Category Archives: In The Press

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

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