Pound Triggers Rise in UK Services Sector Prices

The dropping value of the pound is already affecting the UK services sector as input prices rose to a three and a half year high in September 2016.

David Noble, group CEO, CIPS, said: “Firms raised their prices in response, to counteract increased costs for fuel, food and elevated wage bills and as the weaker pound had an effect.”

Companies demonstrated their concerns at the ongoing uncertainty over Brexit implications through their reluctance to forge ahead with confidence.

“It’s clear that the pace of expansion has cooled since the first half of the year, reflecting widespread concern about the potential future impact of Brexit”, David commented.

Is Brexit Scaring Off Entrepreneurs?

The aftermath of Britain’s Brexit referendum back in June 2016 saw a strong display of optimism from many entrepreneurs. Indeed, a survey conducted by the Financial Times confirmed that the majority of founders and investors had confidence in London retaining its status as Europe’s biggest center for start-ups. But, is there a change in the wind?

Diana Paredes, CEO & Co-founder at Suade Labs and passionate entrepreneur spoke with Business Insider last week about the effects Brexit will have on entrepreneurship.

She questions why anyone would opt to start a business in the UK given the current economic climate. Operating in London adds a premium in terms of housing and talent and people often see the many business opportunities on offer as a justifiable compromise for quality of life. However, with the future so uncertain, is it worth the risk and sacrifice?

Existing organisations might also be keen to relocate their bases to elsewhere in Europe where it is cheaper to operate, less isolated and they can continue to be regarded as a European company and not simply a British one. 

If you’re an entrepreneur, what are your thoughts? Is the dropping value of the pound enough to make you run a mile from UK business? Let us know in the comments below.

Find out what else has been happening in the world of procurement and supply this week…

Samsung in Trouble Again

  • It’s been a month since Samsung recalled its new flagship phone, the Galaxy Note 7, following several cases of it exploding and injuring customers.
  • The company have been issuing replacement devices to customers who bought Galaxy Note 7 phones.
  • However, a Samsung recently started smoking uncontrollably on a flight before takeoff, forcing the cabin crew to evacuate the plane. This could lead to a second recall and a disastrous outcome for Samsung.
  • Google announced its Pixel smartphone this week and could be well placed to steal a whole host of disappointed Samsung’s customers.

Read More at Business Insider

Uber’s Self-Driving Cars

  • Uber’s self-driving car pilot program may want to fasten its seat belts after the bumpy beginning it has reportedly gotten off to.
  • The cars have reportedly gotten into accidents and ignored traffic signs during testing in Pittsburgh, Pennsylvania.
  • Whilst it is still very early days for self-driving cars, it’s believed that they are, ultimately, inevitable given the overall, enticing end-game which should see the cars combatting road deaths.

Read more at Tech Radar

Supply Chain Leaders Pressured to Embrace Climate Change

  • Business for Social Responsibility (BSR) meets next month in New York with the current cri de Coeur being “bold climate action”.
  • Analysts have observed that multinationals must raise their ambitions by investing in climate finance, transition to renewable energy, and find more innovative was of ensuring resilient supply chains.
  • As well as encouraging change in organisational culture to embrace clean energy and other climate solutions, BSR insist that supply chain managers join Corporate Social Responsibility (CSR) managers in becoming .intrapreneurs.
  • Supply chain managers can – and must – play a major leadership role in addressing the alarming consequences of aberrant global weather conditions.

Read more at Supply Chain 24/7

Drones Tested for Emergency Cell Service

  • Verizon Communications is testing the deployment of large-scale drones to provide mobile connectivity in emergency situations when the land-based cellular network has been damaged.
  • The drone which is being flown by American Aerospace Technologies, is nothing like the small, quad copter devices flown by amateurs at home. With a 17-foot wingspan, Verizon’s drone more resembles the types of unmanned aircraft used in the military.
  • Data gathered in Thursday’s trial will be shared with the FAA in order to help craft future rules regarding drones, Verizon said.

Read more at Fortune

Global Trade Growth Slowdown a Wake-up Call for Nations

Global trade growth has slipped to its slowest rate since the 2009 financial crisis, sparking concerns for jobs and economic growth.

global trade

The World Trade Organisation has released figures showing that global growth has fallen to 1.7 per cent in 2016. This is well below the forecast 2.8 per cent growth in GDP outlined by the WTO at the beginning of the year.

It’s expected global GDP growth will remain around 2.2 per cent for 2016, which would represent the lowest figure since the financial crisis in 2009.

The slowdown in growth has been driven by a sharp decline in merchandise trade volumes. These fell in Quarter 1, and then didn’t rebound as expected to the middle of the year.

On top of this, the WTO has also revised its 2017 forecasts downwards, from 3.6 per cent, to between 1.8 and 3.1 per cent.

Decelerating Global Trade & Growth

Falling global trade and growth is also in part due to slow growth and performance in major world economies, such as China and Brazil.

North American growth, the strongest in the world in 2014-15, has also slowed. A reduction on imports into the USA has been partly to blame for this.

The volatility in the global economy, as well as a backdrop of increasing uncertainty, has been a major consideration for many countries in their trade.

Disagreements over global trade partnerships, such as the Trans-Pacific Partnership, have not helped the situation. Both US Presidential candidates oppose the agreement, and have stated they will end US involvement in it after November’s election.

The WTO have also warned that uncertainty around the UK’s ongoing relationship with the EU following June’s Brexit vote may lead to even slower growth in coming years.

Protectionism Hurting Growth

After an extensive period of global trade growth through globalisation, many countries are now looking to pull both manufacturing and supply chains back within their borders.

A separate report by the International Monetary Fund (IMF) highlighted the role of protectionism in the slowdown. While tariffs on trade are regulated by the WTO, other measures, such as reducing quotas and increasing subsidies for in-country manufacturing, can be used to reduce exports.

This then has a knock-on effect on global trade volumes, and can inhibit development of global supply chains.

Roberto Azevedo, the WTO’s director-general, said, “The dramatic slowing of trade growth is serious and should serve as a wake-up call. It is particularly concerning in the context of growing anti-globalisation sentiment. We need to make sure that this does not translate into misguided policies that could make the situation much worse.”

Job and Economic Growth Risk

The global slowdown in trade has also raised concerns about job creation, and general health of the world economy. Both economic growth and job creation have long been linked to open trade.

Efforts to re-shore manufacturing and supply chains have an impact on global employment. Though it must be said that many organisation are seeing economic benefits from bringing manufacturing back in-house. These benefits are passed on to the both the local and national economies in turn.

However, for many developing countries and smaller companies, the slowdown in trade will hit harder. Roberto Azevedo called on countries to “heed the lessons of history“, and re-commit to open trading to boost economic growth.

Though some positive signs have been seen in the past month or so, the uncertainty remains. The US Presidential Election could fundamentally change the way one of the world’s largest economies interacts with the rest of the world.

And with other major economies not showing signs of quick recovery, it remains to be seen when or if the global slowdown will be arrested.

What are you seeing in relation to global trade in procurement? Is your supply chain suffering from the slowdown? Let us know below.

We’ve taken time out from getting you fit with Career Boot Camp to check out the top headlines this week. 

Activists Block Palm Oil Operations

  • Greenpeace activists are blockading operations of IOI, one of the world’s biggest producers and traders of palm oil.
  • A group of ten people, including two Indonesian farmers affected by forest fires related to palm oil operations, are blocking access to IOI’s refinery in Rotterdam.
  • The Greenpeace ship Esperanza is also preventing palm oil from being unloaded from incoming tankers.
  • Greenpeace is demanding that IOI commits to a sustainable palm oil supply chain before they lift the blockade.

Read more at Maritime Executive

US Craft Beer Brewers Outpace Supply Chain

  • US hops farmers are struggling to fulfil orders for a rapidly growing number of craft breweries,
  • The industry has doubled in size over the past five years, as consumers look to smaller companies for their beer.
  • Farmland devoted to varieties of hops has increased by 65 per cent in the same period. However, the number of small customers makes it difficult for farmers to keep up with demand.
  • As a result, production has slowed for the first time after several years of rapid growth.  

Read more at the Wall Street Journal

Inquiry Launched Into UK Defence Procurement

  • An inquiry into the UK’s military acquisition and procurement policy has been launched by the House of Commons Defence Committee.
  • The review was prompted by a report published last year by think-tank Civitas that argued for an overhaul of the MOD’s acquisition process.
  • The committee’s inquiry will look into whether emerging acquisition systems are offering value for money.
  • It will also look at the implication of Brexit will have on the UK’s defence industry.

Read more at Supply Management

Silicon Valley Alive to Truck Potential

  • Silicon Valley tech organisations are looking more closely at why trucks have jumped ahead of cars in driverless technology.
  • Software companies are also looking at the technologies that could be used in passenger cars in future.
  • Uber demonstrated its interest in lorries when it announced the acquisition of Otto, a start-up focused on self-driving technology for trucks.
  • It has been argued that such technology is used on commercial vehicles first, as there is potential for faster ROI.

Read more on The Financial Times

Is the Age of the Tech Unicorn at an End?

Once, every tech start-up wanted to be a unicorn? But could the age of the unicorn be at an end? And what will replace them?

unicorn

For the past few years, much of the talk for new technology start-ups has been about achieving the moniker of a ‘unicorn’. Many have tried, plenty have failed, but there are as many that have succeeded.

However, as many people warned, the constant rise of the ‘unicorn’ was always going to come to an end. And even some of the big name unicorns from the past few years have lost this particular title.

So, is the age of the unicorn at an end? And what is coming next to take their place?

Rise of the Unicorn

For those of you still unfamiliar with the term, a unicorn is a technology start-up company, which reaches a valuation of over $1 billion. The companies are characterised by rapid growth, and are generally privately funded, either through VC, or other routes.

The issue with unicorns, one that investors were aware of from the start, is that they are not profitable. Well, at least to begin with. Most unicorns aim to prove concept, and grow market share, before making any money.

Valuations tend to be based on future projections of worth, which is why truly defining a unicorn is tricky. Currently, the Wall Street Journal lists 155 unicorn firms, Fortune 174, and VentureBeat 229.

There are plenty of recognisable names on these lists. Uber, Airbnb, SpaceX and Dropbox, to name but a few. Many of these companies also appear on lists of organisations still considered to be disrupting their respective industries.

It’s probably easier to argue that companies like Facebook and SpaceX, unicorns of the past, have surpassed that title by being profitable in their own right. And profitability, after all, is surely the key.

Pop! Is that a Bubble Bursting?

When we first visited the topic of unicorn organisations a little under a year ago, we did highlight vulnerabilities in this set up. Venture capitalists and their investments are as much susceptible to market changes as any other business.

And given the global uncertainty that has been prevalent in 2016, many investors are looking for safer options. And this decrease in available funding has already seen a major impact amongst unicorns.

The pre-IPO investment firm Sharespost published an analysis in August that concluded that 30 per cent of all unicorns would lose their billion-dollar net worth. Some already have, and some have been pushed down that road in the past 9 months.

Big name companies like Theranos (once a unicorn, now subject of media interest for all the wrong reasons) and Evernote have already had valuations written down. Even Twitter and Uber have lost some of their valuation (though not enough to take them under the magic $1 billion mark).

Rise of the…Cockroach? Really?

Yes, really. Well, if you’re looking for a survivor, it’s well known that cockroaches could probably survive the apocalypse!

It might not be as glamorous a title, or an image, but the cockroaches are here to stay. Cockroach organisations differ from unicorns by having slow and steady growth, a closer eye on spending, and steady profits.

Cockroaches exist where funding doesn’t come as easily, but they can be smaller, more agile, and better prepared for uncertainty. And with smaller budgets, they are regarded as being more creative than their unicorn counterparts.

For investors, this represents a safer option, and a potentially better return in the long-run for them and their clients. While some unicorns will make it, and make it big for their investors, cockroaches are seen as a safer investment, something that is welcome in volatile markets.

Where will we be in another year? Who knows. We can’t predict which companies will still have their unicorn title, and which will be falling back. However, the chances are that the cockroaches are here to stay.

Cockroach or unicorn – which would you rather be involved with? Is the age of the unicorn really at an end? Let us know your thoughts below.

While you ponder that, here are this week’s procurement and supply chain headlines to keep you going.

Bangkok Fire Trucks Belatedly Enter Service

  • A fleet of 176 fire trucks are to finally enter service in Bangkok, a full 10 years after they were purchased.
  • The trucks have locked up in a warehouse for over a decade due to a prolonged legal dispute.
  • The Austrian-made trucks were locked up soon after delivery as part of a wider corruption scandal involving senior government ministers.
  • Due to their age, the trucks require extensive maintenance before they can be put to use.

Read more at The Nation

Self-Driving Delivery Boats to Ply Amsterdam’s Canals

  • The Amsterdam Institute for Metropolitan Solutions plans to use the city’s extensive  canal network to trial a fleet of autonomous boats.
  • The floating robot vehicles will deliver goods and provide driverless transportation for people along the canal network.
  • The boats can also be linked together to provide on-demand bridges and stages.
  • Amsterdam’s research into robot canal boats parallels the proliferation of self-driving cars in the US and elsewhere.  

Read more at The Verge

Amazon Business Hires White House Procurement Head

  • Amazon has hired the former head of the Office of Federal Procurement Policy, Anne Rung, in a bid to increase its sales to government agencies.
  • The role, titled Global Leader of Public Sector Sales, will focus on helping Amazon win government purchasing contracts.
  • Rung will work closely with government buyers to purchase goods and services more efficiently.
  • In her Federal role, Rung reportedly saved taxpayers more than $2.1 billion in procurement spending by reducing duplication.

Read more at B2B eCommerce World 

30 Under 30 Programme Goes Global

  • ISM and THOMASNET.com’s 30 Under 30 Supply Stars programme has returned for its third year.
  • The programme celebrates the achievements of young professionals in Procurement and Supply chain, with the goal of attracting more Millennials into the profession.
  • This year, for the first time, the competition has expanded beyond the US to include nominations from around the world.
  • Judges are looking for multitalented professionals who are influencers and trailblazers in their organisations.

Read more and Nominate at THOMASNET.com

Supply Chain Review Pressure Following Chicken Scare

Public confidence in supermarkets and their supply chains has taken another hit, following a scare about contaminated chicken.

chicken

A recent report has found that one in four chicken samples bought from major supermarket chains contain antibiotic-resistant E.coli. The findings are again putting pressure on supermarkets to tighten their supply chain quality assurance processes.

While supermarkets have worked hard to improve supply chain traceability, this report shows there is much work to be done. It also serves to highlight a wider issue in the food supply chain – the use of antibiotics.

There is on-going criticism about the overuse of antibiotics by humans, but use of the drugs on livestock is contributing to increased resistance to antibiotics by so-called “super-bugs”.

Issues Raised in Chicken Testing

The study of chicken samples was carried out by the University of Cambridge. It revealed that from 92 chicken pieces, including whole chicken, thigh pieces, drumsticks and diced breast meat, 22 pieces contained potentially deadly bacteria.

The “superbug” strain of E.coli was found in chicken samples from all leading UK supermarkets, including Tesco, Waitrose, Aldi and Morrisons. Similar strains were found in supermarket pork samples tested in the same study.

The findings raise concerns about the quality of factory farming in the UK, as well as the end-to-end supply chains of the big retailers.

Dr. Mark Holmes, part of the research team that conducted the study, suggested that more resources needed to be put into assessment of antibiotic resistance in animals in the supply chain.

“These results highlight the need for improvements in antibiotic stewardship in veterinary medicine,” Holmes said. “The levels of resistant E.coli that we have found are worrying. Every time someone falls ill, instead of just getting a food poisoning bug they might also be getting a bug that is antibiotic resistant.”

Supply Chain Quality Assurance

Quality control software experts InfinityQS suggest that, while the supermarkets themselves might argue that their quality assurances are sound, the findings suggest this is not the case.

“It’s clear that a disconnect exists across these supermarkets’ supply chains. It’s likely they’ll have stringent procedures in place for their own food traceability, but it’s imperative these are adhered to amongst their suppliers.”

The company suggested that closer relationships with both suppliers and farmers was necessary. This could mean a more pro-active approach to site visits to where they source food from, and understand how they could help farmers to make improvements.

“An effective supply chain process will ensure that controls are in place to manage the necessary people, activities, resources and data throughout the supply chain.

“If done correctly, that product will be delivered with the correct documents, with an agreed quantity, adhering to a set quality standard and all sent at the right time to the right place.”

Antibiotic Overuse Creating Resistance 

The report also serves to highlight the wider issue of overuse of antibiotics in humans and animals. As well as depleting global supplies of antibiotics, systematic overuse is creating resistant strains of potentially deadly bacteria, including E.coli.

It’s predicted that, by 2050, one person will die every 3 seconds around the world from antibiotic resistant bacteria. Globally, 70 per cent of bacteria have now developed antibiotic resistance, including to traditionally ‘last line of defence’ treatment.

It’s estimated that around 40 per cent of antibiotic use in the UK is for animals in the food supply chain. The drugs are frequently given to large groups of completely healthy animals, with the intention of stopping the spread of infections. Mass medication accounts for an estimated 90 per cent of all animal antibiotic use in the UK.

Intensive farming practices, and keeping large groups of animals in close quarters, is to blame for such practices. In such crowded conditions, even one unhealthy animal can have devastating consequences.

However, as farming practices change, and retailers aim to ensure higher animal welfares standards, this issue may be lessened. Retailers have also been urged to pay a higher price for meat such as chicken and pork. This would relieve productivity pressures on farmers, and reduce intensive farming too.

Will this change your dietary habits? How can procurement get more involved in changing the underlying issues? Let us know in the comments below.

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Career Boot Camp Reminder!

The Procurious Career Boot Camp kicks off in earnest this morning with the release of our first podcast! Today, as well as every day for the next 15 work days, we’ll be releasing a podcast at 9:30am (BST).

You can access everything you need to enlist for Career Boot Camp here. If you have any questions, read this, or get in touch.

We’ve been on the look out for all the top stories in procurement and supply chain this week. And here they are…

Bailout Rejection Makes Hanjin Liquidation Likely

  • The chances of a bailout for stricken shipping company Hanjin look unlikely, increasing the possibility of liquidation.
  • The bailout was needed to help the company combat $5.4 billion debts, and allow it to unload cargo at ports.
  • However, with decisions still to be made, the South Korean Government criticised the company for “economic irresponsibility”.
  • The company is conducting sales fund the release of $14 million worth of stock currently stuck on its cargo ships.

Read more at Supply Chain Dive

Sewing Robots to Join Garment Workforce

  • A company called Sewbo has developed a robot that can sew, and intends to replace humans in the garment manufacturing process.
  • The machine uses stiffened, pre-cut garment pieces and feeds them into a sewing machine, before dropping the completed garment into hot water to remove the non-toxic stiffener.
  • Automated clothing production provides a potential solution to labour abuses and sweat-shop conditions in the developing world.
  • However, large-scale automation would also put millions of people in the garment industry out of work.

Read more and watch the video at Engadget

Study Says Petrol Must Be Phased Out by 2035

  • According to a Climate Action Tracker report, the last petrol powered car will have to be sold by 2035 to limit global warming to 1.5 degrees Celsius.
  • A ceiling of 1.5 degrees was the most stringent goal set by world leaders at the Paris summit last December.
  • Current projections suggest that electric vehicles will make up only 5 per cent of the world’s car fleets by 2030
  • This means aggressive measures will be required to shift rapidly away from fossil-fuel powered vehicles much earlier than expected.

Read more at Fortune

“Poor Procurement” To Blame For Detention Centre Cost Blowout

  • Australia’s scandal-ridden offshore detention centres for asylum seekers have come under intense scrutiny once again.
  • An audit of the centres revealed “serious and persistent deficiencies” in the relevant department’s management of the contracts.
  • It identified failures in the open tender process for security, cleaning, catering and welfare services, with costs blowing out from a $351 million contract in 2012, to a current $2.2 billion contract.
  • The report also criticised the original open tender process, and negotiations that took place with suppliers in 2012.

Read more at The Guardian